A recent survey I did of my Twitter followers showed that the majority were freelancers.
Freelancers are not employees, they’re not really running a conventional business which they can leave and still make money from, but they’re somewhere in between.
I myself make a large chunk of my income right now from freelancing but it’s not really the ultimate goal and it doesn’t appear on my Definite Major Purpose.
So, why do I do it and more importantly why should you?
There are a whole raft of questions when it comes to freelancing as a form of running your own business so I’d like to answer a few here.
If you’re a freelancer yourself, depending on the field you work in things may differ from my own sector which is Software Engineering.
Lets start with the first question…
Do Freelancers Really Run Their Own Business?
This is a grey area, but let me answer simply. Technically ‘yes’ but in reality ‘no’. Let me explain.
Technically I created and own Tycoon Software Ltd for my freelancing and some other work, which is a UK limited company. I’m the director and the same company laws apply to me as for any other UK company.
For these reasons it’s technically a business, no doubts. However, consider a well structured conventional business.
- The owner will still earn Passive Income whether they’re working or not
- The potential for growth and to earn money is often near limitless
Now consider my freelancing company.
- If I don’t work I don’t get paid, ever.
- The potential to grow and earn money is limited to my ‘hours worked’ x ‘hourly rate’
I could always take on employees which would resolve the above issues, but then I wouldn’t be freelancing, I’d be running a conventional company.
For those reasons I don’t consider freelancing to be truly running a company. Although if you ask me when I’m knee deep in paperwork my answer may be different.
Is Freelancing Better than Being an Employee?
This is another grey area, mostly due to the wooly definition of ‘better’, but it’s why it’s a good question and one worth discussing.
If you’re in an industry which allows freelancing, you have few commitments, you’re not scared of a lack of security and you’re bored of the daily monotony then ‘yes’ freelancing is better than being an employee.
For those who like security (and I use that word loosely), have family commitments, are tied to one location and want a career then ‘no’, freelancing might not be the right move.
I may be biased but there are lots of advantages to being a freelancer:
- Tax advantages – paying less and claiming expenses
- Financial flexibility – pay yourself what and when you like
- Working flexibility – work less hours if/when you fell like it
- Living on the edge – no employee rights and short notice period
- Ltd/LLC companies – learn the basics of how to run a company
- Lack of rules – not having to conform to all of the client company rules
- No holiday allocation – take whatever holidays you like or can afford
- Company politics – not having to be involved in or care about them
- No appraisals – if you do well you stay, if not you go, simple
- Business mindset – freelancing forces a positive mindset change
- Far more money – very lucrative if you can find the work
The list goes on and some people might not see them all as advantages, but I do.
People often ask me what about lack of sick pay? Even after my Recent Stay in Hospital I’ll still be financially much better off this year, so not an issue.
What about lack of company pension? I don’t trust pensions and I don’t want one. I’ll make my own investments thanks because I do trust myself.
What about lack of job security? My current client recently slashed their staff numbers, many of the permanent staff went and 90% of the contractors were axed. It was a real shame but I’m lucky enough to still be there. No-one nowadays has job security.
So called security is always expensive though, remember that. Whether it’s pensions, insurance, loan payment protection, income protection or job security, someone somewhere is making money from it at your expense.
Nothing worthwile was ever achieved by people seeking security and stability. Moving out of your comfort zone is the only way to progress.
Where Does Freelancing Fit Into Your Success Plan?
Although freelancing may not be part of your overall business goals, it makes a good step between permanent employee and running conventional businesses.
You’ll learn a lot as a freelancer about the different business mindset required to live on your wits rather than being entirely dependent on your employer.
Freelancing is a natural step in the right direction if you want to Achieve More in Your Life. I wouldn’t recommend freelancing as a long term goal, because you’ll always be limited in what you can earn and you won’t achieve much if any Passive Income.
However, moving away from the secure weekly pay check and into the more uncertain but potentially more lucrative world of freelancing is a good move towards Starting a Real Business.
If your professional field allows it and you fit the criteria, go for it.
Feel free to leave a comment if I’ve missed anything or you’re a freelancer yourself and have different issues in your particular field.
Thanks for reading.
