For many considering an entry into the Freelance Nation, mental ping-pong ensues. Should I stay in or leave my ‘comfortable’ corporate job. Will I be able to make enough money doing what I love as a freelancer? Is the freelance lifestyle right for me?
Waiting for the 6 a.m. commuter train for your downtown job is NOT the right time to make your decision. Neither is working on a side freelance project that stimulates you and makes you feel passion for what you’re doing. Both are emotional extremes. And it’s never good to make emotional decisions.
Freelancing is a daily grind that comes with ups and downs – forcing you to be steadily situated smack dab in the emotional middle. If you think you’re ready to consider taking the freelance plunge, find some quiet time to yourself and analyze the one major factor that should go into your decision: Money.
It’s easy for professional athletes or actors to say, “I don’t do it for the money,” when they’re making $20 million per year.
But for freelance business professionals, money is central. Why? Because we have to keep a roof over the heads of our family!
My standard of living was typical for a budding freelancer before my business took off. You know the story – I couch-surfed in a friend’s apartment, worked 95 hours per week and ate macaroni and cheese while finding my way.
I simply didn’t want to be a corporate person.
I saw ladders that needed to be climbed, salaries that increased at the same rate of the cost of living, timesheets to be turned in, and two or at most three weeks of vacation per year until 65. No thank you! I wanted to make my own hours and travel when I wanted to. That doesn’t mean corporate America isn’t a good place to be, but it wasn’t for me. And my guess is, if you’re reading this, it’s probably not for you either.
Reduce Your Expenses
So it came as no surprise that I didn’t mind cutting my cost of living as a way of financing my business. I chose to give up my city apartment, sell one of my cars, and work a lot of long hours in the beginning. I moved to Florida where the cost of living was cheaper and found a single-bedroom apartment after living with my friend for a while. All in all, I cut my household overhead in half. That meant I could make half my salary without digging into my savings.
I know that’s a big cut. The good news is you can still start a business if you can’t drastically cut personal expenses, and simply grow the service more slowly.
Keep Your Day Job
Like I’ve mentioned in previous posts, it may not be the most exciting advice to keep your day job while you grow your freelance operations, but it’s the most practical. Continue to expand your service on the side while working your day job and make the switch when you know you can afford to pay your personal bills.
Keeping your job allows you to save all of the extra income you can, taking pressure off your savings account when you do decide to take the leap.
How to Know When It’s Time to Jump In
You have to prove financial feasibility. This will mean different things to different entrepreneurs, but the basic formula should be similar.
Let’s say that the bills to run your family’s household add up to $3,500 per month. You shouldn’t quit your day job until your side business is making that much, or close to it. If you have a spouse, and you both include her or his income when paying the bills, factor that in too.
If you are a long way off from your monthly expenses, there are two ways you can close the gap:
Put more energy into your side business, eventually helping it earn more revenue, or cut down on your monthly expenses by making smart sacrifices.