When deciding what ONE Thing you can do for your job or business such that by doing it, everything else would be easier or unnecessary, consider this: national statistics show that many industries are beginning to experience a dramatic shift toward a freelance-driven workforce.
The U.S. Government Accountability Office recently reported that 31% of workers are independent. The Bureau of Labor Statistics also found that shortly after the recession there was a surge in self-employment. Major players like Elance say that as the trend continues, by 2020, more than half the workforce will consist of online contractors.
The changes are coming about because for many jobs, all that’s really required is a computer and an internet connection. This means some companies can decrease their overhead and reduce expenses by contracting out certain jobs. It also gives companies a larger pool of people to choose from for a project or position. For some, freelancing is necessary because their company is doing away with in-office workers. Others are striking out on their own as solo-preneurs in order to have more flexibility, diversity and control.
When you decide to leave a company and strike out on your own there are lots of things that will change, including health insurance, retirement savings, where you work and the hours you work. If you’re single and coming right out of college, these freelancing factors aren’t a huge deal. But for people with families, it can make one pause before pulling the freelance trigger.
This is possibly the biggest cause for concern for freelancers with families. Health care is only getting more expensive, which is why it’s a big chunk of an employee’s benefits package. If you have an employed spouse with health benefits that you and your kids can piggy back off of then this becomes much less of an issue. If not, there’s a lot to consider.
Additionally, you may want to consider getting umbrella insurance to cover yourself in the event that you cannot work due to injury or illness.
When you’re an independent contractor, there is no 401K or pension to fall back on and social security is never a sure source for retirement. You’ll need to set yourself up for retirement with a combination of an IRA, savings and investments. This means socking away a part of your income to cover what an employer would normally handle.
Much of the time, being a freelancer means that you’ll be working remotely – not in another company’s office. Having a workspace that’s conducive for work and efficiency is more important than you may realize. A well-designed workspace will allow you to focus, communicate with clients and have everything you need within reach.
Carving out a workspace within your home may be easier said than done. There could be an issue of physical space as well as the ability to separate yourself from family life while you’re at home. Kids, pets, television and chores are all distractors that could be difficult to block out.
You may have more flexibility to create your own schedule and work the hours where your productivity is at its highest, but online contractors need to prepare themselves for putting in a significant amount of hours. There are deadlines that have to be met and deliveries that have to be made. Many freelancers put in the extra time and effort because they are in a competitive marketplace with other contractors waiting for the opportunity to take their place. There’s also the issue of managing all aspects of a small business that can cut into productive freelance work. Devoting more time to work can mean less time with family, which is the exact opposite of what most new freelancers would like.
The independence provided by freelancing is an amazing benefit, especially for those that have a family, but you need to be very diligent about how you manage your time and focus on increasing productivity so you don’t end up working more than intended. One way to do this is by getting rid of distractions and doing away with multitasking. Trying to do two things at once has been shown to decrease productivity, not the other way around.
If you plan to get a loan for a home or car, being a new freelancer can limit your ability to borrow money. In most cases, a lender will want two years worth of tax returns from someone who is self-employed to verify income. Unless your spouse has income that can qualify on its own for the loan, you may want to consider holding off on switching to solo-preneurship.
The Stress of Managing Your Own Business
Work-related stress can sometimes creep into our personal lives, and when we’re running a micro-business out of our home the possibility becomes more likely. Finding work, keeping clients happy, collecting payments, being an accountant/project manager/marketer – it’s enough to make any on-staff job seem like a stroll down easy street.
Time blocking for managerial, marketing and accounting work will not only make your work day easier, it will also help you determine the rates you charge. One of the most frustrating parts of freelancing is doing the busy work that you’re not actually being paid for. But if you factor those extra hours into the cost of a project it won’t feel like you’re working for free.
If possible, hire other freelancers to manage certain aspects of your business for you. This will help you focus on your work and generating more of it so you don’t have to sweat the logistics of accounting, web design, taxes and more. The reduction in stress alone can be worth the extra cost for you and your family.
Are You Ready?
Once you’ve decided if you’re willing to tackle the previously mentioned issues, a world of business and capitalism awaits. You can grow your income and business to any level you desire, giving you the ability to accomplish your life’s goals.
Do you have any tips for those looking to march into the world of self-employment? Share your experiences below!