The New Year is approaching, and it’s a perfect time to make a change. If the change you have in mind is from “corporate life” to “freelance life,” then you’ve stumbled on the right post to get you started.
Let’s start with the mechanics. Know who you are and what you are selling. Design. Marketing. Sales. It doesn’t matter what skill you are taking to market (and that is what you are doing) — you have to be sure you are exact in the telling. It has to be short and easy to transfer from human to human – this kind of selling is called referral sourcing. For example: “I specialize in SEO” is easy for people you meet to remember and to tell others about. “I specialize in SEO for big companies who are selling imported goods” is a lot harder. Take any leads you can get in your area of expertise — it’s better to be the filter than the drain.
Next up is to get a legal designation as either a limited-liability corporation (LLC) or an S-corporation — only you can decide which, but you should do it sooner rather than later. Doing so will help protect you from any liability associated with doing business. As a consultant or freelancer you are an easy target (which is not the same as a likely target). I wouldn’t want to list the frivolous lawsuits I’ve heard freelancers battled against, but trust me, it happens. I’ve come close twice in my 14 years (what saved me was impeccable documentation). A legal designation will create a boundary between what is yours as a person and yours as a business, leaving your personal goods (present and future) as safe as the law allows (which is pretty darn safe).
I know your head is probably hurting now — this is much more complicated than a blog post can cover. Rules and costs vary by state. You should talk to your accountant before making any decision (the tax implications are a big part of the decision). To find out more, Mycorporation.com is a pretty thorough resource. (The site also sells templates for incorporating, but I am not necessarily advocating that you use them — a legal disclosure inside of a legal paragraph, cool, huh?). At the very least (really, the least of all leasts) be sure to get an Employee ID Number (EIN) to avoid having to use your personal social security number on the W-9 forms your clients will require. Again, liability protection.
Also important: don’t start until you have some money in the bank. My long-term rule of thumb is to have at least six months of livable income in a savings account for any possible downtime. For sure, to start, you should have two to three months in the bank because even if you have work on day one (and that is great but not a given) you’ll need money to stay afloat until checks come in. Be prudent, and plan for gaps between projects — as well as checks that arrive net 90 and not net 30. (Health insurance, another major consideration, is beyond the scope of this post, but you’ll want to be sure to budget for it as a cost of doing business.)
Now let’s talk about you! What does it take to be your own boss? Most people struggle with the change from the routine of going to work vs. a self-defined day. If you are an organized person, you’ll have an advantage. Know that your day/week/month has to be a combination of going after work, doing the work, and then having time to keep the business running smoothly (e.g., sending invoices and maintaining balance sheets). If you aren’t organized, one of the best tricks is to write down what you are doing every hour of your day for at least three months (even if you are organized you’ll learn something). You’ll get a quick feel for where you need to do more or less.
Another big mental hurdle can be the isolation — just not being around other people when you are working. Try to start out with projects that have you working with client teams — that can help in the transition. In the long run, if you get out and have coffees and lunches to drum up business, you should be able to counteract the isolation with the elation of getting new work.
Finally, you have to be willing to be your own boss. Sometimes managing yourself can be difficult. Don’t work yourself too hard — you’re likely to burn out. Don’t give yourself too many days off, or keep overly irregular hours (those will both hurt the balance sheet). The best thing is to know yourself and your limits and manage accordingly.
Bottom line: be ready for anything (and everything) and enjoy having the freedom to be the best at what you do.
[Photo: Shannon Clark/Flickr]
