The Principles of Successful Freelancing

Now, when we think of milestones, we normally recall a large web project we’ve been involved in. Think of a milestone as a landmark towards your longer-term goals.

A typical milestone is to realize a situation where you’re earning more than your current salary within a year of going solo. There are some smaller milestones you can place along the way to see how you’re shaping up.

The first milestone would be having the ability to pay yourself enough to survive on. Let’s say that’s about half of what you earn today. Set a milestone based upon how long you believe it should take to reach this point—it may be a month, or perhaps three months, depending on your situation.

Now, let’s consider your return on investment, which is initially to reclaim all of those start-up costs involved in your transition to freelance life. These vary, of course, from person to person, but you should have an idea of how long this would take.

The third milestone is that of bringing home the same salary as you currently earn. Will this take six months, or nine months, or even longer?

Write down your milestones and refer to them over the coming months—you’ll be surprised how quickly you reach them, exceed them, and find yourself setting more goals for future success!

Planning the Start-up Shopping List

An important element of this big planning phase you’ll need to do before (or while!) you’re making your move to freelance is to start preparing yourself for some of the expenses you’ll be faced with over the first few months.

Now, I’d like to say there won’t be any costs, but that’s simply not true. However, I can say that shopping around for the best deals, looking for opportunities to swap services with suppliers, and staggering your expenses will certainly alleviate the sting of spending money when all you want to do at this stage is earn a little.

There are immediate costs, depending on your current situation, and then there are costs that you can delay for a while. The best method of allowing for these costs is to create a list, prioritize what you need in which order (based on your current situation), and then expect the higher end of the price range. That way, when those costs work out to be cheaper than anticipated, it’s a bonus for your bottom line.

“Must have” costs include:

• business card printing
• domain name registration
• web site hosting
• telephone costs
• hardware
• software licensing
• legal or licensing costs

“Should have” costs include:

• insurance for office contents
• income insurance or business continuity insurance (if you’re able to be covered)
• office equipment (desk, chair, light, filing cabinets, printer, and so on)

Ideally, you would cover these costs at the same time as the must-haves, but the reality is most people won’t be able to take such a budget hit in their first month of freelancing, so they can be slightly delayed.

Tip: Thrifty Bargain Hunting!
Don’t forget how much cheaper it is to seek out second-hand office furniture and equipment—you can find bargains through the likes of eBay, your local trading post, or used furniture stores. You can set yourself up with perfectly functional trappings at a fraction of the cost of all-new, shiny furniture.

“Nice to have” costs include items such as:

• new hardware
• dedicated servers
• magazine subscriptions
• industry association memberships

These would be great if you have the capital, but they can easily be delayed if circumstances dictate.

Through good planning and careful attention to your cash flow, these costs won’t have as much impact as they may seem to have now. We’ll go through finances in more detail in the next chapter.

Note: Leasing versus Buying
When it comes to any high-investment equipment you might need, leasing is a well-known method of improving your cash flow by paying a far smaller amount per month over the life of the lease.

Although the end result is that you pay more for the equipment than if you bought it outright, the benefits of having more cash on hand can be an excellent compromise. You’ll often be surprised at the small difference in final figures, and realize the benefit of being able to hand the equipment back or upgrade it at the end of the lease term.