You’ve seen it in a thousand different movies. The hero gets to someplace new – a city or country he’s never been in before or doesn’t particularly like – and hails a cab.
When he’s almost to his destination, the cabbie reaches back and offers the hero a card – if he needs anything, a tour guide, restaurant recommendations, tickets to a show, or the like, the cabbie’s got a guy or knows a guy.
And then later, when the hero does need help of some sort, he calls the cabbie and it turns out the cabbie is the guy. And usually some sort of sidekick adventure ensues.
In today’s freelancer economy, more and more often, everyone is either the cabbie or the hero. We’ve either got a dozen sidekicks – Uber, Postmates, Instacart, Fiverr, TaskRabbit, Manpower, Craigslist, Kelly Services, eBay, Mandy, etc., or we need to take advantage of someone with those connections to save time or money and get everything done.
Is It Working?
The Bureau of Labor Statistics released a report in June of 2018 on “Contingent and Alternative Employment Arrangements,” that claimed that the traditional job was alive and well. However, the study completely ignored the nearly one-third of adults in the United States who work a one or more freelance gigs in addition to their ‘normal’ job. Or the thousands of others who maintain their traditional job while starting an entrepreneurial venture in their ‘free time.’
According to another study, an estimated 3.2 million full-time independent contractors claim an annual income of more than $100,000. Another 12.9 million are working as part-time freelancers. And, as of WiseBrand’s 2018 State of the Freelance Nation, almost half of all freelancers reach their income goals in just 12 months, while 2 years is the average time spent to get to that level.
A recent law passed in the state of California claims to help these pseudo-entrepreneurs by re-branding them as employees. But not only is the law getting pushback from the new “employers,” but it has recently been speculated that the law benefits lawmakers’ budgets more than the people it’s supposed to protect. The state estimates it will recoup some $7 Billion per year in previously unpaid taxes.
Two Sides to the Story
As I casually pointed out earlier, most of us fall on one side of the equation or the other. We’re either hiring those freelance independent contractors, or we are them – and sometimes we move back and forth between the roles pretty fluidly.
So I’m going to try and give both aspects of the freelance economy their due. Hopefully, I’ll educate you on how to communicate and work easier and more efficiently for both sides of the freelance transaction.
As A Freelancer:
Work Part-Time Until You Can Afford Full Time-The Sacrifices
Yes, it is very hard to try and work multiple jobs. Trust me, I’ve been doing it my entire adult life. But it is worse to not to eat or to have a place to sleep. Do what you have to – cutting expenses, saving money, working multiple jobs – to get sufficient resources set aside to allow you to go full-time. And this is true even if – especially if – your spouse or partner is willing to support you.
Yes, I know that sounds counter-intuitive, but the more money and resources you have set aside before you go full-time, the smoother the transition will go and the longer you can prevail before it puts a strain on your family’s finances making it easier for your family to continue to help support you.
No, your friends probably won’t understand that you can’t go out whenever they want to. Get used to facing their disappointed faces or texts, because this is just the start of your chosen lifestyle of sacrifice to get to the place you want to be. If it was easy, everyone would do it. Make the sacrifice now, fully aware of what your goals are and stick to them and the schedule you need to make it happen.
Of course, if you do have a family already, you can’t neglect them. You want a balanced life, work included. We’ll get to that in a moment.
Full-Time = ALL IN
When it comes time to be full-time, take the plunge. Give your two week’s notice at your “day job” and start preparing.
One of the biggest obstacles most solopreneurs and freelancers face, the one thing that can destroy everything if you’re not careful, is your schedule. Creating and maintaining a schedule is of the utmost importance, even if you have to occasionally deviate from it.
It’s extremely demoralizing to feel like you are working 24-7. You’ve got deadlines, client schedules, multiple contracts in various time zones. All of this can add up to feeling overwhelmed. But it doesn’t have to.
Set Your Priorities
Although you’ll probably work more than the usual 8 hours a day many days (some you’ll work a lot less) determine for yourself a rough starting and ending time. You’re not punching a clock, but you’re establishing that these are your working hours just like you would have at any business. Again, you can be flexible with these hours, say if a client has an emergency, but if you don’t set boundaries, no one else will.
Create a perfect schedule – this isn’t my term, but one I learned several years ago. You plan out your perfect day, how your whole day plays out, in an ideal world. This isn’t lifestyle design a la Tim Ferris, but the perfect plan for your day right now. You plan your day, including sleep, meals, actual work time and the personal things you want to do make time for on a regular basis.
And stay consistent. Or at least as consistent as you can. One of the reasons most people fit in a full-time job is because your mind loves patterns and routines. So if you have a set schedule, at a job or in your own business, your mind and body work more efficiently during the times that they are used to being worked. If you have a 15 minute power nap scheduled at 2pm every day, try and stick to it so your 2:15-5pm is more productive.
If you have a family, make sure you set aside time for them. Make them a priority as well as work. That will give you the ability to say without guilt, Daddy or Mommy is “at work,” but they’ll play with you at a set time. Then, of course, keep that time.
The same goes for friends. I can’t tell you how many times friends have begged me to chat, help them move, take them to the airport or just go hang out, because I’m – in their words – “free during the day”.
Take it from me, figure out how to explain it now, because you’re going to have to repeat it hundreds of times, often to the same people, over and over again. My easiest shorthand? ‘Sorry, I have work’ or ‘I’m on a deadline.’ For a longer explanation, I’ll add ‘if I don’t work, I don’t get paid.’
Give yourself permission to ignore phone calls and texts (and/or the front door) until the set time that you would normally take them, just like in any work situation. If it’s a work-related phone call, limit the time spent, or agree ahead of time in writing on how it is billable time. You’ll be amazed how brief and concise your clients can be when they know it’s coming out of their budget.
Value Your Time
Don’t be so desperate for work that you’ll take any job. For example, a $100 gig that takes you three 8-hour days to complete nets you around $4.15 an hour. That’s not worth the time that can be spent on more high-level activities – even if that’s grabbing lunch with your spouse once a week, if it’s one of your priorities. 2 hours spent networking for jobs that pay reasonably is more efficient and productive than spending 24 hours earning $100.
Don’t Work For Free – EVER.
It might seem like a great idea to do a job for a friend or former employer that will get you some added exposure, but remember – exposure is what causes most of the deaths on Mount Everest.
Your time is valuable. Every hour has a net worth to it, and you don’t ever want to reduce or degrade that worth for the sake of getting some attention or on the promise of future work.
That includes doing an unpaid project for a potential client “to see if you’re a good fit,” or submitting a bunch of project ideas or pitches “to see if you understand the nature of the work.” If they really want you and your knowledge, they’ll pay for that privilege. And if they don’t want to pay, then it isn’t for you. There’s power in the word NO.
There is one other situation that may appear to be free work at first. It’s not, but be very careful taking jobs that are paid ‘deferred’ or based on certain metrics. These can be lucrative at times, but more often represent the way the company hiring you hedges its bets. I usually recommend that there be a minimum fee associated with such a gig. This will almost always be less than your usual fee, but at least you’re guaranteed something. Unless you have some inside track, be cautious spending time on these jobs, and always, always…
Get it in writing
Know what is expected of you, and what’s expected of the employer, because you have a hard, signed, printed record of the agreement. Even, especially, when the employer is a friend. This isn’t meant to be rude or untrustworthy or disrespectful. It’s to protect BOTH of you.
Yes, You Need a Budget
One of the trade-offs for having time freedom is that you pay for it with financial sensibility. Dennis Peacocke used to say that “Money is time in foldable form.” That’s never truer than in the freelance economy. Everything has a cost and you pay for it. You get to work when you want to? Fine, but no employer healthcare, paid sick & vacation days, or retirement plans. As I mentioned before, you only get paid when you work.
So it’s up to you to create a budget. Know what your expenses are, what you need to spend money on, save money for, and have on hand in case of emergency.
With a budget, you can still overspend, but at least you can see it coming. Without a budget, you’re in the dark – sometimes literally – and hoping you’ll have enough to get the electric bill turned back on.
The more freelance you become, the better you need to track things. I recently started strictly tracking my money in and out. I make sure I reach at least my minimum cash in for each day before I lounge and turn on Netflix. Even if it takes me longer. I enjoy my free time knowing I don’t need to work – I have my income for the day. It helps that I don’t have a family to work around, but it’s a good system to consider to make the most of your days. And your days off.
Take the time to do a budget, stick to it as well as you can, and be flexible when you need to be. Aim for lower fixed costs, higher savings and much less debt. However, there’s one expense you can’t be all that flexible on…
Don’t Wait For the IRS to Find You
This section is going to be brief, because, while I’ve been doing my own taxes for longer than I’d care to admit, I am not an accountant or a tax professional.
Which, by the way, is some one you should consider hiring. Like most of us, a good majority of tax professionals work freelance, and, of course, are busy during the first few months of the year. But as business owners, especially if you’re operating as an LLC, C or S corp – you’ll need help the rest of the year too.
A quick word about incorporation and again, I am no expert on tax law. However, the lawyers I have spoken to all encourage filing corporate papers if you are truly going to be a business. In most states, the upfront costs are not that expensive, and the tax benefits, especially given the recent changes in tax laws, are something you need to be aware of and take advantage of. Spend a few dollars and have an attorney or a qualified accountant help you file the paperwork.
Regardless of whether you incorporate or not, since, in most cases, your employer isn’t taking money out for taxes, you’ll need to make sure you have enough set aside, and are paying it when it is due.
If you wait for the IRS to discover you you’re likely going to pay penalties and interest charges. And unlike Hollywood or Nashville celebrities, the amount, while substantial to you, will not be enough for the IRS to consider a smaller settlement. Sadly, I speak from experience – and I had a trained tax preparer.
Just be thankful we live in the United States where we have the choice to have our own business, and pay ‘the man’ what you owe for that privilege.
Let People Know You’re Out There
One of the most disheartening and disappointing things I saw in the research I did for this article was that while 83% of freelancers realized marketing had an effect and was worth investing in, more than half of them spent less than 3 hours a week, and almost 3/4ths spent less than $100 a month, making their presence known.
Now, I’m not saying you need to spend more money – or even time – but you need to spend both efficiently. That’s why we teach Strategic Marketing here at Grow the Dream. By knowing your ideal customer, what questions they are asking and how you can answer them better than anyone else, you give yourself a leg up on the competition.
If you spend the time up front, you’ll reap the benefits later – strategic marketing is like compound interest in that respect. Like investing, the earlier and more aggressively you start, the more rapidly your investment will start to pay off.
And don’t be shy about asking your happy clients for referrals or at least for positive feedback you can share.
Hiring A Freelancer:
The benefits of hiring a freelancer are immense. You can reduce expenses and leverage your limited time, leaving you more breathing room to focus on your primary vision.
While a freelancer might charge more hourly than you would pay a full-time employee, you also don’t have to pay benefits, retirement, vacation or sick time. You don’t have to pay for hours when they’re sitting around waiting for decisions to be made, or twiddling their thumbs, waiting for work to be found. Or worse, shoehorning them into doing work that they’re not qualified or overqualified for simply to keep them busy.
You can hire someone far more qualified and skilled for a few hours than someone you could afford to bring into your business. Yes, when you first start hiring freelancers, you might happen across a few lazier, less-detailed independent contractors. But many, if not most, who set themselves up for short contracts and temporary work, truly are some of the best of the best. And you access that expertise when you need it, without paying for it when you don’t.
It may be tempting to double down on your savings. After all, you’re already saving 20-25% of your employee expenses by hiring a freelancer, so you may think why not look for opportunities to enhance those savings. Don’t do it. Pay an independent contractor a fair market value for their work. Usually, they already know what that is. Don’t lowball them. Accept their price, knowing you’re likely to get high-quality work and you’re building what could become a valuable relationship down the line.
On the other hand, if you do have sufficient, consistent work for a full-time or part-time employee, hire one of those. I once worked for a company that assured me 4-5 hours a day, 2 days a week. No problem, I thought. Except they kept increasing my workload and not budgeting more time for it. They got frustrated when I would point out that I had allotted them 5 hours on Tuesday and couldn’t work over that. Or on Wednesday, because I had other clients with deadlines. They had more than enough work to have a part-time employee, they just preferred a freelancer because they knew and trusted me.
There are only 24 hours in a day. Five hundred twenty-five thousand six hundred minutes in a year. And everyone’s gotta sleep sometime. Using freelancers allows you to leverage and even use all of that time. For example, because I’m on the West Coast, I write for Grow the Dream hours after my bosses on the East Coast have gone to bed. And it’s there waiting for them in the morning when they start the work day.
Do you have the time to learn every nuance of the software programs that are recommended? Hire a freelance designer to make your graphics look and work well. Need to implement automation and really leverage your time? Hire an independent contractor that’s Infusionsoft (or your chosen CMS) certified to build it for you while you focus on getting clients sold.
And that’s just one example. Lots of businesses employ virtual assistants across the globe from their headquarters to make sure there’s customer service whenever a customer has a problem.
One of the reasons you became an entrepreneur was probably to have more time and freedom. Utilizing freelancers and independent contractors allows you to build bigger, faster and more efficiently, getting to your goals faster.
In addition to getting high-level expertise for a fraction of employee cost, another advantage to hiring freelancers is building relationships. Referrals work both ways. You can recommend a freelancer to a fellow businessperson. You can get the advantage of the freelancer recommending another independent contractor to you when you need other work done, or if they’re too busy at the time you need them.
It’s also possible that your freelancer can send business your way. If they work for another company who serves a different client base than you do, they can recommend your business to that company for the clients who come to them that don’t fit their criteria. That’s a win-win-win.
Almost everything is better with good relationships.
Are you ready to take on the freelance world? Maybe not after reading one article. But there is value on both sides of the independent contractor relationship. That’s definitely something that will help both parties gain financial and time freedom more quickly than either can manage on their own.