If you’re interested in freelancing, you may have heard about the rise of the talent economy. The talent economy is a shift in the global workforce, enabled by technology, where employers are increasingly seeking out talented freelancers to fill gaps in their workforce. Companies are beginning to reap the benefits of hiring skilled contingent talent and are shifting their hiring strategies
to include more non-employed workers. If you currently freelance or are interested in starting, you’ve probably noticed this change occurring. But what does it mean for you? We’ll discuss the benefits of the talent economy for freelancers, as well as what to plan for if you’re thinking of making the switch.
Benefits for Freelancers
As companies embrace the talent economy, more opportunities will become available to freelancers. This means it will be easier to find and connect with a variety of clients across different fields. The rise of platforms like Celerative means easier access to clients looking for your skills and expertise, and more chances to build new long-lasting relationships in your niche. You can even utilize a success manager to help find the projects you want to work on and guide your career.
Only Take the Jobs You Really Want
Working a full-time job usually means you don’t get to pick and choose your projects — your manager assigns you work, and that’s what you do for the next few weeks or even months. But with freelance, you can pick your clients and be more discerning about the projects you work on. This can mean optimizing for projects based on your desired hourly rate, or only working on projects that match your morals and values, as many young workers prefer to do. It also means working on a wider variety of projects, which is great if you’re easily bored by working on the same things.
Set Your Own Rates
Determining how much to charge clients can be confusing, but empowering in the end. It can be hard to determine how much to charge and what payment structure to use, but it’s important to figure out what works best for you. You may choose to charge hourly or per project, but either way, you can charge based on the value you know you bring to the table and the scope of the projects you take on. You also determine your own raises and can raise your rates or drop lower-paying clients in favor of those willing to pay more for your services. It can be incredibly hard to place a dollar amount on your work, but researching market rates for your skill set can give you a good place to start. Just remember to be confident in your work and realize that clients are seeking out your expertise — and that makes you valuable.
Being self-employed and not relying on one company means you need to be flexible. Some days it will be easier than others. You can work the hours you want and travel on the job. As long as you get work done, you work on your own time and schedule. Other times, being flexible can be frustrating, like if a client is slow to pay you or decides they no longer need your services. In any case, it’s good to remember to embrace the benefits of increased flexibility and do your best to prepare and deal with the worst.
What to Plan for
Shifting from a stable 9-5 job with benefits into freelance can be scary, but properly preparing for the change can help reduce uncertainty and ensure you’re successful. To help with this, here are a few different scenarios to think about and plan for when jumping into freelance.
Sometimes when people dream of becoming a self-employed freelancer, they think about working a few hours a day, maybe while sipping a cold drink on the beach in Greece. While you certainly could do this, it’s not all fun and games. There may be times in your career where client work dries up, paychecks take a while to come in, or something happens in life that prevents you from working. During these times money can get tight — which is why it’s incredibly important to prepare for these times before they happen. In times of prosperity, it’s a good idea to try to save as much as you can so that you have a safety net for times when work is slow — and these times will happen. Depending on your monthly expenses, this can be easier said than done. But starting an emergency fund and adding to it when you can will make a late payment from a client much easier to deal with.
Freelancing without a full-time job means you have to provide your own benefits. It’s important to figure out what you’ll need to put aside money for when figuring out your expenses — for example, in some countries healthcare won’t be a problem, whereas in the U.S. it’s something you’ll probably need to pay for yourself if you don’t get insurance through family or a significant other. You also want to think about saving for things like retirement, vacation, and sick days. This sounds complicated, but there are tools to help with this — for example, this calculator will help you figure out how much you should charge to meet your salary goals as well as pay for benefits throughout the year. You can adjust these as needed — for example, if you do have healthcare taken care of, you may not need to charge as much (or can keep the extra for more vacation time).
Dealing with taxes as a freelancer can be tricky. Along with saving for dry spells and benefits, you want to set some of your income aside for taxes since they won’t be taken out of your paycheck automatically like they would at a regular job. In the U.S., freelancers pay taxes quarterly — as of 2019, they’re due in April, June, September, and January. You can find more information on taxes for freelancers here.
You should also check your city and state laws for freelance regulations and tax information. For example, in Los Angeles freelancers are considered a business and have to pay a business tax to the city. It’s important to understand regulations where you live so that you don’t get a surprise tax bill later in the year that you haven’t saved up for.
Remember – You’re a Small Business
Working as a freelancer is essentially running your own small business, and it can be very helpful to remember this instead of thinking of yourself as an individual “employed” by clients. This can be difficult for people making the switch from a 9-5 job since you’re used to responding to a boss, but since you’re now self-employed you can make the shift to thinking of yourself as a small business instead. This mental shift might seem small, but it can make a difference in your confidence and mindset when negotiating things like contracts and rates. You want a mutually beneficial relationship with your clients, not an employee/employer dynamic. Remember that clients are relying on your expertise and skill because they are filling in knowledge gaps in their own organization. This also means learning to say “no” to clients and stand up for yourself when necessary, such as if they ask for free work (and some will). Have confidence in yourself and your business and you can thrive on your own terms in the talent economy.
Major shifts in the workforce can be hard for workers, but if you’re thinking of making the jump from a full-time job to being a self-employed freelancer, it doesn’t have to be. Working in freelance can be incredibly freeing and fun, but also can be stressful if you’re not prepared for the downsides. Be sure to do your research and figure out what rates work for you so you can ensure you have everything you need. Have confidence in your skills and your business and plan for the worst, and you can have a lot of fun in this business, all on your own terms.