Running your own business can be an incredibly rewarding and exciting way to make a living – you get to do what you love, you get to work for the best boss (*ahem*), and you get to choose how you operate on a daily basis. When I started my freelance business, I already had a full-time job (and another part-time job… I had too many jobs), so I didn’t necessarily put a lot of thought into the back-end aspects of running a side hustle, such as the changes it would create for me when it comes time to file my taxes, or how to ensure that I’m getting paid for the work that I do for my clients. Once I decided to take the leap and leave the security of my full-time gig to grow my side hustle into a career, I was faced with a steep learning curve. But from all this struggle, there came so many learnings. Here are three things I wish I knew before I started working for myself:
While it may sound hilarious to those of us who are now more familiar with running their own show, when I started I thought a contract was really only necessary if the job was “big” or the work spanned a long period of time. I mean, I didn’t even know how to draft a contract, and since I was doing small editing jobs on the side I figured it wasn’t really a big deal. And while there is certainly something to be said for the actual legal recourse that a contract provides (that is, can you take someone to court over an unpaid invoice? Yes. Will you spend thousands of dollars to recoup a $500 paycheque? Not likely.), having a contract for your clients will not only clearly outline the work expected of you and the timelines and compensation agreed upon, it is also a means of protection for both you and your clients. While you don’t need to be a legal expert to draft a contract, the wording can come as less than natural for most of us, so a good tip is to seek out your local industry organization (the Writers Guild of Canada or Graphic Designers of Canada, for example) as they will have templates and examples of contracts you can customize and use for yourself. Providing a client with a contract gives you security, gives the client confidence in your professionalism, and provides both of you with clear expectations for the scope of the work and other important elements like how you will be paid, when, and what the process should be in the case of any deviations from the contract terms. Some tips for contract terms: do not undervalue your skills – choose an hourly rate or flat rate that is competitive but that won’t leave you scrambling to pay your bills; do not agree to reimbursement for any job-related fees unless you can truly cover those costs up front; and do allow for extra time to cover any potential roadblocks that may come up over the course of the work being provided.
Setting hourly rates or flat rates for your work can be really difficult. You don’t want to set your rates too high, because then you won’t get any work. But you also don’t want to set your rates too low, because then you won’t be able to make a living and you’ll be setting a precedent that may not be easily changed overnight. One thing I encourage every entrepreneur to remember is how incredibly valuable your time is. You can do something that not everyone can do. You’ve spent years honing your skills, practicing, getting feedback, going through ups and downs in the development of your craft. People are coming to you for your expertise. So while it may seem like you should undercharge when you're starting out, or it may be easy to provide quick consultations free of charge to help someone out who just “has a few questions,” remember that your time is essentially what you’re billing clients for. So while I wouldn’t suggest sending an invoice to everyone you have a conversation with (which, let’s be honest, would be kind of hilarious), keep in mind the time it takes to develop an idea for a client, or the time it takes to hammer out details over coffee with a client, or how much time it really took you to edit that press release given that it was written by what appeared to be someone mashing the keyboard with their coffee mug. Be honest with yourself about the time you spend on a project both when it comes to billing and when it comes to managing your workload and doing favours for others.
As I mentioned earlier, the move from employment to self-employment was basically an emotional rollercoaster filled with sunny highs and dear-god-what-have-I-gotten-myself-into lows. The key to keeping my work life as close to the heavily glamorized idea of self-employment I had in mind? Being painfully organized. Yes of course you need to keep track of your business expenses, but that means more than just “I’ll stuff all of these receipts into a cute folder and ignore it all until some time in March” (shocking, I know). Track every single cent you spend on a weekly basis, so that you’re not scrambling to organize receipts at the end of the year. Keep it organized according to the categories of expenses that you’ll need to account for when you file your taxes each year, or use a software program like QuickBooks or Wave. If you work from home, keep track of everything you spend on your home – from repairs, to heating costs, to that new office filing cabinet. If you work from a coffee shop or another work space, keep track of the coffee that you buy, the gas to get you there, and the parking or transportation costs, too. When you send an invoice, keep track of it, when it’s paid, and where the money is deposited. When you get a new job, keep track of every bit of time you spend on that job. How many marketing campaigns have you done this year? Who have you reached out to? When? How often do you post? When is your next deadline coming due? What does your next month look like? Where is your client information kept? Being on top of everything might seem self-explanatory and perhaps a little tedious, but having a system (or systems) in place to keep track of every element of your work life will only make it easier on you in the long run. Spreadsheets, iCal, and apps like Slack and Clear ToDos will make the organization of your work easier on you so you can spend your time actually working, which is really the whole point, isn’t it?
While I’m certainly still learning the ins and outs of working for myself, it’s small things like creating a customized and detailed contract, not undervaluing myself, and staying on top of expenses that have really been the key to making this work for me. It may take a bit more risk, planning, and strategy, but self-employment isn’t as terrifying as you might think.