Is Freelancing Worth It

Job SearchMoney

Sep 22

To someone who’s never freelanced before, the idea of it can be quite enticing. High income, complete freedom over your work-life balance, and the ability to do things your own way await. But for many of us, we quickly find ourselves even more overworked and underpaid, many times working for free. From one freelancer to another, it can feel like a roller coaster ride.

So if you’re considering freelancing, this article will help you decide if it’s worth it or not for you. In this article I’ll discuss:

Advantages of Freelancing

Disadvantages of Freelancing

Freelancing as a Job Seeker (Should You)

Is Freelancing Difficult

Is Freelancing a Good Career Option

How to Get Started Freelancing

Advantages of Freelancing

First, let’s take a look at the advantages and benefits of freelancing. There are some signifcant upsides.

Freedom and Flexibility

When you’re a freelancer you can wake up when you want, work when you want, work the way you want, and even wear what you want. If you want to take the afternoon off and take your kids to the park, you can. If you want to take a 2-hour lunch break and surprise your wife, you can.

You get to choose how much work you want to do, not your boss.

If you’re a caregiver, or you’re like me and simply wanted to see my kids grow up, freelancing can give you the ability to do these things while making money too. I quite my cushy corporate job when our first child was born so I could stay home with them. I’ve never looked back.

Flexibility and freedom are often the first and immediate benefits people realize when they become self-employed.

No Unrealistic Expectations

Most companies will continue to demand more and more of you until you burn out. They’re never satisfied. You hit one goal and they raise the bar higher. You won’t have someone else giving you unrealistic expectations anymore. The only person that can do that is you.

You can work with one client a month or ten. You can work 10 hours a week or 50 hours. It’s completely up to you. You’ll be setting your own deadlines and your own expectations. And if you burn out, you are in complete control of that.

Earning Potential

The key word here is potential. Most companies won’t blink an eye at paying you a higher hourly bill rate than what they pay their regular full-time employees. That’s because they don’t have the same added costs such as taxes, insurance, and other benefits when they hire a freelancer.

When I placed freelance consultants with my clients as a contract recruiter, it was not unusual for some of them to charge over $100 per hour for their services. To put that in perspective, if I placed a full-time employee doing the same job, they would make around $60 per hour. You can do the math, that’s almost double.

Scalability

As a freelancer, you can stop trading time for dollars at some point. As an employee, we can only trade so much time for so much money. There is a cap on our earnings.

I remember working with one CFO who helped a company post a $20M profit one year. His reward? A meager salary in the low $100,000 range and a $20,000 bonus.

As a freelancer, you can grow and scale your business. You may be a solo operator when you start, but after a few clients, you can afford to bring on other freelancers to help handle the workload as you grow.

As you grow you can pick and choose which parts of your business you want to delegate and which ones you want to continue to work on. If you love selling, you can hire someone to do the work. If you hate selling, you can do the work and hire a salesperson to help you grow sales.

In today’s world, you don’t even need an office. You can rent a mailbox or location at the nearest Regus so you don’t have to use your personal address. And if you do hire staff, they can all work remotely too.

You don’t even have to mess around with the complications that come with hiring employees. In many circumstances, you can hire other freelancers and pay them the same way you get paid.

Own Your Work

This was a big one for me that many people don’t think about. You actually get to keep your ideas and the assets you create.

When you’re an employee, the company owns everything you produce and ideate. As a freelancer, you own your ideas and over time build up assets that are worth something. This can position you for licensing deals or selling your company later and retiring early.

Write-Offs

While you may be paying a higher tax rate (I’ll talk about that later), you’ll also get some perks by writing off expenses. You can deduce office expenses, travel expenses, and mileage to name a few. You can even rent space to yourself and write that off. These deductions can significantly lower your tax burdens at the end of the year.

Normally your employer would take all these tax perks, but now you get to keep them. While I don’t advocate for people to start freelancing to save on taxes, it’s definitely a perk.

Choose Who You Work With

As an employee, you probably don’t get to choose your clients or coworkers. You are told what work you will do and who you will work with to get it done.

That’s not the case with freelancing. You always get to choose who you work with. I can tell you from personal experience, life and work are much more enjoyable when you work with people you like.

Disadvantages of Freelancing

Ok now that we’ve gotten all those miraculous, shiny pros out of the way, let’s take it down a notch and level with some serious disadvantages too.

Inconsistent Work

Unlike a job where you’re paid a fixed amount every month, you never know when you’re next gig is coming or how long it will last. This also means inconsistent cash flow.

You’re going to have to adapt and learn the importance of cash flow when you freelance. You’ll have to get used to building up a decent-sized reserve fund and saving for everything.

One month you could make $20,000. The next month nothing.

Mental Health

The inconsistency can take a toll on someone mentally. It’s easy to question your decisions and your abilities when things are slow. Your confidence will most likely take a hit at some point as you figure out the trial and error of freelancing. It’s a world of high highs and low lows.

It’s A Lot of Work

While the freedom may be nice, if you want this to work you’re going to be working your tail off for a few years. If you don’t treat freelancing like running a business, you’re likely not going to make much money.

Most freelancers will tell you that they work way more than they did in a 9-5 job and often sacrifice their weekends when first starting out. It’s up to you, but there’s a lot of work to do if you want to make money. It’s not as glamorous and easy as Upwork makes it out to be.

Earning Potential

I know I listed this in the advantages, but I’m also putting it here. It’s true you can earn a lot of money. I’ve made over $40,000 in a month freelancing myself. But I’ve also had months with next to nothing.

I know a lot of people who struggle to make their first $1,000 because they don’t know how to price, sell, and market themselves. Stick with it and over time you’ll get better at it all.

You’ll Have to Learn A Lot More

You’ll have to learn a lot more than just your job. You’ll be doing everything from accounting to sales to marketing, and more. You will be a business of one.

You will be the one sending invoices, making collection calls, and paying your taxes.

Taxes

That leads me to my next topic, taxes. When you are an employee for someone else, the employer pays half of your tax burden. As a freelancer, you’ll be paying all of it. That’s 15.3% in case you didn’t know, double what you were paying as an employee.

It’s Hard to Transition Back

It can be very challenging to transition back to an employee after freelancing for a few years. I know because I was in the middle of employers and freelancers for years as a recruiter trying to make these deals happen.

While I think freelancing during a job search if you’re unemployed can be a smart move, if you’re considering freelancing for the long term, you’re going to have some tough questions to answer if you decide to go back to the traditional workforce.

Employers are going to be skeptical about your ability to fit back into a traditional role. They’re going to question why you are transitioning back to employee status and you’re going to have to make them believe that you’re ready to fit back into their world.

As you can see from this article, freelancing is very different than being an employee and this is going to be a serious concern for most employers.

No Paid Benefits

There are no sick days, no paid vacation time, or paid health insurance benefits as a freelancer. You are responsible for all of this. That means making $200,000 as a freelancer could easily be the same as making $100,000 as an employee after you account for benefits, taxes, and the expenses of doing business.

In fact, you may find it difficult to take a vacation because of client and business needs.

It’s Lonely At The Top

This isn’t unique to freelancing. Many Chief Executives will tell you the same thing. It’s easy to feel isolated. Surrounding yourself with like-minded people who can advise you, coach you, and be a sounding board for ideas will be critical to your success.

Freelancing While Job Searching

I’m often asked by job seekers, “Should I freelance while I’m job searching?” Perhaps you don’t dream about starting your own business, but you’re in between jobs and you need money. You may be considering freelancing as an option. I say, “why not!”

If you’re unemployed, your first thought is probably how am I going to put food on the table and pay my bills? Money is and should be your top priority. But you probably don’t want to go down to the McDonald’s and flip burgers either. You want to use your skills and do the things you’re good at.

Freelancing is a great way to make some money in the meantime. Some people will tell you that it will take time away from your job search and distract you from finding your dream job. Here’s what I say to them. There’s no such thing as a dream job, and no one said that you have to make a job search your full-time job. There’s no guarantee that you will even find what you’re looking for anytime soon. Just ask the thousands of people searching for a job right now on LinkedIn.

Taking on freelancing gigs will show employers that you’re active and still doing relevant work. As a recruiter, I can tell you that gives you an edge over your peers who aren’t doing relevant work. And there are many of them following the bad advice of don’t get distracted doing freelance work. Most of us can rub our heads and touch our noses at the same time. You can do both.

What’s more is that during an interview, you’ll have current, relevant things to discuss because you’re still working. Freelancing is way more attractive to employers than being unemployed and out of work. Just be prepared to let employers know that you’re willing to drop the freelancing once you’re hired. But I’d rather explain that than the 6-month gap where I’ve done nothing in my field of expertise.

Is Freelancing Difficult

Most people you speak with (who aren’t selling you their latest freelancing course or technology) will tell you it’s very difficult when you first start. You’re going to experience feelings of uncertainty if you were used to a steady paycheck in the past.

You have to do a wide range of activities and work which means you are going to have to step outside of your comfort zone. You’ll need to learn a bit about sales, accounting, client management, project management, and more.

You’ll gain a lot of valuable experiences and grow way more than someone in a traditional 9-5 job, but it can feel overwhelming.

Fortunately, most people I talk to (and myself included) will tell you that something magical happens between one to two years of freelancing. It becomes easier. If you can survive that long, you may find freelancing long term is a very rewarding venture.

Is Freelancing a Good Career

Well, that really depends on your goals, your financial situation, and your risk tolerance. If the advantages listed earlier are attractive to you and you’re not afraid of the disadvantages listed, it could be a good fit.

Freelancing isn’t for everyone either. It’s much easier to do when you have the financial means to not stress out over money. While you can get started with next to zero start-up expenses (depending on what you are doing), money always makes it easier.

Starting off can be slow and having the financial wherewithall to weather that slow start can really help your mental health.

Overall, it can be a very rewarding career choice for many. You can avoid corporate politics, make more money, and even give yourself a raise when you’ve earned it (not when an executive feels they can’t get away with not giving you one).

How to Get Started as a Freelancer

Most people run out and create a website first. You don’t actually need a website to get started. A few years back I started a marketing agency with a partner. We ramped up to doing over $50,000 a month in sales before we even built a website. The simple fact is it can become a big time-suck and distraction when you need to focus on making money.

So here are some easy steps to follow if you’re getting started as a freelancer.

Determine what services you can offer to someone.
Figure out who your clients are. Are you selling to businesses or individuals? What problem do you solve for them? Where do they hang out? How will you find them?
Set your rates. Don’t sell yourself short, but if you’re getting started, be competitive. This will make sales easier.
Create a portfolio to help you establish credibility.
Join marketplaces like Upwork, or Fiverr. Many people join platforms like these to get started and then slowly build their websites and work on their own marketing. It will shortcut your ramp-up time.
Create a marketing plan. Will you focus on Social Media? SEO? A website? Figure out where to spend your time and efforts.
Do great work. Great sales start with great service.
Collect reviews. This will only add to your credibility along with your portfolio.
Get referrals. If you do great work, you can almost guarantee that you’ll create an army of salespeople telling everyone about you.

Cole Sperry has been a recruiter and resume writer since 2015, working with tens of thousands of job seekers, and hundreds of employers. Today Cole runs a boutique advisory firm consulting with dozens of recruiting firms, oversees Optim’s Resume Revision Service, and is the Managing Editor at OptimCareers.com.