Lessons I’ve Learnt During My First Six Months Freelancing
In a recent post I wrote containing tips to prevent distraction, I mentioned that I’d be writing a lot more about my experiences whilst freelancing. I remember when I first became self-employed, reading blogs by people that had already been freelancing for a number of years offered some invaluable advice and definitely helped me in preparing for going it alone.
In this post I wanted to discuss some of the biggest lessons I’ve learnt during my first six months of freelancing. I’m sure there are many more but these are the ones I feel have had the biggest impact on me.
So without further ado, and in no particular order, let’s begin:
If you’re still in full-time employment and are thinking about becoming self-employed, I can’t stress enough how important it is to have savings ready. Depending on your business plan, it could be a month or two before you begin to get jobs, then another month until the invoices get paid. We’ll talk a little about cash flow later on in this post, but that’s three months right there with no money coming in. Be prepared for the worst case scenario and you can’t go wrong.
Separate your work space from your personal space
When I started out I would work perched on the end of the bed in my bedroom, with the TV one side, the PlayStation the other side, and people walking past the door all day. Needless to say, this didn’t bode well for long and was seriously impacting the amount of work I was getting done. As a result, one weekend we cleared out the spare room and turned it into a quiet, relaxed and comfortable office.
To keep any kind of sanity I think it’s crucial that you have an area dedicated to work that allows you to keep it separate from your personal life. If, like me, you’re lucky enough to have a room going spare in your house you could try turning it into an office. The advantages of this are:
a) At the end of the day you can shut the door and forget about work.
b) Lack of distractions.
c) If you live with other people in the house, you can shut the door and block out distractions from elsewhere in the house.
If you don’t have space to create an office, the thought of renting offices might seem a bit extreme, especially when you’re not sure how much you’re going to be bringing in each month. There is however a compromise by sharing office space with others. Sites like sharemyoffice.co.uk, sharedesk.net and even Gumtree list shared office space available at very reasonable prices.
The added benefit to this of course is that you still get to mingle and socialise with people on a day-to-day basis; something some people may miss if stuck in an office on their own all day at home.
Prepare your loved ones
When starting out you’re going to have to be prepared to work at least some evenings and weekends. Freelancers I know today that have been self-employed for 10+ years still regularly work 15+ hour days, sometimes 7 days a week. I’m not saying you should work every minute of every day like this at all, but with noone else to pay you a wage but you, sometimes the extra hours do need to be put in to get jobs done.
In light of the above it’s important that you make it very clear to close friends, family and your partner that there may be some evenings where you’ll be working over. Ultimately, becoming self-employed is a personal choice but you’re going to need support from loved ones if it’s really going to work out.
My other point regarding preparing loved ones is to make them aware that, even though you are self-employed, this doesn’t mean that you’re available at the drop of a hat any time of day. Let them know what hours you will be working, and ask that when the office door is shut, distractions and interruptions be kept to a minimum.
Set up a business bank account
Being self-employed, I don’t believe you’re actually legally required to create a business bank account by the taxman. I might be wrong by saying this but either way, I would definitely recommend it regardless. I can’t stress enough how easy this makes managing your incomings and outgoings, especially when it comes to doing tax returns etc.
For me I have a business bank account that all incomings and expenses go out of, and at the end of each month I transfer a lump sum to my personal account, essentially paying myself a wage.
You will have to apply for a business bank account and, if it’s anything like my experience, you will get asked questions about every aspect of your business before being accepted. Before applying I would recommend you have a rough idea of what you’re expected turnover, profit, loss and start-up costs will be, and to have a think about what payment methods you will be using (ie. Most banks will charge a small fee for paying in by cash or cheque).
Record all your incomings and outgoings
Now that you’ve separated your business and personal finances, my next tip would be to ensure you have a method to accurately record all the incomings and expenses that occur in the day-to-day running of your business. I use two methods to aid with this:
Use an accounting software package
There are hundreds of accounting software packages out there, including a lot of good free ones. I use QuickFile.co.uk which, at the moment, is proving to work just fine. There are also extra benefits to using accounting software, such as reporting and creating invoices, which will also save you time in the long run.
Keep a box or file of paperwork
If you buy a printer, a new PC, or any other asset for the business, you’re going to want to keep the receipt. I keep a box on the desk where I put all receipts, invoices and even household bills for the electricity and internet. At the end of the tax year I can then hand this box with everything in it to the accountant, along with a printout from the accounting software and it makes both of our life’s easy.
Even to this day I am still unclear on exactly what you can and can’t claim back from the taxman. What I have learnt however is to simply record everything. From new paper for the printer, to the five mile car journey I did to see a client. You’ll be surprised at how quickly it all adds up.
Get an accountant
Keeping on the accountancy subject, my last tip regarding this would be to get an accountant. If you’re unsure exactly what you’re doing you could easily spend a day or two completing your tax return, and even then there’s a chance you might make an error. In that time you are essentially losing money due to not working on your own projects. In my mind it’s better to simply hand everything accountancy related to someone that knows what they’re doing, leaving you to not even think about it and continue as you are on the stuff that matters, the stuff that pays the bills.
Learn about cash flow
Before I started to do my own thing, I’d read a lot about peoples experiences and the word ‘cash flow’ kept coming up. Now I know why it kept coming up so frequently as it plays such a big part of whether you’re getting paid this month or not.
What is cash flow?
In my mind cash flow is like a river of money coming in and you’ve got to keep it running smoothly, ensuring it doesn’t dry out. Even though you get approved for a job this month, you might not see any money from it for a good few months. By anticipating this, and thus ensuring other projects can fill the gap, you are essentially creating a constant flow of cash into your account.
Be realistic about your job estimates
Originally, when asked to quote for a job, I would quote for the job and the job only. What I quickly started to learn however was that there are almost always hours spent doing things that I just hadn’t catered for.
Let’s imagine for example you’ve been asked to quote for building a website. You might think it will take 20 hours which is probably about right. However, how many hours are you going to spend in meetings with the client, typing emails back and forth to discuss changes, talking to them on the phone, putting the site live. These are all hours you aren’t getting paid for based on your initial quote.
Quoting a job is still something I’m learning the art of. I don’t even know if it’s possible to perfect the art of quoting, but with time I am quickly learning a job can quickly turn into double the amount of hours, simply due to these extra unforeseen bits on the side.
Be prepared for tight months
Now that you don’t have a regular income coming in every month it’s time to be just that bit more careful with money. Some months you’ll probably make more than expected, some months you might not have a single job. It’s important therefore to make the most of these better months and prepare for the tight ones.
I remember the last few nights prior to leaving full time employment, I would lay in bed for hours unable to sleep, constantly worrying about the fact I wouldn’t have a regular wage. After all, this is what pays the bills and without money, we’re all pretty buggered. That’s the gamble with becoming self-employed though I suppose. For me I see it as a challenge and find that money is now much more rewarding because I can see the direct correlation between my hard work and the money coming in.
Get in touch with people, old and new
It’s unlikely you’re going to get jobs by simply sitting and waiting for them to come to you. As a result I recommend you get in direct contact with two groups of people:
If you’ve previously worked in a similar industry, make a note of everyone you have worked with and drop them a quick email letting them know you’re now self-employed along with the services you are offering. Even if they don’t need your services, they may know someone who does, or will at least bear you in mind for the future. I managed to get three long term jobs doing this, all by simply sending a quick email.
New potential customers
As above, the same goes for any potential new customers. This group of people will need a slightly more convincing email or letter as they won’t know anything about you at first. Again, even if they don’t have any immediate work available, at least now you’re on their radar.
In my scenario, being a web freelancer, I wrote an email to all the web agencies in the local area introducing myself, offering my services should they ever wish to outsource work, and, being local, offered to pop in for a quick chat and meet up.
Put yourself out there
Above I wrote that it’s unlikely you’ll get jobs by simply sitting there. Well, I lied. It is indeed possible through the power of a website and social network profiles. I recommend that firstly you set up a personal website highlighting your skills and portfolio. Then secondly get a profile setup on LinkedIn. LinkedIn is great because it allows you to input what is essentially an online CV for others to view, containing your past employment, education, skills and portfolio. It also provides a great way to build connections with old and new contacts as mentioned in the point above.
Deciding to become freelance is a big decision for anyone and something that should be seriously considered and discussed with close friends and family as it will impact them too. For me, becoming freelance is probably one the best decisions I have ever made and I wouldn’t change a thing.
If you do take the plunge, or are in the process of becoming self-employed at the moment, then I seriously wish you all the best of luck and hope that my tips have somehow helped to prepare you. I’d love to hear from you if you’ve used the tips above or have some of your own.