| Kudos to the author for sharing a breakdown and analysis that could be helpful to folks considering the leap to freelancing. I would add three related things to consider that were not highlighted by the author: 1. Business acquisition costs 2. Risks of being fired 3. Freedom to hire and fire clients Business acquisition costs -- One benefit of being a salaried employee is that you don't have to allocate resources to source clients to will pay for your services. A freelancer has to spend some of their own resources (time, money, energy) on “business acquisition costs” to maintain their work pipeline flowrate commensurate to the duration and nature of the gigs that they land. This has to be accounted for in the freelancing budget. Risks of being fired -- Despite best-laid plans, a freelancer may find themselves scrambling if a client contract ends earlier than anticipated. Freelancers are the first to get “fired” from projects that are downscoped or downsized. Therefore, freelancers have to expend more energy and develop more skills managing relationships and accurately “reading the tea leaves” than employees typically bother to do. It helps to have multiple simultaneous contracts so that if one terminates, some cash is still flowing in. If there is only one contract, a freelancer should start building and maintaining a work pipeline of even a few small projects. And, must bank as much as possible to build up a buffer. These are good practices for both freelancers and employees. The main difference is that most employees, unlike most freelancers, believe they have more job security than they actually do, and have to develop an action plan from scratch when they are fired. The only job security is recognizing the true nature of job insecurity and constantly acting to mitigating that risk. Freedom to hire and fire clients -- The two points above is to call out that a freelancer actually has two jobs: the work they are doing for clients and the work they have to do to run their own business. A freelancer who figures out how to run their business well gets the biggest benefit of all — the ability to “hire and fire clients”. Not interested in what a client is asking you to do, or feeling that you are generating more value than you are being fairly compensated for? Negotiate a new agreement or an exit with them and move to something better. Hear about another project that is really interesting to you? Expend the resources required to chase and add it to your portfolio of work. It’s the rarer employee that has this level of freedom to make the most use of their working hours, and it is literally priceless. |