There comes a point in every freelancer’s life where you start dreaming of quitting your full-time job and turning your side gig into your main squeeze. The freelance world is incredibly diverse so I won’t presume to speak to every single freelance job out there, but I do believe that there are some tips that apply to most.
The list below of the five questions to ask yourself before going freelance full-time is not meant to be exhaustive but instead give you some considerations and thought exercises to go through as you debate whether it’s time to take the plunge
Am I spending all of my free time on my side gig?
One sign that it’s time is if you’re getting home every evening and working at your side gig until midnight or even later. At that point, it’s probably time to reevaluate your priorities. A lack of sleep is going to affect both your day job and your side gig. The stress caused by this lifestyle is also going to take its toll on you personally. You’ll need to sit down and make a plan to change this. One way to figure out if you’re spending too much time on certain tasks is to use Indy’s Time Tracker tool.
Sometimes, that means you’re getting enough business with your side gig that you can take it full time. Other times this means that you need to start learning to say “no” to new clients or to scale back on the side hustle. Burning the midnight oil is often required to start a business, but it’s vital to plan an exit strategy from this lifestyle.
Is the only way to scale my business to quit my job?
You might be looking at your income from your side hustle and realizing that there’s a big gap between that and the income from your full-time job. This gap can be extremely intimidating for freelancers. It can seem impossible to overcome. It’s quite possible that your current job makes you so much money that freelancing or committing to your side gig will never reach that level.
But often the more accurate way to look at it is this way: "In the first year, I’m not going to make up for that gap. But if I commit full time to this side gig I can make up X amount, and the next year I can improve on that, and the next year…until I can get over that gap.”
You may be one of the lucky ones who can make even more income in the first year freelancing than others, but that’s very rare. In fact Kat Boogaard, a six-figure freelancer, says she made around $30,000 in her first year but that built up the momentum that led to incredible years afterwards.
You’ll also need to look at the rates you’re charging. Could you scale your business without quitting your job just by setting your rates higher? If that’s the case it might be worth doing that before taking the more drastic step of quitting your day job.
Do I have enough money saved?
It’s absolutely vital to have some money saved up before quitting a job to go freelance full time. Many times you don’t make this decision yourself and it can be more difficult, but if you can help it you need to have several months’ worth of income saved up. That means enough money to pay all your bills and expenses with absolutely zero income. If you're quitting your job you’re not going to be able to get unemployment like you would if you had gotten fired. So the only income you make is going to be the money you’re earning in your freelance role.
Another reason this is so important is the inconsistent pay schedules of so many clients in the freelance world. Sure, you might have rent due at the beginning of the month, but that client you invoiced three weeks ago might have forgotten to get your invoice over to accounts payable. Suddenly that check you were relying on for rent might be late. Having savings is often the only way to make it through the first year as a freelancer.
You might be killing it, gaining clients left-and-right and lining up jobs to fill up your first six months as a full-time freelancer, but those jobs are just promised money in the future. So you’ve got to have some money in the bank first to bridge the gap between quitting your job the first set of paychecks.
Do I know enough people to fill my work schedule for the first few months?
I don’t want to assign rankings to each one of these, but in my opinion this one is the most important. As our writer Matt Crossman said in his article, 90 percent of his work comes from people he knows or has mutual contacts with.
Take five minutes right now and make a list of all the clients you currently work with, have significant contacts with, or have worked with in the recent past. Now imagine an ideal first two or three months freelancing. How many of these contacts could reasonably provide you with jobs? Using the rates you charge, figure out how much you’ll be making in the first few months. This can be a significant indicator for how ready you are to take your side gig full time.
If you can fill up a month or two of full-time work with existing clients then you might be ready to take the leap. If you can’t yet do that, then it might be best to spend your time securing those new clients over the next few months as you prepare to potentially go full time. I don’t want to suggest that you won’t find new clients once you start , but the truth is that your existing clients are going to take significantly less time and energy to secure gigs from. It’s the same as the classic business principle that it costs five times more to attract a new customer than keep an existing one.
If you can fill up a month or two of full-time work with existing clients then you might be ready to take the leap.
Are there other jobs you could do to supplement income?
Right now, your freelance job is your supplemental income. If you lost your full-time job you would be in a much better position than others who don’t have a way to make extra money while they look for a new job. But once you make your freelance job your full-time role things change. It might be a good idea to brainstorm some other smaller jobs you could do to make some extra money while you work to build up a roster of clients in your freelance job. Gig work like driving for Uber or Lyft or even a part-time job on weekends can ease that transition into the full-time freelance world. Sometimes you need a little bit of a parachute to help you make that leap. For me, I had a 10-15 hour a week part-time job after I quit my full-time role to go freelance. Eventually, that job was taking too much time away from my freelance work so I had to quit that too. But for the first 3-4 months it provided solid consistent income to make it easier for me to pay the bills.
This is not an exhaustive list but provides some off the most important things to consider and plan for to help you decided when it’s time to go freelance full time. If you’re looking for ways to stay organized with proposals, contracts, invoices, and other tools make sure to check out Indy!