I have a confession to make. I am not sitting in a picturesque office, or at a coffee shop, with a warm cup of coffee sitting on my desk putting off steam and my cat curled around my feet/neck. I mean, I have a dedicated office in my house. But, I am in that room a lot. So, I wanted to sit somewhere else in the house while I work on this post. I've already had my coffee for the day (I got up early and drove to Starbucks to get the whole family a treat) and we lost our "old lady kitty" over two years ago and haven't adopted a pet since. I hate to disappoint you, but I am not that type of freelancer.
I'm going to take some time today to tell you what being a freelancer is really like for me. I suspect most freelancers experience something similar. As popular as freelancing appears to be, the stories about "How I replaced my day job and now only work two hours a week" (I saw an article along those lines just this morning) or "How to create passive income so that you never have to work again" just aren't the norm from most freelancers.
My Freelancer Journey
I've been a freelancer, off and on, for well over ten years now. If I am honest, the whole reason I started freelancing was in the hopes of building a business that could replace the income of my day job. That hasn't happened. The best I have been able to do is replace about a fifth of the income from my day job. To be fair, I earn a very healthy income through my day job and have for these ten years.
When I started freelancing I didn't hate my job. I just wanted something where I had more control over my time. I also wanted to see if I could do it. "It" being grow a business. My father owned multiple businesses during his professional life. One passed $500k in annual revenue and the other nearly reached $2M in annual revenue. I wanted to see if I could pull off something similar.
While I haven't accomplished what I set out to do, I don't count that as a failure. The experience as a freelancer has been worth it. I've been able to supplement our income and use that money to pay off debt, pay for amazing experiences, and invest heavily. Plus, freelancing has allowed me to scratch the entrepreneurial itch.
What Being a Freelancer Looks Like for Most
A few years ago I was fortunate enough to work on a freelance project for a Fortune 30 tech giant. The company was starting to focus on products and services for freelancers and they wanted me to do some research for them on the topic.
Back then it was clear that freelancing was a growing trend. According to Statista there were 59 million people in the US freelancing in 2020. Some estimates had that figure reaching 68 million by the end of 2021. I suspect that growth was largely driven by COVID.
Freelance roles vary, so the average income can range pretty widely. For example, freelance writers don't make as much per hour as freelance software engineers. Ziprecruiter puts the average at around $68k/year. Which is pretty healthy. But, we need to put that number into context. Those are full-time freelancers that, as far as I can tell, likely have full-time contracts with companies. Also, I suspect that is gross income and doesn't account for all of the expenses a full-time freelancer might have.
Nor are they part-time freelancers just trying to earn an additional income. Upwork and Payoneer, two well-known freelance enablers, have the number at between $20-$30/hour. So, let's call that roughly $40k/year. Nothing to sneeze at. but, again, what expenses are the freelancer incurring in running that part-time business. Plus, also not an income that is too hard to replace for most professionals. Which Ziprecruiter has at $48k/year.
I know of multiple freelancers who are great at what they do, but they are struggling to earn a living wage and are considering taking on a full-time job.
Some Lessons from my Freelance Business
Over these past ten years as a freelancer, I've learned a lot. Let me share some of those lessons with you.
- When you start out you will not be able to charge what you think you are worth or what you earn in the corporate world. The first gigs I took paid me about a third of what I earn in my day job. Some of that is because you are competing against international talent and some is because you have yet to establish a reputation that will allow you to charge more.
- Because so many people are freelancing, remember almost 60 million other people in the US alone, the marketplace is highly competitive. This not only feeds into my first point about not being able to charge what you'd like but it also means that simply landing opportunities will be very challenging. Again, especially in the beginning.
- Getting started by offering a service, versus a product, is the quickest way to spin up a freelance business. If you are a freelance writer there is less you have to prepare to start your business than if you are selling handmade journals. That said, if I were starting all over again I would enter the market with products versus selling services. With services, you are swapping your time for money. With products, you have to spend the time creating them, but from then on they are largely self-service for your clients.
- Focus on a niche. When I started out I took on gigs in areas where I had some experience but I wasn't exactly an expert. Again, if I was starting all over I would focus on a specific niche of the market and get really good at serving those customers before I bother expanding into other verticals. For example, make and sell handmade faux leather journals. Once you have grown that business to 2x-5x what you wanted when you started then you move into handmade faux leather purses.
- Move as quickly as you can to attract customers directly rather than getting them off of freelancer sites. Listen, Upwork has been good to me. I've made a nice income there. The challenge is that they take a nice chunk of my profit. One thing I wish I had sooner was to focus on my own marketing activities and to get really good at attracting customers directly than waiting for them to find me on Upwork and other freelance sites.
None of what I have said so far is to say that freelancing isn't worth it. There are plenty of benefits beyond how much money you can make. I'm just pointing out that if you plan for it to become a full-time business you are most likely only going to replace your income or earn some additional income.
Just be realistic about your goals. Otherwise, you are setting yourself up to be disappointed. Being a freelancer is a long-term game. It takes resilience, constantly upping your skillset, and being focused on where you can really add value versus where you are just making a money grab.