With surveys suggesting that up to 40 percent of the workforce could be of the freelance/contingent persuasion by 2020, we can see that we are moving toward a world where freelance work is the norm. Of course, this change can’t happen unless full-time workers make it happen by quitting their day jobs and moving to freelance.
But workers can’t go into this transition blindly: there are eight things that you should consider before quitting your day job to go freelance. I outlined the first four of these action points in the first part of this article. Below, I offer the next four:
5. Prepare a Financial Plan
Don’t quit your day job until you have developed a financial plan, just like you would if you were trying to get a loan to start a business. Make sure you plan for monthly operating costs and start-up capital. Forecast revenues on a month by month basis for the first year, based on your market research and past freelance projects. This should tell you whether or not you are in a financial position to quit your day job.
6. Develop a Freelance Mindset
Research shows that the risk and uncertainty of freelancing not only deters people from moving to freelance work, but it also contributes to their subsequent failure as a freelancer. Educate yourself and accept the risk and uncertainty of the freelance world — e.g., not having a guaranteed monthly paycheck, dealing with alternating busy and quiet periods, and being on a total pay-for-performance system. Make sure you can handle this kind of pressure and uncertainty before jumping into the freelance world.
7. Look for a Financial Kickstart
Prepare to leave after your annual bonus payment to give yourself a financial kickstart, which will help even out your finances during quiet periods.
If you don’t have a bonus scheme, try to find another way to boost your income. Is there any chance your company will be making redundancies? You can put yourself forward as a candidate for such a redundancy in exchange for a severance payout that could kickstart your freelance career.
8. Prepare Your Home Office
Make sure you have a distraction-free, fully equipped place to work at home, as this is the most financially efficient way to get your job done. If you are working from home, set hours and introduce some discipline into your routine. Letting family, friends, and neighbors know that just because you are home does not mean you are available. You are working and shouldn’t be disturbed. A poor working environment will seriously hinder your efficiency and ability to fulfill client orders.
I’d love to hear any more tips and advice from people who have made a successful transition from employee to freelancer!