Working for yourself or starting your own business is an exciting opportunity. You might want to become self-employed so that you can spend more time with your family. Or so that you can focus on a hobby or project you’re passionate about.
Becoming self-employed is a lot to take on. The Coronavirus pandemic has caused many people to rethink their lives. For some, this may mean starting their own business or working for themselves. But by taking things step-by-step and getting advice and support when you need it, you can make your new business work for you.
A serious reality check
Think about your responsibilities, commitments and personal ‘non-negotiables. The obvious things are financial commitments. This will help you map out your lifestyle and circumstances.
With a monthly salary you have an income, and inevitably start building up financial obligations such as rent or a mortgage. Don’t forget all those direct debits going out each month, usually as soon as you’ve been paid.
Some of these might be more trivial, for example a gym membership or Netflix account. However, what would happen if you missed a loan payment, childcare fees or getting a credit card under control.
If you’re giving up a regular salary, make sure you have a complete picture of your income and outgoings. Minimise the risk of missed payments.
If you’re largely based from home, you’re are now the IT manager, financial controller. Furthermore definitely no work dress code for your kitchen table.
Without the usual workplace rules and boundaries, it’s important to work out how to freelance and develop a productive routine. For some people freedom is great, especially if you’re a good self-motivator. But for many, complete flexibility can take a while to get used to.
Before you hit day one of freelance life, create a plan. Give yourself a firm goal for billable hours to clock up in the first quarter. Or target how much you need to invoice. Even if you tweak these once you get going, the goal itself can be enough to keep your business going.
Set the alarm, have a decent breakfast – and get dressed.
How much are you worth?
This is possibly the most important part of becoming a freelancer. You need to work out how much you’re going to charge. Either as a flat project-based fee, or as a daily (or hourly) rate.
Do some basic research and get a sense of the going rate for your services or skillset. Of course, it’s going to depend on your level of experience, but there’s no sense in charging rock-bottom rates only to find that a few months later you can't afford to pay your bills.
Remember the importance here of building up a good reputation and referrals. Earn the respect and trust of a group of solid clients with reasonably-charged work, executed to brief, on time and to a high standard.
Sole trader or limited company?
A key point. Need to decide whether to operate as a sole trader or form a limited company.
Typically, sole traders have less paperwork and more privacy than limited companies (although don’t underestimate the work you’ll be putting into your annual tax return). They do however carry all of the risk, for example debt and other financial liabilities.
Read up on what makes sense for your business, and don’t rush into a decision. Ask around your industry contacts and see what’s worked for them in their first few years of trading.
Advice from people already in business can be invaluable, especially if you’re getting conflicting guidance online. Your clients might well guide this decision too, as some larger organisations may require you to be a limited company to work with you.
Getting your first clients
Learning how to sell your skills is all part of becoming a freelancer. Be realistic about how much work you can take on as one person.
But before you take the plunge and become your own boss, it’s important to have some idea of who your first clients might be, or where to find them.
Get to know your target market and do some research. For example, a freelance designer could enquire with a few local businesses about who they employ to create their publicity flyers, posters, or even website. If they’re doing it themselves, consider offering an introductory rate and showing them how good you are. Repeat business is the least of it, as they might well recommend you to other local contacts.
Marketing plays a major part too, but word of mouth, social media and smart networking can help push your brand.
Register for tax with HMRC
In life, nobody can avoid tax and death. It pays to understand your responsibilities sooner, rather then later. Register with HMRC as soon as you’re up and running. This is an essential step regardless of your business structure, and something you can manage mostly online.
Dealing with HMRC can be a nightmare. One top tip: Make sure you have an easy-to-locate email folder, as well as a paper-based one, for all your early communications with HMRC. As you connect with them to pay tax across the year, you’ll need to provide certain details and login codes, and it can be tricky to locate everything.
If you’re largely working from home, a typical home and contents insurance policy might not cover you for your business activities. So, it makes sense to look at tailored business insurance that’ll give your fledgling business things like professional indemnity insurance. (In case you give faulty advice that causes financial loss to a client).
If you can tackle the principal elements of freelancing with a confident attitude (and lots of self-love), you’ll be ready to figure the rest out as you go. After all, it’s about the journey, not the destination!
Fundamental of Freelancing training course
If you are interested in attending a training course on the starting your own business or freelancing, then send an email to email@example.com
UK Gov site – Setting up a new business
About the author
Roy Edwards is a freelance digital technology & eCommerce consultant and journalist with more then 20 years of self employment experience.