This article was originally written by Rik Lomas, co-founder at Steer - a London based startup which holds courses for folks wanting to learn how to code and design.
Make an escape plan.
Going freelance means that you need a plan. It shouldn’t be something you do on a whim. Step one is start saving money. You will need some kind of monetary fallback when you go freelance. Plan for the worst. I would suggest saving around one or two months worth of salary in the bank before diving in. I went freelance with £1,500 (around $2,500, €1,800) in my bank account and I needed around 75% of it in the first few months.
I hate the word “networking” — it’s a shallow way of saying “making friends” — but it is an important part of going freelance. You need to be able to find work from as many different sources as possible. Start using Twitter if you aren’t already, start going to events and meet new people, keep up with friends you haven’t kept in contact with, get advice from as many sources as possible. Most of my friends in the tech scene I met on Twitter or I worked with. They were always incredibly important in getting me work.
Talk to other people that have gone freelance over a coffee or pint. They will be a goldmine of help for you. Take a list of questions that you want answering. I spoke to the awesome Lawrence Brown over cocktails before I jumped into being freelance and he reassured me that it isn’t as scary as it feels. If you don’t know anyone, send me an email and I’ll try to reply.
Do not burn your bridges. It’s tempting — especially if you’re disliking your current job — to tell people to go fuck themselves, whether in an aggressive or passive-aggressive way. There is nothing positive that comes from burning bridges. It will only make you feel temporarily better about yourself. Do not piss people off. Remember that you’re a professional and are soon to be leader of your own company. Act like it.
Create a business.
Before creating the business, think about who you’re aiming your services to. It could be tech startups, it could be large tech companies, it could be creative agencies or it could be small “mom and pop” companies. This is really down to what you want to do with your life and who you want to be working with. Personally, I enjoyed working with tech startups as I like the speed and challenges that come with it. A friend of mine loves working at creative agencies as she likes working on well-known brands. It will define you and your company, and will mean later what kind of work you’ll be recommended for.
If you’re in the UK, I would recommend setting up yourself up as a limited company rather than as a sole trader. There’s less risk and would mean your personal items aren’t at risk if the worst of the worst happens. You can easily set up a limited company through sites like CompaniesMadeSimple (just get the “printed package”). It will take around 15 minutes to complete and around 4 hours later, you will be the proud owner of a business.
Another thing to consider is a domain name, you would probably want to have a company name that matches. Check before you register your business that there’s a cheap, decent domain available.
After you’ve got your business set up, the next step is to get a business bank account. The easiest way to do that is to use the bank you’re using for your personal accounts as they’ll trust you more than going to a brand new bank. Go into the bank and explain that you want to set up a business bank account and they’ll set you up with a meeting with the bank manager. This meeting should be straightforward as freelancers don’t spend a lot of money on inventory. Around two weeks later, you’ll have a separate business bank account.
Getting your first client.
Okay, take a deep breath. This will be the hardest client you’ll ever have to get. Everything after this will be a lot easier as you’ll have recommendations and a portfolio to fall back on.
I mentioned earlier the new friends you might have made and the bridges that you haven’t burnt. This is generally where you will find your first client. Let them all know that you’re going freelance and you would love it if they could recommend you. A lot of freelancers have work “run-off” — good work they don’t have the time to do — so they may be able to recommend you for it.
Tell everyone you know. Shout it out on Twitter, Facebook and LinkedIn (yes, even LinkedIn). Someone you know might have a lead.
Another way to get work is to look for it. If you’re wanting to do tech startup work, look at job boards like Authentic Jobs or if you’re in London, something like 3 Beards Jobs or the equivalent in your city. If you’re wanting to do agency work, try good recruiters who are specialists. Again, in London, try Roome. Avoid any recruitment agency that doesn’t come recommended or is generalist. Ask other freelancers how they get work too.
Don’t panic if you can’t get work straight away. It will take time. Don’t expect to get anything in the first week or two. In the meantime, keep networking, keep in contact with other people and update that portfolio and that CV.
The first job will come. When it does, do an amazing job. Make sure your client loves you and wants to recommend you to other people. Your biggest promotional device will be other people’s recommendations.
How to price yourself.
Pricing yourself depends heavily on your skills and how in demand those skills are. A web developer is going to demand higher fees than a print designer for example. Learn to code or teach yourself some design skills and you’ll be able to reach a larger market and therefore charge more.
All the following prices are per day, for London and exclude VAT. A junior designer: £150-300. A senior designer: £250-400. A junior developer: £200-350. A senior developer: £300-500. When I started freelancing in 2010, I charged £300/day. By the end, I was charging £500/day. These prices vary by location, age, and unfortunately gender.
The other thing to consider is how long the project you’re about to do is. If it’s a short project, keep your day rate as it is and don’t change it, but if it’s longer than a week, consider lowering it as you’ll have a stable work base. For instance, my day rate of £500 was easily lowered down to £400 when working on projects of two weeks or more. Be flexible with your pricing.
Depending on if your client base and your accountant (see later) will mean if you charge VAT. If it’s “mom and pop” businesses, you might not want to be VAT-registered as it means charging 20% extra that they can’t claim back. For larger businesses, they will generally claim the VAT back so won’t mind. For you it means that you’ll get an extra 6.5-7.5% on top of your fee if you charge VAT. Talk to an accountant about it.
Don’t accept client work you don’t feel comfortable with.
One of my biggest mistakes was to take work because I didn’t have anything lined up. If you have a negative gut feeling, it’s probably correct. If you do take this work on, not only will you hate the work that you’re doing but it means that any work that you do want to take that comes up in the meantime, you won’t be able to do.
Also don’t take work that you don’t feel technically competent with. Again, this comes down to your reputation — if it looks like you don’t know what you’re doing, that client may not recommend you.
A friend of mine has a thing he calls a “bastard tax” — basically if he thinks the client might be a pain in the arse, he puts his day rate up by 25-30%. If the client accepts then he gets a nice cushion for the hassle he might encur. If the client rejects then he’s moves on and finds another client. Personally, I don’t recommend this, but I know a few people who do it.
Get a studio space.
If you’re not at other companies offices, I would recommend getting a studio space. Not only will it stop you going stir-crazy at home, it will improve your work/life balance. I worked from home for around 6 weeks and I hated it. I was going to the supermarket twice a day just to get out of the house.
If possible, try to share with other freelancers in similar industries. My last studio space of 9 people included print designers, photographers, web designers and developers. When one of these people had a client who needed work doing, who did they talk to first? The person sitting in the office with them — me! This goes back to networking and recommendations I mentioned earlier.
Get an accountant.
Please don’t spend time on taxes. Find a great accountant and they will not only save you money in the long term (probably more than you’ll pay them) and save you a lot of time and stress. My accountant wasn’t even in the same city as me and I only ever contacted them via phone and email. There are even some online platforms that will do your accounts for you such as Crunch in the UK.
An accountant should cost you somewhere in the region of £75-150 a month. There are other options if you’re not too fussed about getting an accountant. Online software like Freeagent and Xero can take a lot of the pain out of doing your own accounts.
Get a contract.
In the words of Mike Monterio, “fuck you pay me” (please watch this video in full if you haven’t). Always do a contract when you’re doing any work. The last thing you don’t want to happen is not being paid because legally they don’t have to. Having a contract in place will save you a lot of possible hassle and it will also mean that you and your client agree exactly on what work you will carry out for them. You can get a professional lawyer to write it for you, which will be expensive but watertight, or you can use online resources such as Contract Killer to write it yourself.
Manage your time well.
The biggest skill you will learn when being a freelancer is time management. You have to spin a lot of plates and juggle a lot of client balls (ahem). Some freelancers are brilliant at it, others can find it hard. Time tracking tools likeHarvest are great for reminding you how much time you’re spending on particular projects.
Projects will frequently overrun, as add in a buffer between projects to stop any overlap. You don’t want to be spending all day and all evening and all weekend working because one of your clients forgot to mention a feature they wanted.
If projects don’t overrun, then you have the perfect opportunity to update your portfolio or maybe start that side-project you’ve been wanting to do.
Dealing with stress.
Now that you’re the boss, you’re not just doing the work you wanted to, you’re also doing all the crap that comes along with it… admin, emails, chasing payments. Learn to be comfortable with everything that gets thrown your way.
You will have dry spells of work. Again, don’t stress, don’t take on work you don’t feel comfortable with. Try to relax. It’s not easy and I’ve seen other people panic when it happens but remember that being freelance is a long term option. Do anything that will help you to handle stress. My personal recommendation is mediation using Headspace.
You may have to sack clients.
I sacked two clients in three years. Some of my friends have never sacked a client in even longer. It may happen, it may never happen, but try to be aware of when a project just isn’t worth it any more to you. If a client is being verbally abusive towards you, it’s worth considering calling it quits. If a client is more stressful than having no work at all, it’s worth considering calling it quits.
Again, try not to burn bridges and do this in the most professional way that you can. Less “fuck you pay me” and more “thanks but no thanks”.
Freelance isn’t for everyone. Some find it lonely. Some find it stressful.
I remember one moment around 20 minutes after setting up the limited company for the first time. A knot in my stomach due to what had happened. This scary roller-coaster of a less-certain future had just started. It will daunt you. You will think “what am I letting myself in for?”. I can’t promise it will be an easy ride but you will enjoy the journey.
I really enjoyed my 3 years freelancing. I got to work with some amazing clients who were passionate about what they wanted to create with me. I was the expert and clients treated me as that. I had the possibility to work on a variety of different projects that I never would have had the chance to do if I was working full-time at my previous job.
It is scary. It is a lot to think about. But being freelance is one of the most fun, interesting and empowering things you can do.