Tips for Starting to Freelance
In August, I quit my job as a long-term contractor at Cisco to officially make the leap to freelancing. I did some side projects earlier in the year, but not enough to replace my full-time income. I want to share my experiences and tips from these first three months as an independent contractor for anyone else thinking about making this change.
Get a Project First
If you’re currently working, don’t quit until you have a project lined up. Obviously, not everyone has this luxury, but if you do, stay put until you’ve signed an agreement with a new client. In my case, I had been talking with a potential client for several months before a project finally came up that was big enough to justify quitting my job.
Put Money in Savings
This is hardly unique advice from me, as I received it from several people myself, but save up money before you start. You need a cushion in the bank to cover expenses when you’re getting started. Many clients have a 30-60 day lag before you get paid, so even if you have billable hours from day 1, it may still be two months before you get a check.
As with the previous tip, I know not everyone is in as fortunate a position as I was. If you are working currently though, and are thinking about moving to freelance, start saving now. I’d been considering this switch for over a year, so we had 6+ months of living expenses saved before I left Cisco. That has significantly reduced my stress levels.
Be Ready for Delays
I’ve experienced a lot of “hurry up and wait” with clients. I finally get a PO signed, but then the SME isn’t available. The design document is approved, but the rest of the project is held up
When I quit my full time job, I had a big project lined up, one that would easily cover my expenses and keep me working pretty much full time for two months. I figured I didn’t need to work too much at getting other clients right away since I’d be too busy with this big project to do anything else anyway. Then most of the work got pushed back from August to October, and I was caught off guard. Fortunately, as noted above, my husband and I had money in savings to cover some slow weeks, but I wasn’t expecting the amount of delays I’ve had. In hindsight, I wish I’d gotten other clients lined up sooner. On the other hand, I took the slow time to build my business website, set up an LLC, meet with a CPA, etc., and it was nice to have the down time to address those details.
Multiple Income Streams
One independent contractor I know has talked about never wanting to be “owned” by a single company again after a less-than-wonderful experience as a salaried employee. Michele Martin made this great observation a few weeks ago: “Would you rely on a single company’s stock for your retirement fund? Why, then, do you rely on a single organization for your salary? … Strength and security is found in diversity, not homogeneity.”
Part of my mistake with not being ready for delays was still relying on one particular client for my work, then scrambling to find something else to fill the time when the project was postponed. Now I know there will be delays and slow periods, so I’m building up clients so I’m not so beholden to one organization or another. I’m not quite where I want to be yet, but I’m getting there.
Professional Liability Insurance
One thing I didn’t initially realize I needed is professional liability and errors and omissions (E&O) insurance. A few clients have asked about it though, so I’m getting prices now and plan to have it soon. Other people I’d talked to about freelancing had mentioned setting up an LLC, getting a privilege license for the town where I live, and so on, but nobody talked about the insurance. I’m not sure if many people don’t get it, or if everyone I talked to just assumed I already knew about it.
Build a Network with Social Media
Most of the clients and potential clients I’m working with are people I connected with through social media. In a single two-week period in October, 10 different people contacted me about potential instructional design contracts, and 6 of those found me through either my blog or LinkedIn. The typical path people take is searching for a phrase like “instructional designer” on Google, finding a post like What Does an Instructional Designer Do?, and then visiting my business site or portfolio. It’s too soon for me to know what else I may have to do for marketing in the future, but so far, my blog is definitely working as a marketing and networking tool.
Your Tips?
I got some good tips and resources from several people when I asked previously about getting started as a freelance instructional designer. Those of you who have made this leap yourself, or are thinking about it, what other tips do you have?
Knowing both sides of the coin helps. Most people just concentrate on goodies that freelancing offer not taking time to know the disadvantages. Knowing both pros and cons will prepare you well.
Put everything in “Contract” No Contract No Work. 80% of the freelancers find it hard to get the money once work is completed.
Could you please provide a citation that backs up your claim that “80% of the freelancers find it hard to get the money once work is completed”?
That sounds ridiculously high to me.
Unfortunate but true —
http://josephcaserto.com/unpaidwages.pdf
http://pinterest.com/pin/107734616056093118/
http://www.linkedin.com/groups/Pitfalls-Being-Freelancer-astounding-80-138763.S.98923603
http://www.freelancersunion.org/political-action/paymentprotection.html
Hmm…throwing a bunch of links up that don’t support your point isn’t as helpful as I would have liked. That shows sloppy research on your part. I was hoping for you to just give me the single source of published research.
That statistic that you’re citing is probably from the infographic that you Pinned (the third link above, for other readers). That infographic cites this survey by the Freelancers Union:
http://fu-res.org/pdfs/advocacy/2010_Survey_Summary.pdf
The statistic actually is this: “77% of respondents experienced client nonpayment during some point in their freelance careers.”
Saying that they weren’t paid at some point in their entire careers isn’t the same as saying that the same number “find it hard to get the money once work is completed.”
The statistic that matches your statement is this one: “40% of respondents had trouble getting paid their owed wages in the last year.”
That’s still a significant number, but it’s half of what you claimed. The Freelancer’s Union didn’t publish their actual survey instrument, which brings their credibility somewhat into question. My guess is that they asked the questions in such a way as to encourage people talking about problems. This is a group with an agenda and bias, and their survey should be suspect. “Trouble getting payment” could include something as minor as payments being delayed for a few days or just not liking the “trouble” of sending invoices.
Your point about having a contract is a valid one, but you don’t do yourself any favors by supporting it with such flimsy research.
These are great tips Christy! I had also made a leap from full-time employee to full-time consultant. I learned a lot along the way and captured my learning in a blog post. Hope it will be useful to you and your readers.
http://tarunagoel.blogspot.com/2010/09/from-employee-to-consultant-story-of.html
Great tips, Christy. I have one more to add: set up your agreements/contracts with clients to include a deposit that must be received before you start on the project. Helps with the income gaps, especially with new clients.
Excellent point. I did set it up that way for the one prospective client where I wrote the agreement myself, but in my other situations I’ve been signing contracts written by the clients. I think I need to work on my negotiating skills to get that as part of more of my contracts, even if someone else is writing it.
Would you be willing to share an agreement/contract that you have found successful?
My SOW is modeled after the agreement in Joel Gendelman’s Consulting Basics. I highly recommend that book for anyone starting to freelance.
Depending on the project, I often sign an agreement or contract from the client and use my SOW to specify the details. If I need a legal contract, I use the template from the Freelancer’s Union (plus a few sentences on intellectual property as required by my professional liability insurance).
Great resources, thank you!
Great advice from the trenches, Christy! One other thing I’d say about having a diversity of clients is to try to draw from different industries, areas of the country, etc. One thing I’ve discovered is that the more diversity in my client base, the better. You’d be surprised how many of the same financial and other issues impact companies in the same industry at the same time. It’s something we don’t always think about.
That makes sense that companies in the same industry would face similar issues at the same time. I hadn’t thought about getting more variety in my client base that way, but that’s a good idea. Thanks for the tip.
Great article! I’ve never even heard of professional liability and errors and omissions (E&O) insurance. Thank you!
Neither had I until two clients asked how much coverage I had. 🙂 Somehow that point just gets missed when people talk about switching to being independent consultants.
In case you don’t get a trackback for this, I shared it on Google+ (via Reader) and you may find some comments there: https://plus.google.com/109972393384120358602/posts/L9jbxCJLzgL