Bryan Jinks blogs this month that it is important for Freelancers to think like a freelancer, i.e., not like an ‘employee’.
For Freelancers who are used to being employees, or people who take up Freelancing, it is crucial to understand the difference, or else face a terrible economic disaster (by dramatically undercharging).
He highlights two basic things to keep in mind. First, your charges (e.g., your hourly rate) must include all the overheads that are not mentioned in the salary or scale of an employee: taxes, benefits, business expenses, etc. A Freelance worker must pay these him or herself out of their billed rate, so the rate must be a lot higher than an employee’s rate for the same job.
The second issue is the importance of accounting for what may be sporadic gigs, and the overhead of finding gigs. A Freelancer must factor the work needed to set up the gig into the hourly charges for the work time.
The bottom line is that Freelance work is a business, and needs to be run like a business.
I note that part of the value of the Freelancers Union is that it provides not only advice on this topic, but also resources to help Freelancers tackle all this business goop. This now includes resources such as a tool for creating contracts and an app to find legal help.
Enspiral is also creating open tools for project management and other business support, as is Loomio, These tools and services make it possible for a worker to get all the stuff you get from being part of a large company, except everything is peer-to-peer.
(There are zillions of commercial services that do the same things as well.)
I have to say that this biz stuff is a big reason why I probably never will be a successful freelancer. I just don’t think like a business owner, and frankly, I don’t want to think that way.
I suspect that the only way I would make it at all would be with the kind of help that the FU and the others are creating.
I’m sure I’m not the only one who thinks like this, and in any case, no one is expert at everything. So these efforts are surely the right idea. As I said in an earlier post, this is putting “tools in the hands of the workers” in the 21st century.
- Bryan Jinks, Why freelancers can’t approach money with an “employee” mindset, in Freelancers Union Blog. 2017. https://blog.freelancersunion.org/2017/05/31/why-freelancers-cant-approach-money-with-an-employee-mindset/