Freelance Startup Business
If you dream of breaking the 9 to 5 mould and setting up on your own as a freelancer, you are not alone.
It is already a reality for millions of people, and this could include you, too!
Many companies now use freelancers to complete specialist tasks such as designing a website, or optimising it for search engines.
Businesses also use freelancers to hold the fort down during staff shortages or throughout seasonal holiday periods such as Easter and Christmas. This saves them the hassle of taking on new, full-time employees.
First of all though, you may be wondering…
What is a freelancer?
A freelancer is basically just someone who has a particular skill, such as editing and proofreading, accounting, software development, or public relations.
A company or individual hires them to complete a set task, usually at a hourly rate or for a fixed amount for the whole job.
So what’s the advantage of hiring someone on such a short-term basis? Well, companies avoid all the costs and red tape involved in sorting out national insurance, pensions and sick pay.
One advantage for the freelancer here is that they can charge more than what the company or individual would pay an in-house employee to do the task.
Other benefits include being able to work on a variety of projects, as no two jobs are ever likely to be exactly the same.
If you can get yourself on the books of several companies so you always have some work in the pipeline, it means you won’t have to worry about earning enough money and becoming unemployed.
Therefore, it’s key to make as many contacts as possible to make sure the work keeps rolling in.
Is freelancing for me?
Being a freelancer, like any other self-employed person, involves wearing lots of different hats.
As well as acquiring enough work to keep the wolf from the door, you also need to be able to market yourself effectively, keep track of payments and your accounts in general, organise your time so you complete work on schedule, as well as many other things that are involved in running a successful business.
This means a lot of self-discipline is in order. Limit the amount of work you take on, and never accept any new tasks unless you are sure you can complete it on time.
If you have to turn down work, don’t worry – it’s not your fault. You’re only human after all, and if people see how highly demanded you are, they may try you again next time.
If you deliver work that is below par, or miss a deadline, it’s highly likely the client will not use you again and look for someone else next time.
How do I become a freelancer?
If you haven’t already, you will need to leave your current job.
Whatever your situation and however you feel about your position, remember it’s best to leave with your dignity in tact and not burn any bridges with your boss or other colleagues.
You never know, but they could be a source of important contacts once you set up on your own!
Since being a freelancer means you are self-employed, you have to make sure you fulfil all the legal requirements.
You will need to register pay class 2 National Insurance contributions for the self-employed, as well as inform HM Revenue & Customs.
You will also have to become VAT registered if your turnover exceeds £67,000.
How much does it cost to start up as a freelancer?
Since a majority of freelancers work from home, start up costs can be kept to a minimum.
You can convert one of your bedrooms into an office space if you do not already have somewhere suitable to work.
Other essential equipment such a desk, computer, internet access, printer and business stationary should not set you back too much. At some point during the start of your venture, you will have to design and print some business cards.
You should also make sure you have separate lines for phone and fax access to make yourself appear as professional as possible.
Depending on your particular freelance skill, there may be some other items or tools you need to do business, but if you set yourself a budget, you will be fine.
During work-time, it’s a good idea to take advantage of ways you can keep your costs down. For example, using your client’s phone, internet and printing facilities.
How much can I earn from freelancing?
This will depend to a certain extent on a number of factors.
- how many hours you put into the business each week
- how much you charge for your work
- how much work you receive
Obviously, the more hours you work, the more you can get done. If you can get through a larger volume of work, then this should mean a bit more money for you at the end of each month. Be careful not to invest too much time though, and burn yourself out.
How much you charge for your work may depend upon the extent of your skills and how much experience you have in your field.
A good, successful freelancer can expect to turnover around £1,000 a week, but they will have to take off their costs from this, which could amount to around £80 a week.
Therefore, earning over £900 a week means freelancing can be a fairly lucrative business.
However, do not be deceived – it is likely you will not always be swamped with work, especially when you are just starting out. Expect down periods during the summer and over Christmas and New Year, when fewer companies are running campaigns.
It’s wise to set aside a little extra of your income during the busier months, in order to cover these quieter times of the year.
Another thing to take into account is your annual leave – how much holiday you take each year will affect your turnover and therefore your profit for that particular year.
Are there any risks involved in freelancing?
As a freelancer, you will always have to bear the burden of worry when it comes to how much work you receive.
When you first set up as a freelancer, you will likely find business to be slow until word has spread or companies are looking for someone with your skill set.
To help reduce the risk of not landing enough work, it’s best to always plan in advance. Figure out how much money you will have coming in over the next month or two, and when.
You can then start to set up replacement work after you’ve finished your current projects. The last thing you want is to finish a job and find there is nothing else to make a start on.
Contract work is always a blessing, as it is set in stone and allows you to budget more easily. But again, make sure you have further work in place after these contracts are up.
Getting payments from clients can also be a hassle – in some instances you may find clients don’t pay up until 6 weeks after you’ve sent an invoice. This is particularly true for government clients, where red tape is always a problem.
There are likely to be times when you have to tactfully chase up payments from outstanding clients. If they pay up relatively quickly after a reminder, then it’s not so much of a problem.
However, if you find a particular client is giving you hassle when it comes to making payment, as yourself whether it’s really worth carrying out further work for them in the future.
To help you spread your risks, it’s a good idea to try and get semi-regular work from at least half a dozen clients. This is just in case one or two of your clients fold, so you then have other clients to fall back on.
Secrets to success
In order to become a successful freelancer, you will need to have a unique selling point that you can market.
This is usually something that the client does not have available with one of their in-house employees, e.g. being able to program a website in a particular code.
The next step to being successful is to network – gain as many contacts as you can, as each one is a potential source for a new client.
LinkedIn is a great way to network with people you already know through work, family, friends or other associates.
Showcase your work on your website once it’s up and running – it’s important to demonstrate to potential clients how good your skills are.
Tell people what you have achieved for previous clients, e.g. increased sales, higher website traffic, etc. so new clients can see the benefits of hiring you.
For more tips and advice on starting your own business and entrepreneurship, please see: