What Nobody Tells You About Freelancing – A Guide for New Contractors

While rewarding, the jump to self-employment can be hard. Let us make it easier for you with 10 important considerations in our freelancing startup guide.

Striking out on your own is becoming an increasingly popular career choice in the UK. According to the Office for National Statistics (ONS), the number of self-employed people has risen from 3.3 million in 2001 to 4.8 million in 2017, which comprises 15.1% of the total labour force. Clearly, freelancers are on the rise.

While the freedom and flexibility offered by the freelancing lifestyle sounds idyllic, the transition from a full-time job, a recently-finished higher study course or even a spell of unemployment can be a difficult one. With that in mind, this handy freelancing startup guide aims to point you in the right direction and ensure you don’t overlook any of the least glamorous but most crucial aspects of the business when it comes to setting up your own.

A freelancer checklist

With so many plates to keep spinning, it can be difficult to remember everything that must be undertaken in order to make a successful fist of this freelance malarkey. To simplify matters, the checklist below should keep you on the right track for taking your first steps into a life of self-employment and ensure you don’t veer off course.

Identify your market…

Knowing your intended audience is paramount for success in any business venture, but it can even more important when operating alone. With less time and resources to devote to both your marketing efforts and your client portfolio, you’ll need to ensure you’re targeting a market that will welcome and value your services.

…and market your identity!

Having pinpointed your audience, you’ll need to make them aware of your presence. Online is everything in today’s marketing terms, so a user-friendly, informative and engaging website is a must, while an active social media presence can also go a long way to raising brand awareness and spreading the word about your new venture. A portfolio of your work is also an effective way of demonstrating your abilities to those interested in your services.

Use freelance websites

With the rise in freelance culture, there have sprung up a number of sites dedicated to uniting buyers and sellers online. The competition may be fierce here, but they can be an excellent place to start your search and access a whole new database of prospective leads, rather than waiting for them to come to you.

Set your rates carefully

When starting out on the freelance scene, it can be difficult to know exactly how much to charge customers for your work. Will you operate on a per-project basis or set an hourly or daily rate? Get a good idea of what the current marketplace climate looks like by checking out your competitors’ rates, then set yours accordingly. Remember, undercutting with cheaper prices might be tempting, but could leave you overworked and out of pocket in the long run.

Personalise everything

With freelancers interacting with so many potential clients on a near-daily basis, it can be tempting to create templates and use the same pitch for multiple leads, time and time again. While it might be acceptable to replicate certain messages for like-minded targets, you should still take the time to personalise every email you send to show the recipient that you are serious about working with them and willing to devote the time to securing their custom.

Accrue customers and encourage referrals

Once you’ve landed your first few customers and completed a job or two, don’t rest on those laurels. Ask your customers to give you a review which you can use as valuable marketing material, while encouraging them to refer you to their colleagues or acquaintances can be a superb way of driving business and increasing outreach. If you perform every job with the same, care attention and ability you’re capable of, your client list will swell in no time.

Sole trader or limited company?

While securing income is one of the most crucial aspects of starting out as a freelancer, looking after your outgoings is equally important – especially in relation to your tax obligations. When registering with HMRC, you’ll need to decide whether you want to become a sole trader or set up a limited company. The former might be less stressful and involve reduced paperwork, but the latter offers impressive financial benefits and greater protection.

The umbrella alternative

A third alternative to the two options listed above could be to contract the services of an umbrella company. These professional firms essentially “hire” you as an employee, issuing you with a wage, offering you statutory benefits not normally available to freelancers (such as holiday pay, sick pay and maternity or paternity leave) and handling all of the difficult administration, in exchange for a weekly or monthly fee for their services.

Budget sensibly

Regardless of whether you opt to work as a sole trader, set up a limited company or go with an umbrella company, you’ll need to flex your budgeting muscles. Freelancers are far more in charge of their own finances than employees of other companies, meaning you’ll need to set aside funds for stock and equipment, premises on which you’ll work, your tax obligations, your personal pension and any other costs which might arise. An umbrella company can take the strain off some of these duties, but a prudent approach will always serve you well.

Insure yourself

One other financial overhead which is often overlooked by freelancers new to the scene is insurance. As well as protecting your assets, it’s quite probable that there are certain other forms of insurance demanded by your job, depending on the industry in which you operate. Professional indemnity and public liability are just two such policies which you may be required to take out, so make sure you cover yourself in the face of any eventuality.

Ready to compare umbrellas?

Our freelancing startup guide should help with most of the essentials in your journey to self-employment. For everything else, you can rely on an umbrella company. With Umbrella Supermarket, you can compare leading umbrella companies in minutes and get quotes tailored to your monthly income. Give it a try today to find the best deal for you.

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