As the freelancing economy takes off in 2021, many workers are tapping into the freelancing revolution. Multiple studies by the likes of McKinsey Global Institute, Accenture, and Upwork all reinforce the growth of the freelance economy. The pandemic has accelerated the growth of freelancers, and more businesses are realizing the benefits of including freelancers on their talent rotas. However, along with the perks of running a freelancing business right now, there are still certain drawbacks. The income volatility and financial uncertainty of the freelance industry can make many individuals reconsider their decision. While unpredictable income and nativity of the industry may deter you in the beginning, launching your own freelance business does not need to be complicated or expensive, to begin with. All it takes is a great plan to manage your finances as a freelancer, some great brand building and market research, and the right tips on getting started.
Do You Have Clear Business Goals?
You must have a clear plan and goal set before you launch a business. It is no different for a freelancer. Think about what you are looking to gain from launching this business and the role you would like it to ideally play in your life. Is it to provide financial security during retirement? Alternatively, you may be considering launching a freelance business as a side hustle or for additional income. It is not unusual for employees to launch their own freelance business on the side and aim to use it as a replacement to their main source of income either.
Set your business effective and measurable goals, so you can review your progress in the months to come. Recently, the independent contractor market has thrived during C-19 but it also means there is more competition in the freelance market. The recent Freelance Forward Survey by Upwork showed that a staggering 59 million Americans have freelanced in some form in the past year, which has meant companies now have ample independent contractor supply to choose from. So, new entrants into the market must have clearly defined goals and a clear grasp of their ideal target market.
Is There A Safety Net In Place?
A large drawback of being a freelancer is the financial uncertainty and limited access that freelancers have to employer-provided benefits. In fact, it is one of the key stressors for freelancers and can put freelancers off the idea of investing thanks to its risks. Since inflows can be infrequent and irregular for freelancers, it is even more important that you create an emergency fund before you think about pursuing investing as a freelancer. Most experts recommend a rainy day fund goal of 6 months of your monthly expenses.
If you are worried about funding your emergency fund with varying income every month, start with working out your emergency fund target amount and your monthly base expenses. This gives you clear insight into any extra expenses you incur every month- and where you can cut costs. You can also try picking up extra work each month to fund your rainy day pot. Recruiting one extra client every month can easily pay off quickly with you putting the extra income into your emergency fund instead of investments. You want to be sure that your expenses are covered, especially as it can take some time for your freelance business to secure clients and become self-sustaining. As we all know, launching a new business is always a risk.
Do You Have A Basic Understanding Of The Freelance Market?
Another thing you can do to help you succeed as a new freelance business is to become familiar with the basic rules of the freelance industry and the market you will be targeting for clients. investment terms floating around. For instance, if you are thinking of pursuing real estate investment in the beginning, becoming familiar with terminologies like cash-on-cash return, your capital expenditures, and a debt-to-equity ratio would help you get started on a knowledgeable foot. You may also benefit from research the current loan/financing options available, current market interest rates, and industry-specific freelancing platforms for the real estate industry like Commission Crowd.
Remember that getting into freelancing does not need to be complicated or require thousands of dollars upfront. Start slow, find your niche and get comfortable with the industry. Before you can begin to build a name for yourself and your freelancing business, you must first understand what your clients want and cover the basics of launching your business. Finding a balance that suits yourself and your freelancing business will take time- and in a lot of cases, trial and error.