If you’ve been considering chucking in your day job in favor of the freewheeling freelance lifestyle, you’re in good company. There are currently 53 million Americans participating in some form of freelance work. And of those who are currently freelancing part-time (moonlighting), 1 in 3 are seriously considering going full-time in the near future.
It seems that economic conditions are right for an increased freelance workforce. The question, though, is whether your conditions are right for you to make the transition. Here are five questions to ask yourself before jumping into the full-time freelance lifestyle.
How Much Savings Do I Have?
Before venturing out on your own, evaluate your cash situation. Your on-hand cash situation. Chances are there is going to be a ramp-up period between working part-time freelance and working full-time freelance. You won’t immediately be at maximum capacity, so you won’t be at your full earning potential either. You’re probably going to bleed a little cash at first.
Most financial advisors would recommend you have enough in your savings account to cover about six months of living expenses. But we’ve seen people venture off with as little as two months’ worth in the bank. If you have less than enough to cover two months of living expenses socked away in savings, you’re not ready to make the transition.
How Much Do I Need to Earn?
It’s time to get realistic. If you’ve been earning a salary up until now, it’s easy to go on autopilot and stop thinking about what exactly you’re bringing in and what exactly you’re spending. Venturing out on your own will not only mean that your income is more sporadic, but it also means you’ll need to earn more. Your income taxes will be higher. You’ll need to pay for your own healthcare, dental care, and vision expenses.
Plus, you will be running your own business — you’ll need money for business expenses: marketing, equipment, supplies, maybe even office space. Figure out at least a ballpark amount for the actual dollars you need to bring in.
Am I Getting Referrals?
One of the best indicators I’ve seen for whether or not someone is ready to go full-time with their freelance work is whether or not they’re getting work through referrals. Drumming up new clients takes an incredible amount of time, effort, energy and money. It’s work you’re not getting paid for. This is why most full-time freelancers get a significant amount of their work through referrals.
Their clients find them more clients because these freelancers are good at their jobs, and they know how to make their clients happy. If you aren’t getting consistent referral work, you might not be ready to make the leap.
Am I Getting Long-Term/Repeat Clients?
Similar to that last question, you should ask yourself, Are my clients coming back for more? Are they offering me long-term projects that will keep me busy for a few weeks or a few months? In an ideal situation, you could jump to full-time freelance with at least one long-term project waiting for you — that’s income you won’t have to pull out of thin air.
But getting recurring clients is important for another reason: It means you’re doing a good job. You’re communicating well. Your prices are good (or at least low). If your clients aren’t coming back, you need to figure out why before you’ll be ready to venture out on your own.
Do I Have My Business Organized?
You don’t have to be a business expert to make it as a freelancer, but you do need to be organized. More than ever, your time is money. Nobody will pay you to send out invoices, track expenses, follow up on payments.
So for your own sake, get a system. Keep things organized. Be extremely efficient when doing unbillable tasks. There are a lot of great tools out there to help freelancers with this type of stuff.
Whatever tools you decide to use, getting a system in place ahead of time will save you a lot of stress later on.
So let’s regroup. How are you feeling? What’s your confidence level? If you answered yes to most of the questions above, chances are you’re in a good position to make the transition into full-time freelancing. Or at least you’re as ready as you’ll ever be. If you answered no to most of these question, don’t be discouraged. You might need a bit more time to hone your craft, build up your client list, or refine your business skills.
Even so, you could be just a few months away from the freedom, exhilaration and absolute terror that is the freelance lifestyle.