So You Think You Can Freelance?

The life of the technical worker has never been better; they have strong salaries, low unemployment, challenging work, and modern black t-shirt benefits like ping pong, stocked kitchens, and flexible working hours. That doesn’t mean it’s perfect though and the media continues to detail the upward freelancing trend in the marketplace predicting 40% of the workforce will be freelancers by 2020. Will we be 100% freelance someday? Of course not and I suspect these stories are overplayed as I would have expected TaskRabbit to be in Minneapolis in 2014, or 2015, 2016, please give me TaskRabbitMPLS in 2017!

I think freelancers are wonderful for tech needs and I use them often for systems, DBA, and IT support work; any area where the level of expertise I need is greater than the skill set of my team or more commonly where resource constraints exist. It gets work done fast, done right if properly managed, and allows us to learn and scale simultaneously.  My past position in corporate IT even drew me to this model with hiring for full-time positions by starting as a contractor for 3-6 months as a test drive for both parties. Hiring is hard and if the super-tech HR systems for talent identification aren’t in place I would much rather do a contract-to-hire then do a straight hire; I think it is fairer to both parties as it allows time to feel each other out.

Okay, Okay. So you think you can freelance in the tech scene? I bet you can! If you are considering a move then here are some considerations for you to bring into your brain-space when you are making the choice.

  1. Why do you want to do this?
  2. What do you do well?
  3. Who do you know?
  4. How do you plan to charge?
  5. Are you a business?

Why do you want to do this?

Tech life has never been better. The marketplace is strong, tech is central to most of the domains out there and the offshore focus from the aughts has withered on the vine for most of us. Techie life for the full-time worker is solid, so how could it get better? For some its roles and responsibilities and career growth at your current employer but perhaps the grind of your workplace has reached a tipping point and you want to go independent, either for the chance of higher earning power or just to do something new and interesting. Whatever the circumstance know your why.

For me it was the opportunity. I had come back from my experiment in the wine-making world and joined my buddies startup to run the tech but our funding was so low I had to compliment my income with some side work. That’s what led to me starting my consulting company and 8 year run as a consultant. My why was opportunity and taking a leap.

What do you do well?

Its so important to know what you do well and what you don’t do well and then how you can market that story in your new venture. Are you an expert in a legacy stack like ColdFusion? Are you a user experience ninja? Product management, MySQL DBA, architect, AWS, training, etc. There is something you do well. I was raised in a project shop that worked on large accounts in e-commerce, CRM, CMS, and custom dev so I was able to consistently touch diverse areas and was always involved in the client meetings because one of my core skills is the ability to speak to the business and tech. When I started consulting I looked for projects where I could help be that bridge and lead the product/project to launch.

Related to this is what you don’t do well or what you don’t want to do. While I’m good at diagnosing the root cause of an issue I don’t support. I prefer spending most of time with the big picture view rather than being heads down all day coding. Most in our field are the opposite, figure out which you are and look for clients, roles, or contracts that fit your style. There is always more demand and flexibility for the heads down roles then there is for leadership roles and it’s a different sales strategy as well.

Who do you know?

So, really, who do you know? Also known as how are you going to find work? I was fortunate that my friend suggested I walk the path I did, he is much more of risk taker than I and saw that the risk was actually low and the need was high out there given my skill set and network. And he was right because a majority of my clients were either past colleagues or former clients! If you don’t think you have the network for that then you should consider focusing on contracting. In my terms, contracting is when you work with a recruiter or placement agency to find you contracts of variable length and compensation. That is how the majority of independents work. It’s a trade-off, outsourcing the client acquisition for a fee to the recruiter. My experience was as a consultant, again in my terms, that was where I found the client and made the sale either on a bid or time and materials basis, no middle person. The client acquisition process for a consultant is long and expensive but the hope is that your investment pays off for both sides via a long-term relationship measured in years and the financial upside is far greater.

A talented freelance coder easily can earn $100 to $200 an hour. –wsj.com

How do you plan to charge?

If you’re a contractor you will be talking in terms of rate. There are two points of negotiation there, the rate you are paid from the recruiter and the rate they charge the client. Your challenge is to understand the difference and work to know all the data. That delta between the rates is what the house takes and the recruiter may be incentivized to maximize that gap (often the case). Recruiters are well versed is discussing rates and odds are you are not; expect to feel some level of discomfort the first time you explore this area, it’s okay, work through it. One of my first experiences was where a recruiter was trying to pay me $35/hour and at that time I didn’t know rates but I knew it felt really low for my level of self-perceived talents! I ended up passing because it just didn’t feel right, eventually you’ll learn rates. Also, there are shops that are transparent with their practices and will just tack on a flat fee to your expected rate…if I were contracting that is who I’d work with. In Minneapolis that would be a shop like DevJam.

If you are a consultant you have more options. Rate or time and materials is common and I would bill monthly. Over time my rates got quite high and some clients wanted a price break and for them I offered blocks of hours that they could purchase at a reduced rate, this worked because I was prepaid and was willing to take in a bit less for a happier customer and reducing the rate of payment default. Earlier in my career I worked more on a project basis where I would bid on work with written proposals. That is normal for most consulting shops of any size but given my solo focus and lack of interest in growing into a consulting shop I moved away from those. Either way you will have times where you are uncertain if you can charge a certain dollar amount or if you should discount in order to ‘secure’ the work. To that I say good luck, it takes reps and resolve and there isn’t a crystal ball; just know what you are worth.

Are you a business?

You better be! My dad owned a bar and restaurant when I was growing up and Minnesota had Dram Shop rules that made it a bit too easy to bring lawsuits against providers of alcohol.  My father let me know the importance and necessity to separate business assets from personal ones. You won’t be subject to the level of risks as a bar owner but you should still protect yourself and besides its easy. Go to your state’s department of commerce website and register yourself as a LLC. Yes, you can overcomplicate it and go to Delaware like the startup sites will advise but why make it hard. I advocate to keep it all easy; spend the $50 and come up with a basic name that won’t cause embarrassment. I used JD Laboratories because my first two initials where “JD” and I had a chemistry degree in addition to computer science so I thought that made me sound smarter, perhaps, who knows it was way back in 2004!

Next, use a credit card specifically for business expenses, it’s so much easier when you do bookwork. You can also set up a business banking account if you want or use Quicken, Quickbooks, Freshbooks, etc for invoicing and tracking your P&L (Profit and Loss). This can easily be used to fill out our schedule C on a tax return. You could go with a S corp and do a corporate tax return but IMHO its much more a pain then it’s worth unless you have employees and real growth potential…but this is just to be independent!

Good luck with your endeavor. I had 8 years of consulting that were professionally enriching. In the end I went back to the workforce as I was more intrigued with the roles and responsibilities part of the equation that larger orgs offered. But consulting bought me a house and my masters in software engineering, brought 3 startups, offshoring experience, travel and a ton of pride at being self-employed.

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