One way and another, I’ve freelanced for almost half my career, as both a mid-weight strategist and now at strategy director level. So if you’re thinking about jumping from agency or clientside into freelance in 2024, take some financial advice from someone who has been there and done that:
- You need to earn more than your current salary in order to enjoy the same income
There are business expenses that can’t be passed on to clients like insurance, accountant’s fees, website hosting, tech and software, CPD and professional memberships. And HMRC is stricter about what constitutes claimable expenses than your employer probably was.
Most importantly, freelancing requires you to make your own pension contributions, there’s no extra 10% automatically going into a workplace pension every month. And if you had health insurance with your job, that’s an extra expense too.
Yes, operating as a limited company might reduce your tax and you can claim an allowance for working from home, but everything above will almost certainly outweigh that.
- You won’t be earning for every hour that you work
You might expect to have to spend some time on accounts, invoicing, chasing unpaid invoices and general admin, but actually getting the work can also rack up unbillable hours, especially if you’re starting out. ‘Dropping’ into a business for a get-to-know-you chat could eat up half a day if you’re traveling in from home. Project proposals need agreement upfront about how much input you’re willing to provide before the clock starts ticking. The amount of time you invest in a relationship with an agency or just winning a piece of work should reflect the value of the work, the risk you’re willing to take and the time/capacity you have available.
- You won’t earn the same amount every month
Some projects can’t be billed until they’re complete, some businesses ignore agreed payment terms and pay on 60 or more days (this morning I finally got paid on an invoice that had hit 75 days), some months will be flat out busy and others quiet. If your personal responsibilities demand a predictable income, or you don’t have some savings as a buffer, freelancing probably isn’t for you.
In the UK I’d highly recommend working where possible through YunoJuno and/or The Allies, who in slightly different ways both act as freelancer/agency intermediaries or matchmakers and pay freelancers within 14 days, even if the agency hasn’t paid them yet.
- You need to actually find the work in order to start earning
You need a network of agency contacts who know you and your work and would consider hiring you for a project. You need to be willing to hustle, to send reminder emails, to post on LinkedIn and to generally remind people that you exist and would be perfect for their project.
If you don’t have a good network, loads of experience at what you do, thick skin and a flair for self-promotion, freelancing probably isn’t for you. But if you tick all those boxes, both the lifestyle and career benefits can be great.