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Should I Become a Freelancer or Consultant?

Should I Become a Freelancer or Consultant?

My Top 10 Reasons Why You Should and Top 10 Questions to Ask Yourself before Trying

Your boss is just so aggravating you want to choke her, or perhaps your job is mind-numbingly boring, or maybe you’ve just had enough of your employer’s arbitrary workplace rules. Wouldn’t it be awesome if you could tell them where they could stick that job, and still be able to pay the mortgage and put food on the table? Is it time to strike out on your own?

Why Be an Employee?

The above scenarios notwithstanding, employee positions do offer important advantages. The main ones are:

  • You don’t need to hunt for work, a.k.a. market yourself;
  • As long as you haven’t been let go, your paycheck comes regularly, whether you had work or not;
  • Your employer covers his portion of your payroll taxes (Social Security, Medicare, and Medicaid); and
  • You usually get benefits such as subsidized medical insurance, paid time off, and paid sick leave.

Especially this last one can be important if you ever suffer an extended illness.

What about Job Security?

A self-employed friend once told me that as a freelancer, he felt like he wakes up each morning unemployed, and has to find work to make sure money comes in. In fact, the biggest advantage people mention as an argument for remaining an employee is job security. But, is this really true?

Over the past decades, the US job picture changed dramatically. Gone are the days when a worker was hired for an entry-level job, had a 30-year-plus career with the same employer, and retired with the proverbial gold watch and guaranteed pension benefits. Now, companies downsize on a regular basis, escorting suddenly-ex-employees to clear out their desk and leave the building. If lucky, they may get severance pay equal to a few weeks’ worth of salary. In rare cases, they may get some assistance in finding a new job elsewhere. Although this is not the case for most government jobs or tenured teachers and professors, those are a small minority of jobs in today’s economy.

This means employees’ job security depends on how well their employer maintains activity or grows, and whether or not the company tries to improve business results through downsizing. Since the individual employee usually has little control over these factors, job security, especially working for smaller businesses, is often more apparent than real.

Why Consider Freelancing?

There are many reasons to become a freelancer. My top 10 are that you get to:

  • Be your own boss – choose who to work with, what to work on, and where and when to work;
  • Control your time – no need to ask permission to take the day off when you’re burned out, or the afternoon off to see your daughter’s volleyball game or your son’s play;
  • Improve your compensation – as an employee, your employer pays a rather high overhead for your office, your benefits, and for managing you, plus he makes a profit on your productivity; with the lower overhead of self-employment and not having to let someone else profit from your efforts and talent, you get to keep much more money if you’re self-employed;
  • Reduce your expenses – less spending on commuting, business attire, dry-cleaning, etc.;
  • Reduce time wasters – shorter if any commute and no mind-numbing meetings;
  • Get tax benefits – there are deductions for the  self-employed an employee doesn’t get (though not all are worth pursuing);
  • Create your own workspace – no permission needed to get a larger monitor, a better printer, a more comfortable chair, or simply adorn your desk with a collection of family photos;
  • Work part-time during retirement – continuing to work past an arbitrary retirement keeps you engaged and sharp, and improves your finances; as a freelancer, you can continue at half-time or even less if you want, without running afoul of company policies;
  • Avoid office politics and co-worker dramas; and
  • Have a constant call to learn, grow, and expand your skills.

The above are those I consider most important, but others may motivate you more. For example, if you were let go and can’t or would rather not get another job, freelancing can be a great path forward.

Is Freelancing for You?

Here are the top 10 questions you should seriously consider before telling your boss what she can do with that job. If you answer any of these “Probably not,” you may want to reconsider; if it’s “Heck no,” make the best of being an employee, because freelancing is not for you, at least not yet.

  • First and most important, do I have skills that aren’t commoditized so I don’t have to compete with hordes of third world freelancers eager to work even for less than $3/hour?
  • Can I market my skills and myself effectively, commanding rates that cover my expenses?
  • Can I negotiate with confidence when I have little work, so I don’t undercut my rates and credibility?
  • Am I organized enough to keep good enough records for tax return preparation?
  • Can I manage multiple parallel jobs for different clients, meeting or beating all deadlines?
  • Do I have the self-discipline to keep myself on-task knowing I’m only accountable to myself (and my clients), and work long hours when work is available because some of the time it won’t be?
  • Can I maintain spending discipline, setting money aside when it comes in, so I can pay the bills when it doesn’t?
  • Do I have the fortitude to handle the stress of not knowing how much (if any) money will come in this month, let alone next month?
  • Can I be my own CEO, COO, CMO, CIO, and CFO (because at least at first I’ll need to do it all myself)?
  • Can I get along with, and communicate effectively with a wide variety of clients?

There are certainly more things to consider, but the above list provides a good basis for self-evaluation.

The Bottom Line

If you have marketable skills, and are organized, disciplined, self-starting, and willing to take calculated risks, being a self-employed freelancer can be a dream-come-true. If you’re not, and choose to go that route anyway, it can become a nightmare.

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