It’s such an amazing time to be alive. Technology has made it easier than ever to start a business, generate an income online and even work for yourself full-time.
And the world is rapidly changing to become a freelancer dominated workforce. Last year, a Freelancing in America 1 study found that freelancers will make up over 50% of the US workforce by 2027. There are a number of benefits for freelancers (which we’ll get in to), but it’s also great for businesses. Hiring a freelancer means you can hire the right person, for the right job at the right time. This is often a lot more cost-effective compared to paying a full-time employee, their rent, office supplies and benefits.
NOTE: In this post, I’m going to use the term “freelancer” to refer to any type of independent worker be it a freelancer, consultant or coach.Freelancers will make up over 50% of the workforce by 2027Click To Tweet
Naturally, this is very exciting, but before you make the leap to becoming a freelancer, consultant or coach, let’s discuss the pros and cons of becoming an independent worker.
THE PROS OF WORKING FOR YOURSELF
Let’s start with the fun stuff…
1. More freedom
One of the biggest benefits of working for yourself is the added freedom and flexibility to work on your terms:
- Work WHERE you want. Last year we spent 5 months traveling Asia while working remotely for clients in the US and Europe.
- Work WHEN you want. More and more business are employing and contracting workers from different time zones. The 9-5 culture is slowly dying and employers are becoming more comfortable with the idea of paying people to work when they want as long as the work gets done.
- Work HOW you want. Whether that’s on a laptop at a co-working space in Bali or at your home office where you can be close to your spouse and kids.
For me, this was one of the biggest motivators to quit my job and work for myself. I didn’t want to be tied to an office and working for “the man” all day. I wanted to work on my terms and be my own boss, only accountable to myself.
2. Diversified (and more) income
While working as a full-time salaried employee comes with the added security of a stable income, when times are tough and businesses need to save money, one of the best ways to do this is with layoffs.
When you work for yourself, your income doesn't come from just one customer or client. It (more than likely) comes from a few or even dozens of different clients and even revenue streams.
So even if you lose a big client, you have a number of other clients and source of income you can fall back on. Compared to if you lose your job and this is your only source of income, this could be a big shock to the system.
While I make the majority of my income from consulting, I have a diversified income and earn money from a number of sources:
- Bigger clients who pay me anywhere from $2-6k per project.
- Smaller clients who pay me a few hundred dollars for “ad-hoc” support.
- Product sales of my ebooks and online courses.
- Affiliate Marketing, which is where I earn a commission for promoting products like Pipedrive (affiliate link).
- Sponsorships of my newsletter or podcast.
And because I work for myself, my income isn’t fixed. So if I work really hard, I often get rewarded for it by earning more that month. Compared to when I had a full-time “job”, if I worked really hard when working on a big project, my income would usually stay the same (unless you get a bonus).
3. Work on your goals
Finally, another massive benefit to working for yourself is that you get to work on the things you want to work on. There’s no boss telling you how to spend your time and if you don’t want to work with a particular client because they’re difficult, you don’t have to (I often turn people away if there isn’t a good fit).
There’s a common saying that:If you don’t work on your own dreams, someone else will hire you to build theirs.Click To Tweet
And it’s so true!
I used to get frustrated when people would tell me what projects to work on when I didn’t believe in the project itself. Or when I’d have an idea but it would get shut down by other people.
Working for yourself means if you have an idea, it’s up to you to make it happen and there’s no manager or red tape standing in the way.
You can work on the things that you enjoy, that make you happy and earn a living at the same time.
THE CONS OF WORKING FOR YOURSELF
Okay, so working for yourself sounds great. But there are a few drawbacks…
1. No guaranteed income or predictability
This was the biggest concern for me when I quit my job to work on my business full-time.
The nice thing about a salary is that you get a guaranteed deposit into your bank account every week/month. As long as you show up to work and do your job, there’s not a lot to worry about. Compared to when you work for yourself, there’s usually a lot less certainty.
If you take a few weeks off to go on holiday, you’re not working with clients or bringing in new sales during this time and you're not getting annual leave paid out either.
Or if you lose a big client, your income could take a hit.
My work is particularly project focussed. In other words, I do very little retainer work with ongoing clients (in fact this is something I’m now trying to change).
And this is why you need to be constantly on the lookout for new clients in order to replace the old ones. This brings me nicely on to my next point…
2. Finding and selling to clients work
In order to succeed as an independent worker, you need to have some ability to sell. Regardless of what you do, whether you’re a designer, developer, accountant or consultant, in order to make money, you need to be able to show people that the money they have is worth investing in your services.
You can be the best developer in the world, but if you can’t sell, you may as well quit right now.
And like I said, this needs to be an ongoing exercise. In order to make your income more sustainable, you need to be constantly finding and selling to new clients.
For a lot of new freelancers, this is the most uncomfortable part of working for yourself. And it can feel weird going from a job where you spent all your time doing the work and now you need to spend time finding work (because I track my time, I can tell you that about one third of my time is spent finding and following up with prospects trying to turn them into paying clients).
3. Paying for your own expenses and benefits
And finally, working for yourself means you have to pay your own way and support yourself. This means paying for:
- Office rent.
- Physical equipment like your computer, phone, keyboard etc.
- Software and tools like G-Suite, Dropbox and Xero.
- Accounting services.
- Income protection, health insurance, professional indemnity cover and other forms of protection.
- Sub-contractors you may need to hire.
This is all stuff that is usually paid for by an employer that you need to cover when you go out on your own. These kinds of expenses need to be factored into your calculations when you are working out how much you need to earn.
And if you have a nice comfortable job, think about all the things you might have to give up. Maybe a company car (and gas), your phone bill, expense account, retirement contributions and annual bonuses.
WILL YOU JOIN THE REVOLUTION?
As you can see, there are pros and cons on each side of this equation. Working for yourself is great (and I wouldn’t have it any other way). But it’s not for everyone. And before you make the leap to becoming an independent worker, take some time to consider what you’re giving up and how you’re going to deal with the extra expenses. Do some homework and make some calculations on what you need to earn to cover your costs. Not just your business expenses, but personal things like paying for your mortgage, groceries and gas.
If you’re interested in learning my system for making money online as a “virtual consultant”, then check out my How to become a “virtual consultant” program.
- Source: Upwork.com. This study, conducted by independent research firm Edelman Intelligence and commissioned in partnership by Upwork and Freelancers Union, surveyed 6,000 U.S. workers to analyze the size of the growing freelance economy and the major role freelancers play in the future of work. In fact, based on this year’s findings it is predicted that the majority of the U.S. workforce will be freelancers within a decade (by 2027). ↩