It takes a lot of confidence and guts to give up a full-time waged position to launch a career as a freelance marketing or PR consultant. Many people either start doing freelance work in their spare time, or make the leap after they’ve been made redundant.
It can be hard to know where to start. I was made redundant 11 years ago, and had already started making contacts and doing freelance work in my spare time. I had been re-thinking my career for some time so I was fully prepared to make the leap.
However, there’s so much that you don’t know when you start out as a freelancer. Do you set up a website and social media first? Where do you even find clients? There are many questions that run through your head.
I’ve put together a full guide on setting up as an independent freelance consultant, and creating a business strategy that ensures you have a long and fulfilling career. This is part 1 of the series and covers the basics of how to actually get up and running.
1. Think about what you offer
What are your core services and skills? Work out how they help businesses, and ultimately why someone would buy them from you. What value are you offering to that business? You should come back to this every year and refresh your whys and hows, as your skills grow as your business develops.
2. Admin and business set-up
Take some time to research how you want to set up your business. Many people start off as sole traders, then perhaps set up a limited company if they feel it would benefit them at a later date.
The Government’s website is the best place to start to ensure you have all the correct information about setting up as a sole-trader or limited company. There are pros and cons to both ways of setting up a business, but being a sole trader is by far the easiest initially in terms of admin and accounting.
3. Think about your accounts
Even if you have no idea how to do your accounts when the time comes, make sure you get organised from the beginning. This can be as basic as keeping all your business receipts in an envelope and entering all your incomings and outgoings on a spreadsheet. If you don’t do this as you go along it can take a VERY long time to dig through all your bank statements and shaking old receipts out of bags to put together your accounts.
There are many good digital cloud-based accounting software option now, so it’s worth looking at Quickbooks or Xero. Find a good accountant who can ensure your tax return (and company accounts if you’re a limited company) are filed on time correctly.
Keep on top of your bookkeeping weekly and you’ll be fine!
4. Equipment – what do I need?
You will need a decent quality laptop or desktop computer to work on, so if there’s an investment to be made, I would suggest it’s here! Most people already have a home computer, so it’s absolutely fine to just start working using the equipment that you have. Do not go and buy loads of new expensive computing equipment on a credit card – you’re probably better to earn the money before you start spending it!
If you’ve never invoiced anyone before, it can certainly be daunting. However, invoices are best kept basic – you can get set up either in a Word document, or using a template in your accounting software. The important information to include is:
- Client name and address
- Your business name and business address
- Outline of what work the invoice covers and the month/ date of work
- How much money is owed
- Payment terms (this should already be agreed with the client before the work began)
- Your bank transfer details (account name, account number and sort code)
6. Know your rates
Before you agree work with a client, you need to have an idea of what your hourly or day rates are. The best way to do this initially is to find out what other freelancers charge. A freelancer’s day rate will always be more than a waged salary divided into a day rate, because it also covers their tax, pension, holiday and sick days.
It’s fine to be flexible with your rates, but always know what your lowest rate would be and stick to it.
7. Get your finances in order
It’s a huge leap to make the move from a regular salaried wage, which is paid on the same date every month to the life of a freelancer, who has to regularly chase invoices. So, it’s time to get organised with your money. When you do get paid, make sure you allocate some of it to savings for tax and emergencies and decide how much you will pay yourself.
When you are properly up and running, it’s a better idea to pay yourself a regular wage on the same date every month, keeping anything that is left over for tax and NI payments, holidays and quiet times.