There’s a new breed of American worker that’s poised to take over the marketplace. Empowered and independent, this new breed is also a hybrid entrepreneur, one who controls his or her own schedule, lands clients and maintains an office space. On top of that, these entrepreneurs rake in more cash than traditional, in-house employees. Who can blame them for wanting to break away from the cubicle to start their own ventures?
Who is this emerging worker? The Freelancer.
The Freelance Market at a Glance
Although freelancers and independent contractors have existed for countless generations, the rise of cloud computing has made doing independent work from home that much simpler. A recent study conducted by Accentureestimates that between 20 and 33% of the U.S. workforce is made up of freelancers and independent contractors. To put this in perspective, in 1989, independent workers comprised only 6% of the workforce; that means the market share for freelancers has increased at least three-fold in just over two decades.
And this trend is showing no signs of slowing down. Another study conducted by Tower Lane and Elance found that over 60% of U.S. companies plan on hiring freelancers in 2014. Accenture also found that some industries (like the oil and gas industries) have as much as 77% of their workforce residing outside the core organization, while about 20% of global companies have outsourced or offshore workers.
Benefits of Freelance Work
Benefits abound for independent workers. An industry report conducted by the International Freelancers Academy (IFA) found that 38% of the survey’s respondents earn more money as a freelancer than they did as in-house employees. In fact, about 15% of the freelancers surveyed reported earning at least $100 an hour. But the perks of freelancing don’t stop there.
Not surprisingly, most freelancers (46%) say they have more free time than they did when working as traditional in-house workers; in comparison, only about a quarter (27%) of respondents say they have less free time as a freelancer.
What is surprising, however, is that just over half the respondents (57%) say they feel more secure as a freelancer than they did as a full-time employee, despite the fact that jobs are often temporary and can be tough to land. In addition to that, 70% say they are happier as a freelancer, and 79% say they’re more productive. In perhaps the most telling stat of all, a full 55% say there’s “no way” they’ll go back to traditional work.
So what exactly keeps the workers happy? Elance asked the respondents to list the best aspects of being a freelancer, and atop the list were:
Controlling their own schedule
Being their own boss
Following their passions
Not commuting
Having more choice over work projects
Pitfalls of Freelance Work
Freelancing isn’t best for all people. When asked what the biggest challenges were for freelancers, the top responses were:
When considering doing freelance work, keep in mind that it’s often solely your responsibility to find, vet and land clients, which in itself can be a very time-consuming and frustrating prospect. A headhunter or employment agency can help alleviate these tasks, but these services can often be expensive and can dip into your earnings. Be prepared to hustle for some time while finding clients before reaping the benefits of a flexible freelance schedule.
Also, keep in mind that not all professions benefit monetarily from freelance work. While many positions earn more cash through freelance than in-house work, some jobs generate weaker wages, including:
IT systems support (53.8% make less than they did as a traditional worker)
Marketing professional (44.1%)
Editor/copy editor (41.7%)
Designer (40.3%)
Software developer (35.7%)
Deciding to become a freelancer is a huge professional decision. For those of you in large cities with many job prospects, perhaps it’s in your best interest to stay at a traditional position. Before making the commitment to freelance work, research industry practices to gauge where your wages might fall, and weigh all factors, including pay, commute, personal time, insurance costs, etc.
You've built a very successful career, and while "working for the man" has proven to be a lucrative and rewarding experience for you so far, you are ready to branch out on your own. Since so many people come to you for advice, starting a career as a professional consultant seems like the logical next step. After all, if other people see the secrets of your success as valuable, shouldn't you get paid for them?
While the idea of becoming a consultant in your field may seem like the perfect goal, pursuing it isn’t a decision to me made lightly or too quickly. Plenty of people who thrive in their respective fields crash and burn when they decide to become full-time consultants. That’s why it pays to prepare and ask yourself the right questions before you start.
Follow this step-by-step plan to turn your skills into a fulfilling and profitable career as a consultant.
1. Expertise and Certifications Are Absolutely Required
You need to have vast experience, proven success and a sincere love of the skill you plan to build your consulting business around. You may love givingsales presentations or building websites, but if you aren't exceptional when it comes to doing either of those things, you have more training to do before you can become a consultant in those fields. People are only going to hire you if you have a proven track record of excellence.
Your potential clients will also want to see relevant education or certification related to your field, especially when you’re starting out. This might pose less of a problem for the stellar programmer with a decade-long career and a high school diploma. But for rookie consultants, make sure to research the types of education or certifications that others in your field hold. These will go a long way in demonstrating your credibility.
2. Ensure That You Are Ready
Even if you have already started doing a bit of business on the side, it will likely take time before you are making enough money to support yourself. Know for certain that you can handle the financial burden of stepping away from your full-time career, especially if it takes you months to shore up business. Do this by creating a business budget.
It will take a great deal of time, effort, energy and cash to market your business and close deals with clients. If you aren't ready to invest everything required to make the business work, it's likely not the right time to strike out on your own.
3. Set Goals
Before you do anything, establish a plan for yourself. Where do you want your business to be in one month, a year or five years? Be realistic about your goals. While making $500,000 in your first year sounds amazing, for most people, it likely isn't achievable. Focus instead on smaller, attainable goals, such as "Obtain at least three new clients per month."
4. Obtain the Proper Permits and Licenses for Your Jurisdiction and Industry
Chances are you will need to obtain some sort of business license from the county, city or state in which you conduct business. Checking the SBA’s “Permit Me” online tool will provide you with information about the licenses or permits you may need based on your business type and location; a service like License123.com will also help you find, fill out and acquire any required licenses and permits for your business.
In addition, check to see what certifications or licenses you might need in order to consult in a specific field. For example, the healthcare or engineering industries require that you obtain industry certifications before you can bid on projects. Do your research, and know which permits, certifications and licenses are required for you to consult in your industry, field and locality.
5. Understand Your Market
First, you have to know exactly whom you want to consult and whether that type of client will actually pay for your services. Is your expertise likely to be used by individuals or companies? If it’s the former, will you be working with wealthy people or those with modest bank accounts? If it’s the latter, will you work with large corporations or small businesses? You need to profile yourtarget customer so that you can begin to build your marketing, pricing andsales strategies.
Conduct your own market research to know exactly what challenges your ideal client is facing, and then craft a perfectly tailored sales pitch that explains exactly how you can help the client overcome those problems.
6. Know How to Properly Set Your Rates
How much you charge clients will be contingent on your reputation and experience. This will be determined, in part, by gauging how much other consultants charge for their services. You shouldn’t expect to charge $3,000 an hour if you’re just starting out. However, you don’t want to undersell yourself. An asking rate noticeably lower than your competition can make you look like an amateur or, worse, incompetent.
Do some research before coming up with a proper rate. What are other consultants with similar expertise charging for their services? How much money are you saving the company, or how much would it cost them to do the same work in-house? These questions may provide you with a starting point, after which you can adjust your rate based on demand.
7. Set Your Pricing Structure
Experts recommend that new consultants opt for project-based pricing as opposed to hourly pricing. With a project-based fee, you determine the amount of hours you will need to invest and establish an overall fee for completing the project. You may invoice the total sum at the end of the project or set up monthly payments. Another option is to add a retainer fee, where the client pays you a set monthly fee and you make yourself available for a specific amount of hours every month.
Whichever payment method you choose, just don't expect to be able to charge the big bucks if you first have to prove yourself to potential clients.
8. Create Marketing Collateral
A professional-looking website goes a long way. Don't skimp on this. If you can't afford to hire a site developer, choose one of the many do-it-yourself options on the market.
In addition to a site, consider creating a brochure that details your services and the benefits you can bring to your clients. Include your credentials and background information, and add testimonials from other satisfied clients. The brochure will serve as something to hand out at industry events, trade shows and other networking events. In addition, you can drop copies in the mail to potential clients and present the brochure during sales calls. You can even make the brochure available as a download on your website.
If you don't want to go with a do-it-yourself option, hire a designer and pay to have the brochure professionally printed. Just plan for that expense, and opt to print small batches initially.
9. Hit the Ground Running
Once you have established a plan, you need to head full-force into marketing your new business. The scope of your marketing campaign will rely heavily on your budget, but there are a few ways you can spread the word about your business without breaking the bank:
Reach out to your network through social media and other channels to share the news that you have started a consulting business, and ask your contacts for referrals.LinkedIn is a great starting point.
Cold-call and email potential clients using contact information you obtain through online research.
Advertise in industry-specific journals or magazines.
Publish a newsletter or e-letter that provides valuable content that readers will want to subscribe to and share.
Find and take advantage of public speaking opportunities (even if you do them for free) to build your reputation as an expert in your field. This could include speaking at local Chamber of Commerce events, presenting as part of a webinar or serving as a speaker at a trade show or industry event.
Offer to write guest blogs and articles for relevant publications to build your credibility as a thought leader.
Becoming a consultant has many advantages, but make sure you are aware of the drawbacks as well. Working for yourself may sound glamorous, but it is not for everyone. However, if you are truly an expert in your field and love project-based work, it may be the perfect next step in your career.
On its face, the idea of freelancing sounds amazing. Dreams of being your own boss, working when you want, nixing commutes and avoiding office politics feel like they’re coming to fruition when you start out on your own.
In many regards, all those things are true about freelancing, and they’re part of the reason why over 10 million Americans call themselves independent contractors. But this decision can’t be made lightly, as turning away from corporate life also means turning away from its benefits and relative security. Before you turn your back on the tried-and-true workday for good, there are a few things you’ll need to consider before walking out.
1. You Need to Be Self-Disciplined and Proactive
When you are your own boss, you answer only to yourself and your clients. This means you’re responsible for finding clients, scheduling deadlines, doing quality work, drafting invoices, managing your payables, managing books and filing taxes. You are also your own salesperson, the only person who can turn leads into clients. There are no paid vacations or sick days in freelancing, and it’s up to you to set up and maintain health insurance. The math is simple: you get out only as much as you put in. All of this requires not only the willingness to say “I’ll do it,” but also the energy and commitment to actually see it through.
On top of your new commitments, you have a responsibility to meet your deadlines reliably and professionally. You no longer have the luxury of a boss riding your back to meet expectations. As such, passive procrastination should now repulse you. If you miss a deadline without adequate and valid notice, you can kiss your income goodbye, because that client will not be coming back and will certainly not recommend you to anyone else. Excuses from your personal life will fall on increasingly deaf ears. Remember, your clients count on you. In freelancing, the rule is to get the work done or don’t take it on in the first place.
2. You Have to Be Willing to Work Odd Hours
One of the great advantages of freelancing is that you regain control overyour time and environment. This works for many people who do not follow the normal 9-to-5 schedule, including those with caregiving responsibilities or who use modern technology to perform their jobs remotely online.
But if you’re not working 9-to-5, then you’re likely working “odd hours,” or hours that fall outside of a conventional work schedule. This can mean working very late, very early, while you’re traveling or on weekends or even holidays. But it can also mean not missing family events or having time for errands and appointments during the day, all without guilt. It can even mean being more in sync with your client’s schedule and needs, as he or she may not be working during typical hours either.
As long as your clients are getting what they need when they need it, it doesn’t make much difference whether you’re in your home office or a hotel room at Disneyland. Then again, realize that freelancing means that you may need to be working from your hotel room at Disneyland, which isn’t always a good thing.
3. You Need to Be Good With Money
Your income will fluctuate, and there will likely be no steady paycheck—or even steady amount—every two weeks like in-house employment. You’ll have to maintain a budget to stay afloat. So if you can’t control your spending or live beneath your means, or stay on top of your invoicing or project your income, then freelancing may not be for you. Unless you can be disciplined in your spending, the potential financial stress will be a very heavy burden to bear.
4. The Pace of the Work Will Fluctuate
If your services are in demand, you may go through periods of being triple-booked and working nonstop without a break for days on end. Then, all of a sudden, you might not have any jobs lined up for a few days, weeks or even months. In this way, freelancers do indeed live and die by the sword. When you have work, you have income; when you don’t have work, you have to work hard to get clients. Be ready to cope with booms and busts accordingly.
5. You Cannot Escape Jerks, Office Politics or Unnecessary Meetings
These are perhaps the biggest surprises about freelancing. Sure, you’ll never have to set foot inside a cubicle again. You’ll never have to listen to annoying co-workers talk to their friends on the phone or hear Muzak all day. But you will still have to deal with jerks.
In fact, your best clients may turn out to be the biggest jerks. They may be the people you need to get a project done, or they might be responsible for figuring out why your invoice is still outstanding. You will have seemingly unnecessary meetings with them, and you’ll have to deal with them in ways that you find trite or difficult. Jerks will still try to manipulate you; they’ll just be doing it remotely.
The truth is that jerks, like your co-workers, are people. People behave differently and see different things with varying degrees of importance; they will act in ways you never saw coming. Your ability to get along with people will dictate how successful you are, no matter if you’re in a cubicle, on the phone or at the bargaining table.
6. In Fact, You’ll Likely Face a Whole New Set of “Office Politics”
While you’re in the midst of three concurrent projects, a client will pop up and ask you to do something. But you’re already slammed. Do you turn the client down, knowing you might lose the income or hurt the relationship? Or do you take it and somehow make it work?
Just as your decisions at the office dictated how your peers and supervisors interacted with you, your decisions on which jobs to take and when to take them will have consequences throughout your career. These are the decisions you’ll have to balance as a freelancer.
7. You Need to Be Okay With Working Alone
If you’re an extreme extrovert, the “free” part of freelancing may be an adjustment. Although it does take some degree of extroversion to go out and land clients, you’ll still have to get the work done on your own or with a very small team. If you enjoy schmoozing or talking a lot, it may be very difficult to sit in your home office all day and listen to the clock ticking.
But don’t get rid of your business attire just yet, as you’ll probably have to meet with clients or other folks in a formal setting once in a while. Just realize that freelancing is usually project-oriented, and much of your time will likely be spent working alone on completing those projects.
8. People Will Think You Don’t Work Hard or Don’t Work at All
For whatever reason, many people still don’t understand the practice and culture behind freelancing. They often assume that freelancing is a hobby or something that happens only “once in a while.”
Because of your odd hours or varying frequency of work, people might draw conclusions based on their (often wrong) perceptions of a freelancer. They might openly criticize you, so be prepared for a few sarcastic comments (e.g. “That must be nice!”) when you tell people about the nature of your job. People might also make demands for your personal time because they think you have a lot of it. For example, relatives may come to town and expect you to be available on a Wednesday afternoon based on the belief that you’re free because you’re home. And others may even try to take advantage of your services for free or for a large discount.
Freelancing can be incredibly rewarding for you and your family, but be prepared to answer questions from skeptics and to defend yourself against assaults on your time.
9. Know How to Negotiate
We’ve all had to negotiate in business, but for freelancers, it’s incredibly important. It is in your clients’ best interests to pay you as little as possible in order to control costs, but it’s in your best interest to earn as much as possible. Know what you’re worth by researching going rates for your industry and market. Make sure you have a good pitch for why you’re the most appropriate person to do the job.
Sometimes, in order to establish a relationship, it’s worth it in the long run to take a gig that pays less than you deserve. But beyond that, don’t be afraid to ask for what you want, as nobody else will do it for you. Perhaps more importantly, don’t be afraid to walk away from a job offered by a client paying far below market rate.
While not for everyone, freelancing can be a good way to balance your work life against your personal life while still doing rewarding work. But be wary, as there can be long hours and lots of stress—both financially and professionally—waiting for the underprepared. For those that have the discipline to make it work, a freelance career can be financially and emotionally fulfilling.
The Freelancing in America survey, commissioned by Freelancers Union, oDeskand Elance, found that there are 53 million Americans who fall under the definition of a freelancer. The study also broke down the freelancing segment of the American workforce to discover who they are, why they freelance and how they feel about the future of freelancing.
But while the study did offer some interesting facts, the question still remains: Is freelancing a viable career option that can support you full-time?
When searching for an answer, the numbers suggest that compared to a traditional job, freelancing is still a difficult career to take on. The good news is things may be changing. To understand the reasons why, it is important to dive deeper. To begin, the study defined what a freelancer is and broke down the freelance workforce into segments.
The 5 Types of Freelancers
The study defined freelancers as “individuals who have engaged in supplemental, temporary, or project- or contract-based work in the past 12 months”; it then broke down respondents into five different types of freelancers.
Independent Contractors: This group is made up of 21.1 million freelancers (40% of all freelancers) who take on work in the form of projects, whether they are full-time or on a temporary or supplemental basis. This group is known as “traditional” freelancers who do not have an employer.
Moonlighters: These 14.3 million freelancers (27%) have a primary job but take on additional freelance work in their spare time. A marketing professional at a large company who also takes on a marketing project for a friend’s startup would be a good example.
Diversified Workers: This group of 9.3 million (18%) is made up of people who support themselves with several sources of income, whether it’s working part-time at a traditional company or doing supplemental work during the weekend.
Temporary Workers: The 5.5 million people (10%) in this group take on temporary work, either full-time or part-time, with a single employer or client. Consultants often fall into this category as long as they are not employed by a larger consulting company.
Freelance Business Owners: The 2.8 million professionals (5%) that fall into this group consider themselves freelancers but also employ one to five employees depending on the project they undertake.
The five types of freelancers indicate a broad spectrum of professionals. People with full-time traditional jobs, temporary jobs and even small business owners can be considered freelancers if they fall under the definition. But the actual number of people that are supporting themselves with only freelancing is unclear. Independent contractors and freelance business owners do not have any other sources of income, implying that they are making a living through freelancing alone.
It is clear that moonlighters and diversified workers are not making a living from single projects, and they’re making at least part, if not most, of their income from full-time or part-time employment.
A telling statistic is found in why people become freelancers. With 68% of respondents becoming freelancers to “earn extra money,” it is implied that they use the freelance work to supplement other income sources. The good news, however, is that for a third of respondents (32%), the demand has risen in the last year, and 38% are expecting to work more hours. The opposite was true for the 15% who saw demand decrease and the 12% who expect to work fewer hours.
When it comes to income, there is even more good news. About 43% expect to make more money in the coming year, while only 11% expect their income to decrease. Interestingly, 77% said they make the same or more money than they did before they started freelancing, with 42% saying they make more. It is unclear, however, how long it took these respondents to start earning more money, and if that amount was significant or not. The only conclusion we can draw is that, for many freelancers, their earning potential is increasing.
The survey also left out important information about the challenges and barriers to freelancing. While 50% of part-time freelancers and moonlighters claimed that “a lack of stable income” was a key barrier, it is not clear if this is a problem for full-time freelancers.
The Future of Freelancing
The results showed that freelancers are generally optimistic about the future of the freelance job market, with 77% feeling good about the year ahead. They also believe that freelancing garners more respect than it did three years ago, with 65% agreeing with this statement.
Conclusion
If you are considering leaving the traditional workforce and joining the freelance movement, the evidence suggests that it is still an uphill battle to support yourself full-time from freelancing alone. Stability still lies in having a traditional job when compared to a project-based career.
As the freelancer population grows, it is not clear if the opportunity to make a decent living by only freelancing is growing or shrinking. At some point, it simply becomes an issue of supply and demand. Even if there was an increase in demand for freelance work, prices per projects would be driven down as more people enter the freelance workforce. Because of this, it is very important to understand that becoming a freelancer is a lot like becoming a business owner. You will need to be prepared to sell and market yourself and grow your client base through hard work and dedication.
There is reason, however, to be optimistic about the future. With companies such as Elance and oDesk, it is becoming increasingly easier to join this growing segment of the American workforce. And with organizations such as the Freelancers Union taking root, there are institutions being formed to protect freelancers’ interests, such as creating access to health insurance and other benefits. If this trend continues, opportunities for freelancers will continue to grow as the landscape of the American workforce continues to change.
