This article was published in the Otago Daily Times on 11 July 2020. If you are a freelancer or consultant, or thinking about becoming one, check out Confident Contracting for contracts and coaching you need to take control of your future and make long-lasting connections with people you do business with.
Many people are considering becoming freelancers or consultants in the current economic climate. Some want a change after reassessing their job or life situation post-lockdown. Others find themselves out of work or they need to top up their income by getting paid for their “side hustle”. Whatever the reason, the life of a freelancer or consultant is different from being employed. You shouldn’t rush into it without considering the practical and holistic differences. There is a certain “Yin/Yang” quality to it – the concept of two halves seeking a new balance in each other.
The Yin: The practical differences
You may do the same work as a salaried employee does but that’s where the similarities end. Being a freelancer or consultant involves higher rewards and greater risks. It means you:
From the start you need to appreciate that you are running a business, and that the product is you. Consider getting legal and accounting advice about being an “independent contractor”. Should you operate as a “sole trader” or a start a “company”? A company protects you from personal liability but it will involve more compliance. How should you plan for gaps in your income and what taxes do you pay? It is wise to save two to three months of income but unless you have savings, you will need to bank that up at the same time as covering your living expenses and operating costs.
Your rates need to include what you were paid as a salary, plus the costs of running your business. You should also add in a profit margin to allow you to grow your skills and reap some benefit from taking the risk of being your own boss.
The Yang: The holistic differences
Many discount the holistic aspects of being a freelancer or consultant - for example, you should focus on how to build your reputation and make sure you have ongoing relationships with clients. This will discourage them from wanting to end your collaboration and encourage them to refer you to others. Start by:
Yin and Yang
For all its benefits of flexibility and freedom, the nature of freelancing or consulting involves responsibility, commitment and initiative. You gain confidence and cope with the insecurities of it by sorting the practical details and mastering a long term holistic strategy. Having good contracts in place is essential to dealing to the details and building strong relationships is the key to security. Both will help ensure you have more control over your future but remember that neither Yin nor Yang is absolute. Each aspect is interdependent and contains the beginning point for the other aspect. For example, day becomes night and then night becomes day. You will find a new balance in your life as a freelancer or consultant if you consider both aspects.