Is becoming a freelancer or contractor for you?
With unemployment rising and more and more companies making people redundant, I’m having a lot of conversations with people about the merits of becoming a freelancer or a contractor.
According to IPSE, the Association of Independent Professionals and Self Employed, approximately 6% of the UK workforce are freelancers and since typically when we see high redundancy levels we see an increase in the number of people freelancing they are expecting that percentage to go up.
But before you decide if you should join that movement what are the things you need to consider?
So are you ready? Let's get curious about becoming a freelancer and make some choices about the employment status that’s right for you?
Making decisions about your career direction
Deciding what next in your career isn’t easy at the best of times but during a recession caused by a global pandemic, there is even more pressure around deciding what to do next. If you are currently employed is it best to stay put rather than making your next career move? If you have been made redundant should you look for another job or is now the time to freelance or set up your own business?
Whichever of these questions, or variants of them, you are considering, only you know the right answer and can make the right decision for you and your circumstances. In this episode we are going to focus on considering if becoming a freelancer is a good option for you, and whatever your situation you will probably find that some of the questions posed and things I’m going to suggest people consider before freelancing are going to help you with your decision making too.
As a freelancer myself I know all too well what it’s like moving from a corporate role to working for yourself. I made the transition in the last recession so I understand the excitement and the fear that go with building a business in a tough set of economic circumstances. In more recent years I have also worked with countless others who are making the same transition, so am also able to share learnings from their experiences too.
The answer to should I be a freelancer is different for everyone.
As a freelancer, I’m able to focus on the work that I love doing most and I have to admit I love working with individuals who are making this kind of transition. It is wonderful to watch clients who started working with me when they were having a mid-career crisis, you know when you are good at what you do and it's all OK, but the thought of doing it until you retire leaves you feeling a bit empty, figure out what is the best next step for them and then flourish as they have make it happen.
When you get this decision right everything else is just better - people’s whole body language changes, they get excited about the work they are doing and about where it fits with the rest of their life.
And here is the thing - what is right for one person is not right for another. Only you can decide what the right decision for you, and your life is, but you can get help exploring your options and considering all the angles as you make that choice.
So what are some of the things you need to think through if you are considering becoming a freelancer?
Be realistic about what is involved in being a freelancer
It's important to be realistic about what’s involved in being a freelancer. After a bad day at the office, or after redundancy where you find yourself without a job through no fault of your own it's easy to find yourself sticking the metaphorical finger up at corporate life and thinking it would be much easier if you ruled the world and people would just work your way. Freelancing would be so much easier, you could just do the work, get paid a lot, and that would be that.
After all, that is what we are often told freelancing is. If we have worked alongside freelancers or contractors that’s probably what we have seen and others have said. You don’t have to spend very long on social media to hear from celebrity business gurus who have best selling books and award-winning businesses telling you that you too can have the dream lifestyle doing almost no work, sitting on the beach while the money rolls in.
Dig a bit further and look behind the smoke and mirrors and the picture is very different! If you are seriously considering becoming a freelancer one of the skills you are going to need whatever field you work in is Critical thinking and the ability to think things through. When you come across these ‘too good to be true’ sounding offers - please apply your brain. If you want more information about the flaws in these business and the damage they can do to your business let’s talk. Maggie Pattersons BS Free Service Business Podcast also makes great internet business myth-busting listening.
Being a freelancer means running a business, and there is work involved with doing that on top of the work you will be doing for your clients. Especially when you start out you are going to be a company of one so you will have to do everything yourself. You will go from having whole departments who help you do your job to be the accounts, IT, sales and marketing departments. There is a lot to set up and to learn and sometimes so much advice and so many options it’s easy to be overwhelmed! If you worked in a larger company your knowledge of how other departments really function may be limited and the learning curve can be steep.
Think about how you feel about this kind of challenge and the level of support you are going to need. Is this something that excites you, can you afford to pay for the specialist help when you need it?
What motivates you?
You should also consider how self-motivated you are, it’s time to be honest with yourself if you are the kind of person who works best when other people set your targets or needs others to motivate you, working for yourself is going to be hard. If on the other hand, you are very self-motivated you will find working for yourself much easier but you will have to make sure work doesn’t become all-consuming!
Another thing to consider is how important is being part of a team to you? If you are freelancing or contracting you are going to be spending more time as a team of one, and only being a transient member of other people’s teams. Yes there are freelancer groups and over time you will build up your support team of fellow business owners, but if you are the kind of person who needs the team around then as much as possible, you will probably find the freelancing life hard.
On the other side of the same spectrum, not being part of a team or an organisation means you are not part of office politics in the same way. Yes you have to watch out you don’t get used as a pawn in someone else’s power plays, but you have to do that when you are employed too! For many people, this is one of the best things about contracting or freelancing.
Let's talk about money and freelancing
Then let’s think about money.
The headline numbers that sometimes you see on contractor and freelancer rates can look very high if you are an employee and it can seem that freelancers earn more for doing the same work.
And in some ways they are - but what is covered by that payment is very different.
As a freelancer that is all the money you get - there is not benefits scheme, holiday pay, sick pay, you need to cover your costs, your taxes, your training, any equipment you need, pay for your accounts to be done, for the software you use and the list goes on. As a freelancer you only get paid when you work, and especially early on many people experience periods of both feast and periods of famine.
What you need to think about here is how important is a consistent income to you? How much risk are you willing and able to take with your income? I always encourage people to consider who else is impacted by the risks to your income too - if you have a family you may well want to manage your risks differently than if you are single or your children have left home. The financial rewards can be higher working for yourself and you need to decide where the balance of risk and reward sits for you.
Right now the financial climate for contractors and freelancers is stark. Here in the UK, many didn’t benefit from any of the government’s pandemic support measures and the changes to the IR35 tax legislation has made many employers wary of engaging freelancers and contractors.
That said the need for a flexible workforce is greater than ever with the need for changes to cope with a post-pandemic world and the Brexit which may not be in the headlines but is still an imminent reality.
Add to this the economic realities of the recession meaning that many companies will redeploy internal resources where they can to save making them redundant, even if normally using a freelancer would mean they got the job done faster and better. Frustrating as that is for freelancers we also have to understand them doing the right thing by the people they have employed.
It's another area to think through.
IPSE is reporting a 25% drop in income for freelancers, and a significant increase in the amount of time people are not working. Being employed can mean some insulation and protection from tough economic times, but it also means you have very little control or influence over what happens to your organisation. Your company could decide to take a course of action that means your job goes and there will be very little you can do about it. As a contractor or freelancer, you have more control over your future, there is always something else you can try to get more work. So you need to decide which of these factors is more important and more attractive to you.
As a freelancer it is down to you to find the work
And talking of getting more work, as a freelancer you are going to be the one lining up your jobs, you are going to have to get comfortable with selling what you do and asking people for work. You may have the option of using an Agency to help you, that will cost you some of what you earn and managing your relationships with agencies and your network who may be able to help you get work in the future all takes time and effort. As a Freelancer, building and maintaining your network is going to be essential activities.
As a freelancer being really clear about what it is that you do and the problem you solve for clients is going to make it much easier to find work. So as you are deciding if freelancing is for you, I recommend taking some time to think this through. What is it you are offering? Think about your experience not just in terms of what an employer wants when you apply for a job, but as someone who could come in and fix a particular problem. How can you show the results you could get for this type of work?
Being a freelancer does allow you to focus on the kind of work you love to do, you have the choice about which bits of work to take, to choose who you work with and when. You get to choose what you specialise in and to take that specialism and apply it in different companies and in different settings. That freedom and flexibility are why many freelancers chose to be freelancers in the first place.
The final thing I encourage people considering freelancing to think through is what they love about what they do and if they are still going to get that working for themselves as a freelancer. We all like to make a difference and to create a legacy, and depending on what we do and what doing it successfully means to us, you may or may not be able to get that as a freelancer. It’s up to you to decide!
Summary & Taking Action
So in this episode, we have considered many of the things we need to think about if we are considering becoming a freelancer. We have talked about how it’s important to make a decision that’s right for you based on your circumstances and what matters to you about work. It’s about where the right balance is for you between the risks and the rewards, how important being part of a team is for you, how you feel about running a business and looking for more work, what motivates you and what problems you could be solving for clients.
It’s a lot to think through but investing the time to do that will allow you to make a decision that’s good for you and which is going to leave you motivated about your work.
If all this seems daunting and makes freelancing seem like an unattractive option then maybe it’s not the best one for you ad that is totally OK, it’s not for everyone. If you have decided it is, great, let's get going.
If however, you are still not sure, that’s OK too, thinking this through properly is important. Knowing when to get expert help is part of being a freelancer and if you need help working through the decision for yourself let me know and let's chat.
The things I share in this podcast are based on my experiences, and some will be more relevant to you than others. It’s up to you to choose what you do with the information I’ve shared. That’s what being a Curious Choice Leader is all about, getting curious about your situation and then making choices that are right for you and your business.
So the question I would like to leave you with is,
How would being a freelancer or contractor work for you?