When people look to make a career change, often it is not what they do for a living, but all the pressures around it. As such, many people choose to go freelance rather than stay working in full-time salaried employment.
They see the advantages that make freelancing or contracting such a successful change of direction for many - working in their field, doing what they love and all the while dictating how their working lives are shaped. They also see the incredible array of freelance opportunities in the employment market and available through the internet (which also sometimes allows even more freedom through working from home); and the advantages of flexible working hours, choosing your own assignments and career path, being your own boss and finally, exceptional financial rewards.
All of these exciting prospects are no doubt true for many, but it is worth stopping for a minute and considering some of the downsides of freelancing as well. Firstly, although flexible hours mean you can choose when you work and when you go on holiday, it is also the case that you might go through periods of no work at all. Can you be sure you will secure enough contracts or freelance work to keep you financially secure? Are you certain there are enough clients out there that need your skills? Freelancers, particularly when starting out, need to be prepared for long periods where they are searching for the next job. This can often be a test for your confidence in your abilities and your new career path as a freelancer! Indeed it pays to always keep some savings just in case this happens, and to be extremely pro-active in searching out new work.
Indeed, this leads to the second issue for freelancers. Whilst it feels like a massive advantage to be your own boss, there are also pitfalls. Work is not going to come to you. You need to be proactive in getting yourself out there, networking, sniffing out jobs and clients. You are also the only one liable for the job. The buck stops with you. You live and die by your reputation, and you alone have to deal with annoying or annoyed clients.
You also need to be disciplined. With no one to look over your shoulder and with kids / internet / TV / spouse in the next room if you work from home, you have to be certain you can make time and space for your career and your clients. If you are easily distracted you should think long and hard about freelancing.
Finally, although freelancers can earn double the rates of the salaried worker and can gain significant advantages in the tax system because they run their own business, the nature of freelancing means that freelancers need to take care of their own taxes, NI contributions and Limited Company admin. This can be tedious and time consuming and get in the way of all the advantages of contracting - so much so that a number of companies have come up with innovative ways of managing this admin for contractors and freelancers. These are known as umbrella companies, but even they require expenses forms and time-sheets. A more recent innovation for freelancers is an Employee Benefit Trust, which manages all the admin and tax issues and allows freelancers or contractors a massive return on their earnings compared to umbrella companies. Nevertheless, all these issues require careful consideration before embarking on a freelance career.
If you are able to handle all these possible disadvantages, and are aware of the pitfalls, contracting or freelancing for a living can still be an incredibly rewarding way to work.
The Bedouin Group offers Contractors Umbrella Company alternatives and increased earnings retention.