How to Grow your Side Hustle into Full Time Work
The freelance economy is booming, and more and more people are looking to freelance work as a way to transition out of the traditional workforce. Freelance consulting can be a great way to build your own business, set your own hours, and work from home. It can also be a great way to transition out of the corporate world. However, it is not without challenges in terms of both time and money. All of us at The Marketing Greenhouse (and the TMG Collective) took somewhat similar paths into and out of corporate work. We coach clients at every stage of the transition on a regular basis, and we offer many resources within the Collective that have been born as a result of our own paths to running profitable freelance practices. If you're looking towards freelance consulting as a way to transition out of the corporate world, here are a few tips to get started:
The first step is to make a skeletal plan with a few long-term, medium-term, and short-term goals. What are your long-term goals? What do you need to do in the short-term to get there? Once you have a plan, you can start taking actionable steps to make it happen.
Two of the obvious early hurdles to plan for are how to save enough money in order to leave corporate work, and how to acquire enough paying clients in order to replace your previous income (or approximate replacing it) so that you can cut the cord on your paycheck and work full time for yourself.
Following are a few tips in each of these two areas:
Planning to leave full time paid employment
For many people, the dream of leaving life as full-time employees at corporate jobs to make the jump to full or part-time freelance work is a strong motivator to start saving money. However, the shift from a steady paycheck to an unpredictable income can be daunting. To make the transition successfully, it is important to create a six month to a year-long plan that includes both savings and income goals.
Start by evaluating your current income and expenses. This will give you a good idea of how much you need to save each month to cover your costs. Next, set a goal for your freelance income. This can be done by estimating the number of hours you plan to work and setting a reasonable and profitable rate for your services. Remember that your total compensation at a full-time job includes much more than just an hourly rate--sometimes up to 30% more. Your employer is paying employment tax as well as social security and medicare contributions for you. That 30% difference will be critical to paying business expenses when you fully transition to being a sole proprietor.
Finally, create a budget that includes both your savings and income goals. Try to put away at least 20% of your income into savings each month so that you have an emergency fund in case of lean months in your business. For some people, it is feasible to downshift to a part-time job at their current employer in order to make a slower transition to freelance work.
Even if you ultimately decide to delay freelance work longer, it is a productive exercise to figure out the costs of your health insurance, retirement savings, and other fringe benefits as part of your total compensation.
Acquiring your first clients
In addition to building your cash cushion, spend three to six months thinking about how to acquire your first few clients.
Making the switch from corporate work to freelance can be daunting. It's a big change, both logistically and mentally. But it can also be rewarding, both in terms of daily lifestyle and earning potential. Each of us at the Marketing Greenhouse retained our first few clients in the same industry that we worked in at our full-time employment, and then we branched out from there from client referrals and outreach.
One of the most important things you can do is make sure you are pitching the right clients. You want to make sure you are pitching clients who are a good fit for your skillset and who are likely to be interested in your services. A great way to find potential clients is by networking with people in your current industry (before you leave your full-time job). Start thinking like an entrepreneur while you are still an employee. Attend industry events, introduce yourself to people, and most importantly, serve proactively before asking for business. Do not be shy about telling family and friends about your plans for freelance work-you will be surprised how many of them will be willing to make introductions for you! Finally, consider the possibility that your current employer could be your first gig as a contractor. They might be happy to pay you on a contract basis, as it will likely save them money, and save you time.
A perennially controversial topic in this conversation is whether to pick up a client project for free or discount your work early on. We advise our clients to be open to discounting their work and to consider how much they will learn in their first few projects as an independent contractor or small business owner. Your clients provide value to you in the form of learning and professional development, so it is not always a loss to offer a pro bono project or discounted work early on (but not for too long)! This can be done when you are still employed full time, and it is a great way to learn and test out your concept in a low-risk way. It is also a strong first step on the path to diversifying your income sources and making sure you have a few different clients or projects that you're working on at any given time. We cannot underestimate how helpful it is to start this process while you are still at your full-time job.
We find it incredibly gratifying to lead clients through this process and see them confirm that it is totally possible to land paying clients in advance of resigning from their full-time jobs!