Shall I go to full time freelance in this current economic climate?

[Thandeka]

Hello,
I read this topic loads but haven't posted so much- I usually post on conception.

I need help making a decision and wondered if the lovely Mnetters would be able to help me.

Basically recently I went down from a fulltime contract to a 0.6 in my place of work so I could do consultancy with my other time and finish off a masters. Due to a recent government announcement relating to my line of work- there is TONS of work around (depsite the credit crunch) far more than I can handle in 2 days a week so I am possibly thinking about giving up my job to go fulltime consultancy from Sept. Having spoken to some of my clients they are desperate for me to do this and want me to work for them. Although the work is plentiful am worried the credit crunch could possibly affect it in some way- especially if things get worse. My current job is pretty much recession proof- but being a freelancer could be tricky.

Basically I do love my job but its very stressful and there is only about 20% I am passionate about- the rest of it often gets on my nerves and I feel I need a change.

Thing is the jump to fulltime consultancy is terrifying too- tax returns, indemnity insurance etc etc. Maybe have to travel so much more (but am london based where a lot of the work is so shouldnt be too bad). Also my work pension is one of the best around and giving that up would be very bad for my retirement. (Obviously I would get a private pension but it won't be nearly as good). Also fear about whether I am "expert" enough to be a consultant- I'm only 27- but I know a heck of a lot in my field and my name is well known- but everyone else is a lot older than me!

Oh and another thing to consider is DH and I are trying for our first child- not having any luck so far and I suspect stress is partly to blame so I think leaving my stressful job for a different pace of life in consultancy would be great but obviously then I would lose SMP and have to get MA instead. (I know these are the same but I would also lose my jobs- 6 weeks full pay, 6 weeks half pay etc etc for being on Mat leave- but then again I doubt I would go back to my job after having kids so I would have to pay it back anyway so maybe I should forget about that as an option.). I suspect its going to take us a very long time to concieve (for various reasons) and don't want to put my life on hold while waiting for babies to happen.

Other option is reduce my job down further to a 0.2 or 0.4 (but waiting to see if my boss will let me) or even see if he will let me take a "gap year" from my job.

Have to make this decision by 31st May- so also have 3 more months to see if I get pregnant (If I do then would prob keep what I have now as it would be silly to uproot everything when maternity leave isnt too far away).

Any advice? Sorry for the long post!

I can see why you are finding it hard to make the decision.

I am a freelancer and I love it. It takes about 10 years to get over the fear that every job is your last one and You Are Not Worthy, so you have to be able to live with that.

If you leave your job, hate freelancing and want to go back to work do you think it would be easy to get your old job back/another job, or difficult? If easy, then what's to lose?

Thanks for the reply. I think it will be very very easy to get another job in my field if I needed too- trouble is my "exact" job is rare so I may have to compromise and do a slightly different version of my job which I know I would hate. Its a tricky one. Also chance that the consultancy would overqualify me so employers may be too scared to employ me. But the staff turnover at my current place of work is reasonable and I know my boss loves me so potentially I could go back to the familiar which would be better than starting somewhere new.

Hate making decisions.

I work freelance and best decision I ever made. I gave up a secure, well paid job with great holidays and never looked back. DH has been self employed for about 20 years now and loves it too. Has dramatically improved our lives and stress loads. When I was working I felt like I was living 2/7ths of my life. Now I feel that I can take time every single day to rearrange and move my schedule to suit me and my family. Obviously there are times when deadlines heap some pressure or having your computer breakdown when at work a nice man would just take it away and hand over another..

I would do the obvious and make a pro and con list, keep adding to it, mull it over, talk to your DH about it and try not to feel you have to decide this weekend! You have a few months to make a final decision.

Some of my benefits (as a mum with school age children) taking into a count that my job allows me to work from home office, flexi hours, DH is my IT consultant and colleague so have a little company and do not have clients home to the house that often - once a month maybe:

Always being in for the postman!
Not a problem when children are ill
School holidays are easy to manage and not rely on my parents or other babysitters
Motivation - for me, I find being my own boss motivates me to work harder. For some I know the flexi hours means they find it hard to make a start. Depends on your personality I guess.
Can volunteer for school trips, help out and really "be there" for the school and my kids - not having to drop and run or rely on after school clubs to pick up the time before I am home from work is fab. Much nicer and less stressy
Less travel - no rushing around in rush hour traffic is wonderful, I value the time I save. Half an hour each way to work and you save 7 hours a week.. work out how much drive time you do for work in a year and imagine what you could do with the added time. Let alone the saved petrol and car wear and tear
No work clothes - YAY!! I can wear whatever I want, when I want
Having children constantly throw up the odd spanner in the works and being flexi time work from home means I can cope easier with them: kid left reading book at home, I have time to go pick it up and drop it back to the school, left lunch bag and phone call at 12.30.. no problem, I can run it up to the school etc etc
Easier to have other children home after school for playdates. If you work from home, you can rearrange your schedule to allow for the odd 3-6pm play date without having to leave work early. I know some parents find playdates almost impossible and IMO their children can miss out

Disadvantages or things to consider: do clients need to visit your house?
how does that effect neighbours or parking?
Will there be flexibility with your hours? working from home with a young baby can be very stressful unless you have plenty of time space and ability to drop everything when your baby needs you.
Socially how will it affect you? You could feel like you are stepping out of the work arena and only ever speak to people, not see and chat to people like you used to. How would this make you feel?
Access to support and equipment? In the past you had only to phone or speak to a colleague in the office, possibly, how would that change if you were at home alone?
Pension?
Space in the home? We have space for a home office but it is at the cost of a room in the house. Will you physically fit everything in or need to rent space? Might start off thinking it is just a phone and pc, maybe a couple of books but it soon spreads into a huge amount of stuff (if it is anything like us) with book keeping, printers, records, books, fax machine, copier, shredder, files, etc etc

Anyway, I guess there are plenty of things to think of and just suggest you make a list and work through it carefully to see what is ultimately the best option for you. I will warn you though, once self employed for a short time, you could find you are so comfortable with the freedom and sense of independence that it will seem impossible to go back to working "for" anyone else ever again

Thankyou so much for this! Very helpful.

Going to start the pro's and cons list now.....

I have a feeling that the pro's far outweigh the cons!

DH's response- so long as i earn £650 a month for the joint account he doesn't care! HAHA- With my day rate- can do that in 3-4 days a month! (hope I have a baby for the other time else I will get bored!) Technically I do need to run a car and phone etc. but I reckon I can fairly easily bring in 1k a month. Maybe I should set that as a target!

Hang on 1k a month is a fraction of my original fulltime salary. Hmmm I think I need to look carefully on the financial side of this. I don't nec want to earn the same as I used to but will need to carefully consider finances.

Hi Thandeka

I think the fact you're considering this so carefully, weighing up the risks, assessing the marketplace etc, means you'd make a very good freelancer/consultant-type person.

I go along with what Missingtheaction said about it taking a while to stop worrying that every job is your last - and I'd add that this comes with the territory, in the same way as the wash of annoyance that accompanies the tired commute to work comes with being a full-time employee.

I'm not a consultant because I've got a baby (although I'm just about to have one) - I, like you, left a good, secure job with pension etc because I wanted some more flexibility in how I worked (although for different reasons than you).

And as LemonTart says, it was the best decision I ever made. The positives (in the spiritual sense): whether you work from home, at a client's office or a mix, you are your own boss. And there is a satisfying challenge (I find) in making it all work successfully (ie finding the projects you want at the price you want).

On the practicals: accounts, tax and all the rest of it - you hire an accountant, of course! Nothing terrifying about that, really - although you should take a bit of time to find one you like, who explains things in a way you understand. You factor in what you pay them to your profit and loss for the year. It takes a bit of time to understand the mechanics of running a small business, which is what you would be, but that's as nothing compared to identifying a market need and generating sales (and it sounds like your most of the way there on this).

Being a consultant and having a baby: I'll personally be better placed to offer views on this once I've had it obviously (come on baby, where are you? ), but you may be heartened to hear that in the last 9 months:
*no-one has tried to sack me for being pregnant (even though I work on a daily rate so they could have got rid of me in an instant if they'd wanted)
*several other customers offered me work, knowing I was pregnant
*customers have been asking when I will be back from maternity leave

And there's no question I'm going onto any 'mummy tracks' - the only track you're on being a consultant is your own!

Once pregnant:
*your brain doesn't turn to mush ... unless you want it to (so there's no impact on your intellectual output).
*you're not obliged to walk around in front of your clients stroking your bump and talking about fairy cakes (you can leave that to the full-time employees who plan to take the full year's maternity leave)
*your customers may well be flexible with their demands of you in the later (more uncomfortable) stages of pregnancy, if you are based in their offices and supposed to work core hours - the bottom line is, if you're good and they need you, as long as you communicate with them and deliver the outputs they mostly won't care whether you arrive at their premises at 0900 or 1100.

Maternity leave:
*I will say, rather controversially, that I was a bit suprised to read on another thread in this topic that someone had not contacted their customers for nine months whilst they were off and wondered why, when they got back in touch, there wasn't any work (was it the credit crunch, they asked). I think the answer is that people are SE/freelance/run small businesses/contract at different levels and for different reasons - some people just want to earn an amount a month, working only on Tuesdays, their first priority being their family etc. But this is not me and sounds like it may not be you
*if you're going to be a successful consultant/businessperson you will want to make some decisions in advance (as much as you can) about how long a maternity leave you take, how to keep in touch with your customers whilst you're off, and how and when to return (eg can you do one project 'part-time' for a while, instead of two 'full-time' etc, or will you take, say, 6 months out and then go back full-time - depends what your assessment of your customer needs are). The key is to appear professional and considered to your customers.
*childcare - when I'm ready to return to work I am expecting to be able to tell my customers what my childcare arrangements are, as part of my sales strategy (ie I don't want people having second thoughts about contracting me because they think I'm suddenly going to become unreliable/start missing deadlines etc)
*SMP/paying for maternity leave etc - there are other threads on here about this. Suffice to say you'll undoubtedly be eligible for the standard £100 a week from the state and you'll want to consider putting some money aside (unless you have a rich DH) in advance to help pay the bills when you're off/the first couple of months nursery fees etc

Hope all this helps you make your decision!

MrsBaldwin

£1K a month? Thandeka - without knowing what your field of work is, you're setting your sights way too low here! (I say this with apologies to others reading who don't earn as much as this).

As an 'expert' consultant you can sensibly aim to earn more than an employee - in fact you'll need to, to pay the accountant, the taxes, the private pension, the other expenses as well as to pay yourself.

Don't start with the minimum you think you'll need - start with the maximum you think you can get!

Right, time to go off and have a pre-childbirth haircut

Hi Mrs Baldwin,
Thank you so much- and enjoy the pre childbirth haircut! (And congrats on the baby

My day rate is between £150 (lowest- "mates rates") to max £500 a day (at the minute- unsure if as experience goes I could get more than that!) Average seems to be £250-300 per day in my field. I was partly thinking about not necessarily being a fulltime consultant (ie. earning as much as I possibly can in the month) but just making sure I earn enough to live comfortably (Have estimated 18k per annum is about what I need to be comfortable -(we live in london so rent is high!) I am very lucky in that once my DH passes his final set of exams (hopefully Nov) his earning potential will massively surpass mine so the plan would be for me to be a SAHM but doing the odd consulantcy job from home as time allows. (Occasionally there will be training I would need to deilver- hmmm would need to find flexible childcare as no rellies nearby- hmmmmm Mrs Baldwin let me know how you get on with that!)

Also need to be finishing this BLOODY masters with the time (finally at dissertation stage)- but the dissertation to which should also help massively with my training portfolio...

(I do know an accountant who has offered to do my tax return for me- but they are an ex so probably a bad idea!)

Oooh so much to think about- am glad I have a few months to chew this one over.....

I'm not freelance at the mo (although have been in the past and am planning to be again so reading this with interest) but just wanted to say that my childminder is pretty flexible (and has another child whose mum is freelance) so that's probably your best option re childcare

Just a couple of thoughts to add on money:

On needing £18K a year to be comfortable: you may already have done these sums so forgive me if so ...

... but here are some example numbers re earnings ...

As an employee on £18K a year you'd take home £18K minus PAYE tax and NI, possibly in the form of a monthly salary of X amount, which you can then spend as you like.

However, as a self-employed consultant things look slightly different because ...

... you pay your own tax and NI and you also incur various expenses in the course of running your small business, ranging from phone bills, to travel, to accountants fees etc. Many of these can be written off against the fees you earn, for tax purposes, but the bills still have to be paid.

Let's say you bill a customer for £1000 gross for a week's work (nice round number).

The well-organised might set aside a % of this fee to cover their year-end tax bill - say 10-20%. You stick it in a savings account and leave it there. Let's say you put £150 of your £1000 into this 'accruals' area of your books.

Then, you may find you spend £50 (or more) a week on the various things that help you do your job - travel, phone etc. Let's call this another £150 a month for the purposes of this example (although it can be more than this, depending on the job and you will need to think about this when setting your prices).

Suddenly your £1000 in gross fees is £700 in net profit (ie you have £700 to spend on yourself after you've paid the bills above).

Then we get into the fraught but vital area of cashflow - you need money to pay to pay your bills eg your train ticket to reach the job even though your customer hasn't paid you yet. You decide you could do with a bit of a cushion in your current account to cover these circumstances. Perhaps you decide it's best only to spend £600 of your £1000, therefore.

Suddenly, generating the £18K (whether gross or net the example stands) takes a bit longer and involves a bit more work than it may at first seem.

If you decide to go the route of becoming the director of a small ltd co (which is what I am), the cashflow part becomes extra important, because it's this that prevents you going formally bankrupt (which you will if your sums don't add up)!

So, to generate £18K gross would require you to bill for 18 weeks work at £1000 a week. But you'd want to do your sums as above and see how generating £18K gross like this compares with getting paid £18K net as an employee. Put another way - in my example only 60% of the £18K you've generated is your own to spend. Of the PAYE £18K a greater proportion is yours to spend (although this comparison doesn't take into account relative lengths of time taken to earn the money).

And this is why I say 'start with the maximum you think you can get, not the minimum you think you'll need' when thinking about fee rates and job duration. Otherwise you may find yourself taking a lot longer to earn the money you need to be comfortable than you expected - and this will eat into your SAHM time, of course, which is not what you want at all.

Good luck with it

Who can spot the deliberate mistake in my maths above ??

But the gist is correct.

In my first year of business I earned more than I "needed" to. This has left me every year with a positive bank balance which has enabled me to be much more relaxed about which contracts I have chosen to do, and means that I can now plan future developments without worrying about where this month's money is coming from.

Good luck - it's a great life.

The one thing that I learnt when I started out as a freelance, was not to undersell myself. I found it very difficult to ask for what I considered to be 'high' day rate at the beginning because I felt that clients would laugh at silly little me asking that much money. However, having quoted over the top for a job that I didn't actually want to do, I was very surprised that no-one even questionned it (and I ended up doing the job because it was such a huge amount of money!).

I suppose what I am trying to say is have faith in your ability and charge a good market rate. I found the busier I got, the more in demand I was and therefore the more able I was to set my own price and terms.

Having said that, one of my clients has just been made redundant without having paid an invoice, so I will now be fully acquainting myself with their accounts dept....!

Okay muted excitement here- looks like I am not going fulltime consultancy just yet as erm I think I am pregnant! (Faint positive test, period is now a day late and I have felt exhausted and nauseous for last week!)

So I guess that plan is for after my maternity leave ends- as am not sure I would go back to work.....

Wow! Excellent news.

It's a great opportunity to use the time to do some planning and research about consultancy.

Also, make sure that you build up a data base of useful contacts in your business, and give them your contact details. From what you say in your other posts it sounds as though potential clients would welcome you back after a period of consultancy leave.

Good luck.

Thandeka - great news!

What NotSoClever said. You may not want to stay at home for 30 years! So don't forget this thread

MrsB

Hi guys,
Thanks so much for all the advice and support!

I now have no idea when I am going to finish my masters- nargh!

Also I am doing keynote speeches/delivering training at two conferences week after next- on tuesday and thursday- I look and feel like death warmed up already and dread to think what I will be like two weeks in. So very worried I will undermine my credibility if I fook up so wondering if I should quietly explain to the people leading the conferences so at least then they won't hold it against me and hopefully want me for more work. Downside is one of the people may also have a permanent "dream job" in the pipeline for me- which could disappear if she finds out I am pregnant!

Oooh the dilemmas. I also will need a good think about maternity leave as i know I can't necessarily work whilst on leave but then cutting ML early may mean going back to my job too quickly- so I guess it will come to the point where I decide to give it up- downside to that is my boss just announced how amazing I am and how they have to keep me and keeps throwing loads of great projects my way! I don't want to lose that! Although some of the time I hate aspects of my job, it is great to work somewhere where you are so valued. hmmmm.

Ho hum came back to this thread because things have changed again. Sadly I miscarried at 10 weeks. Will keep trying but it will probably take a while. Now the notice date of 31st May is even closer so I still need to make a decision, and its a bit difficult while I have all the grief and stuff going round my head. Though bizarrely at the min I am fine and so hoping I stay this way for a bit while I make my decision.

Luckily in the meantime I now have a contract for 2 days a week (@£300 a day) potentially for the next year. So that is a great buffer to get me started in fulltime consultancy. I think the miscarriage has clarified that I need to look after myself more and do what I want to do.

Going to do some list making today!

Take great, great care of yourself. It will be the best habit you can get into in preparation for your future career, and for you potential future family life.