By 2027, the majority of American workers will be freelancers. It's not hard to see why, from a corporate perspective. Freelancers and contract workers allow companies to be more agile and hire only when they have a specific need, while full-time employees cost thousands more in benefits each month even when work is slow. Freelancing offers advantages for workers, too, but the benefits must be carefully weighed against the costs.
Flexible working hours afford freelancers a healthier work-life balance and more control over the direction of their careers, but these advantages come at the price of increased risk.
Many freelancers are all too familiar with the concept of feast or famine, in which there's too much work or not enough. Completing work for existing clients makes it harder to find the time to prospect for new ones, and only the very best freelancers have a constant stream of work in the pipeline.
However, studies show that the majority of freelancers are going independent by choice, not as a last resort. According to research from LinkedIn and The Adecco Group, a leading HR solutions partner, 54 percent of gig workers choose flexible work because it's the best fit for their current needs and life goals, whether that means it's a beneficial career step, they want more flexibility, or they prefer project-based work.
While these independent workers may love the freedom and flexibility that come from being your own boss, there's a lot to consider before jumping the corporate ship. If you can contend with the following challenges, the freelance life just might be for you.
1. Clients cover your insurance.
As a freelancer, you'll need to find your own insurance plans--health, dental, vision, life, and disability. You'll also want to set up a retirement fund such as a Roth IRA, with tax breaks comparable to a 401(k). The true benefit of freelancing, though, is that you set your own rate; just make sure you're invoicing for enough to cover health benefits. Many freelancers don't mind paying for their own benefits packages because they still end up taking home more money.
2. Moneymaking means marketing.
Out of necessity, independent workers are marketers and salespeople. A full-time employer lands new clients and delivers them right to your desk. As a freelancer, it's your turn to bear this burden, and you'll find that doing so involves a significant amount of unpaid work.
Prospecting, networking, accounting, and administrative tasks are all vital to your success but amount to zero billable hours. However, as any marketing team will tell you, referrals are the best way to get clients. Ideally, as you do more and more great work, you can market yourself less as clients will sing your praises for you.
3. The hours are yours.
You might find you're working far more than 40 hours a week to try to keep up with client demands. You'll also find that taking time off becomes a choice between making money or spending money, and you'll need to work extra ahead of time to make sure you can afford the downtime.
As a freelancer, there's no such thing as a paid vacation, but there is such a thing as taking a month-long road trip and not getting fired from your job. Communicate your availability to valued clients, and they'll still want your work when you return.
4. You're the accounts person.
Freelancing is not for the timid. It's your responsibility to negotiate your rate, and even if your work delivers incredible value, you have to be able to justify the cost. Clients might occasionally want you to "just take a look at something" or "give it a quick glance," which is code for "do your job for free." Set clear expectations and ensure contracts are written and signed by both parties. If you find yourself spending months chasing after a payment, you'll be glad you did.
5. You're on your own.
Flexibility sometimes means cutting yourself off from co-workers, and you may deal with entrepreneurial loneliness. Many freelancers work from the comfort of home. Amenities include a kitchen and your own bathroom, a comfortable couch for an afternoon nap, and much more privacy than you would have in an office. While you won't miss your food disappearing from the break room fridge, you might miss the social aspects of office life. Take advantage of co-working spaces and new programs that connect contract workers with networking opportunities and other resources.
Freelancing has a lot of promise, and it offers you the most career control--not to mention the most lifestyle control. It's not for everyone, but it could be for you. Before diving into freelancing, it's a good idea to weigh the above considerations carefully to determine whether it's time to bid adieu to your W-2.