A way of a freelancer
These days more and more developers decide to quit their current job and start their own company as a freelancer. The reason someone decides to make this step varies from person to person.
How or why do you decide to go freelance?
Here are some of the reasons I heard:
- the side projects: While working for a boss your side projects start taking up more and more time until at some point you come to the conclusion you could just quit your job and start working full time on these “side projects”.
- the boss: Some people just don’t like working for a boss and want to do things their own way. You want to decide for yourself how and which projects you take on and how you handle them, so you start working for yourself.
- the adventure: You like the adventure and the thrill that being self employed gives you.
- the hours: Some don’t like working regular hours and prefer to sleep-in and code at night. While others like the freedom of combining their work with their family life. Keep in mind that this is not something naturally to do, even as a freelancer you still have an employer or co-workers to take into account.
- the money: If you are your own boss, you keep all the money you earn yourself. So if you’re working these extra hours, you will directly see the result in your own wallet. But don’t consider yourself rich, try to build up a reserve and don’t forget those taxes!
- gratification: Some get a greater satisfaction when working for themselves.
- unemployed: It is possible you lost your job, you can’t find the job you want or want to do something completely different than what you were previously doing, but you can’t find a job at an existing company.
- the variety: As a freelancer you have the chance to work with lots of different people, in different types of companies and with different tools and techniques.
- the challenges: Working as a freelancer will give you all sort of challenges. To overcome these challenges can be very rewarding.
- the idea: You have that crazy idea that you want to build or sell. Since it isn’t available on the market, you decide to bring it yourself.
What challenges do you have to face? And how could you overcome them?
- the boss: As a freelancer you probably work for somebody, during a project he is your boss. But don’t forget that the other boss you are working for is yourself. Set goals for yourself, make a personal development plan, set a target for the end of the year. Keep yourself under control.
- the work: As a freelancer you are responsible for your own work in many different ways. If you don’t have any work, you are probably not making money, and without money you can’t continue your business. So you need to always have enough projects lined up to cover the bills and live your life.
But how do you find these projects to work on? Sometimes they just present themselves, but you will probably also have to look for them. Because working the projects you like best, wasn’t that a reason to start working for yourself?
Working projects just for the money is not a good idea. It might help you pay the bills right now, but will they make you happy? Probably not. And if you’re not happy, your not doing your best, you’re not enjoying your work and your employers will see this and probably look for somebody else in the future.Therefor always try to find work you like doing. It’s okay to work on projects you like less once in a while, just because you need to make that money.. Be aware, doing lots of these projects could easily become a downward spiral.
Always try to do the things you like, or at least try to do them in a way you can enjoy. Because by doing so, you enjoy your work, your work will be of a higher quality and your employer will notice this and be happy as well. What might result in future projects and word of mouth on new employers. (See the upward spiral there?)
- the business: As your own boss, you have to do more than just your work. You are no longer “just that guy from that department”, you are basically everyone. As I mentioned before you need to look for new projects so you have to do your “marketing” and “sales” yourself. You have to make your own website or design your own business cards, so you are also “design” and “public relations”. And at the end of the month you have to send an invoice to your customers and pay the bills you receive yourself, so you also need to do “accounting” and “finance”. Probably some skills you don’t excel in or even like doing..
Don’t be afraid to outsource these jobs to other people or look for easier tools to use. These people probably enjoy doing the work you don’t, and they will definitely do a much better job than you. Okay, there is a cost involved, but with the time you save not doing that job, you can do what you really like and sometimes even make more money.
- the money: What do you charge for your services? Although you might already have an idea what you could charge, it won’t hurt to look around you and check what other freelancers are asking for their services. If you don’t have any problem finding work or getting your quotations accepted, you might be too cheap. Or the other way around, if all your quotations bounce regularly, maybe you are overpricing yourself?
The advice I would give you is make a budget for yourself. What is the minimal amount of money you’ll need to live your life, pay the bills and what is your company prospectus?
If you know that, you can “play” a bit with your rate. Is there a project you would really like to work on and you know there are other people interested as well? Is there a possibility to close a contract for a longer period? Lower your rate a bit. Do you know you are the only expert they contacted? Don’t really like the project or you really don’t have time for it, raise it (a bit). As long as you keep a close eye on your budget and what other freelancers are asking, you should be okay.
- the knowledge: Just as in any regular job you need to keep learning and training yourself. As a freelancer it is very easy to keep doing the things you know best and run from one project to the other (similar project). If you have the privilege of working in teams or at larger companies its not hard to broaden your horizon, but I know some freelancers who do a lot of work on their own and basically are repeating the same trick over and over again. (Me included)
If you can’t learn during your projects itself, make time to learn in between projects. Attend a conference or go to workshops. Visit a meetup in your area, listen to a podcast while traveling to the office or watch a video during your lunchbreak. There really is no excuse to stop learning!
- the people: Working as a freelancer can give you the feeling that you don’t belong anywhere. A lot of times you start or work on a project and then it is over and you move along while the project continues without you. And when you are working at a company you are a temporary employee and only part of the team for a fixed amount of time.
One way to partly overcome this is to be active in your (local) community and participate in open source projects or become a member of Dutch Web Alliance 🙂 . Make all these people out there your colleagues!
A different approach
I’m not sure if freelancer is the right term for the way I work.
For the past 11 years I am self employed and I struggled with – and struggling still – with a lot of the challenges I’ve wrote down above. I quickly found out that working “by the hour” involves a lot of risks. You can save some money in your company with the idea to use it in the future for some kind of investment. But than all of a sudden you’re out of work or made a mistake accepting a certain project for a fixed price and it is all gone before you know it.. So I was looking for a way to prevent this or at least look for a way I could make money without working the hours.
The thing I like best is the start of a project. That spark of an idea, to create something out of nothing and to make it a success. But also the puzzle, how to solve a certain problem in a innovative or creative way. But when a project gets mature, I tend to lose interest a bit. At least in the day to day work and “maintenance mode”. But I like staying connected to the project in some way, to see how it grows, give advise from time to time and off course in the hope to make a lot of money one day.
So the way I come up with is to not only work for startup companies, but to also participate in them. There are a lot of people who have great ideas, but lack the technical knowledge to create and realise them. Hiring people to do this job can be very expensive. Especially for a startup because most of the time their end product is unclear (even more than your regular business projects).
Over the past couple of years I participated in 6 companies in different ways. For some I did not charge anything for the hours I worked in exchange for shares in the company. For others I gave a discount to my hourly rate in exchange for shares. And for one project I even invested some money myself.
Every way has its own advantages and disadvantages. Here’s why:
- hours for shares: While you are working, you won’t get paid. So doing this very early in your career as a freelancer is probably not the best idea, better wait till you have saved enough money to live for a couple of months.
It can be very good for the company your investing in. Because they don’t have to worry about your hours and the money they save, they can spend on other things such as marketing or sales. And it might improve creativity, because you are not worrying about the cost, your free to explore different solutions.
But be aware, I advise you to think this through before you start. Ask yourself what is it you want to get out of it? What is your return on investment? Personally I’m not always doing it for the money, investing in a company can also be a great way to learn new things or an adventure. But in the end you still have to be able to pay your bills.
How much time do you have or do you want to spend on working for this company? You could make an agreement that you only working X hours a week/month or not more than X hours in total in exchange for your shares.
- discount for shares: Personally I like this one the most. Instead of charging your regular rate, you give them a big discount and in return you’ll get shares in the company. This way you at least have some form of steady income.
- money for shares: if you were already planning on working (and getting paid) on the project this is basically similar to the first option. You make an investment in the company just like any other investor and in return you’ll get the shares. And after that you start working to earn back the money you just spent. This way you have a clear return of investment and the company might have that extra bit of commitment from you. But there is a more visible risk that you can loose your money if the company fails.
- hybrid for shares: and you can always make a hybrid deal out of it. The first X hours are free. After that you’ll get to charge your hours at a discounted rate and if the company reaches a certain point, you can start charging your regular rate. Be creative and find a way that works for you and the company.
A lot of companies (or entrepreneurs) I know are open for these kind of constructions. Because not only is it “cheap labor” for them, they get an expert on board that is concerned with the company itself, willingly to make that extra step and is less likely to leave the company (and take away valuable knowledge) overtime.
When you are considering doing this. Always take a close look at the contracts you are about to sign. Don’t hesitate to call a lawyer or accountant and ask for advise or act as second pair of eyes while reading the contract. For instance here in the Netherlands there are different tax rules that apply for shares under and over 5%. Before you commit to anything, check with your tax consultant what is the best way to acquire your percentage of shares.
Think about the time it will cost you, because I guarantee you it will be more work than “just working on another project”. You might think you can start collecting dividend after a year, without having to do any more work for it. But most of the times all profit in a startup is reinvested back in the company to accelerate growth, and a very big profit after the first year(s) is very rare. Most start ups are not sold within the first 5 years of their existence. So think of it as an investment, or consider it similar as stock trading. There is a lot of risk involved, but personally I find it totally worth it!