avoiding the pitfalls
In the last part, the part 2, we talked about what are the things which could go wrong when you're doing freelancing. While they could go wrong, with little bit of planning you can overcome these. Let's quickly rehash what are the things which could go wrong:
Since you're working by the hour, it could get addictive and the line between personal and work life blurs.
You do repetitive work. There's also the problem of low level work which is not good for long term.
In times of crisis, you're let go first. Like during Covid, contractors lost their jobs first.
You miss learning from the team. You also miss on the depth.
You're always in hunter mode. Which means you'll always look out for potential client trying to do a Sales.
There's a lot of paperwork, taxes, finances, meetings, accounting, invoicing etc.
You don't know the next steps. End up creating a service company at the end. You manage, someone else codes. You miss programming.
Some companies not counting freelance as relevant experience.
let's dig in
Since we have rehashed what could go wrong let's see how we can fix it. Let's get the easy ones out of the way before we discuss more.
You need a thinking framework Here's a framework which would help you: Know your per hour rate. It's not the rate which client pays you for work. From Sales, to Marketing, to invoicing and filling taxes. Count all the hours you're spending on work and use it to divide the total money you made.
Now, see where you should focus your energy to increase the per hour rate. This framework will help you. If invoicing is taking a lot of time because of back and forth, there are two ways: either go for automated software, there are many. Or, hire an assistant with much lower per hour rate and let him/her handle all of the nonsense paper work. Part of growing your business is learning how to delegate: to man or machine. This could be a good starting point.
Takeaway: Not knowing your per hour rate, and where you're burning most hours will not help you form a successful strategy.
crisis time management
Have a financial plan. Know that there will be dry times. There's a concept of "rainy day funds". Even as a salaried person I have managed it. But for folks who are into freelance always don't splurge when you're making money. This is easier said than done. Self control that too when it comes to money is tough.
Someone will promise you a job, and you would order an iPhone (I have seen people done that). That's really bad. One thing I have learnt from my Dad is that the money which is in your bank is the only money you have. Money which you have lent your friend, money which a prospective client has promised or any other thing is not your money. So, do not make plans on it. As a freelance, never buy anything on EMI. Make it a rule. Don't increase your monthly expense if you want to last long. Buy things when you have enough savings after the safety net. In India, you can take your father's help, basically put your safety money in his account, for this. I have done that in initial years until I got my financial discipline.
Takeaway: Spend and plan with what you have and not with what you'll get
This is something which will keep happening unless you create channels where people contact you rather than you contacting them. This is classic marketing. If you're good at marketing, you have to do less of Sales. Anyway, this problem can be taken care of and we'll talk about it in depth in the 5th issue (the one after the next one) itself with how to market yourself better.
When you're starting you have to be in this mode for sometime. So, in the next issue we'll cover how to hunt better as an engineer and beat the digital agencies in their game by playing to your strengths.
When you're starting to code, this actually is a good thing. However, if you care about your personal life, and health, which you should it becomes a problem. So, you have to make a routine. Answer to any addiction, good or bad, is mindfulness. Know when you're getting addicted and make time for hobbies.
Let me tell you this too, if you don't take off time, your overall creativity and problem solving decreases. Brain like any other machine needs distractions, downtime and rest to rejuvenate. So, even if you don't care about other things take care of prolonged winning.
Takeaway: It's a marathon, not a sprint. Prepare to run far, not fast.
See all the other issues around not growing depth, stagnant learning, work experience not being covered are all symptoms of one problem. If you solve that problem these dissappear. Not only that, it can actually branch out into a great marketing strategy which we'll connect to in issue 5.
So, when you're doing freelancing you need to ask yourself, "Why am I into this?". Please give yourself honest answer. Are you in it for quick money, long term career, learning, an exit down the line or what? If you're in it for long term career then you need to plan your steps. But before we proceed, let me tell you that this career advice holds true whether you're in freelance or not.
Your current value takes a dip when you pick up a hard problem, but your overall value increases later.
There are two types of approach people take in career:
I am good at this X thing. I will keep doing X and becoming better. X could be a framework, language, programming paradigm, work area, basically anything. Eventually, I will drive my price upward. However, I am putting all my eggs in one basket. What if this basket falls tomorrow? Or for people like me, what if it gets boring doing the same thing?
I am good at this X thing. I will continue on this. But I will pickup Y thing as well. Which means I have to spend time, or take a cut, coz my overall impact has decreased. If I was working 8 hours everyday on X, and I was skilled at X, I would obviously make more money than if I now work 6 hours on X, and 2 hours on Y, or 8 hours on Y for few months. Y is something which I am not good at. This approach is tricky coz you see the loss upfront. Humans are wired to avert loss. But this is where you have to understand that delayed gratification is something, the more you delay the better. If you spend 8 hours on Y for a month, you might get paid less but now you're good at X and Y both. You can mix and match. If Y is something which is difficult then you would be paid even more.
In the context of freelancing, if you want to avoid other problems, or you don't want to become a service company, look for hard problems, look for difficult projects after every project is complete. If you don't stay in your comfort zone, your price will keep increasing, you will keep coding, you can have a small team of experts and not service folks.
Problem is that in India we don't follow this model much. We generally believe in scaling horizontally i.e. hiring more for low level jobs than scaling vertically i.e. learning more for high level jobs. Individually as well, you would rather work more hours to get more money than work less hours but increase your per hour rate.
the startup of you
Give it some time and let this sink in. There are people who know this but don't know how to put this in words, or maybe too busy to put this in writing for students/freshers. So, read the para again and let this sink in. You don't get advice like this everyday. In life, job, business or anywhere always strive towards increasing your per hour rate. And that happens only when you develop an apetite for short term loss, put yourself in uncomfortable zone and keep learning.
This would solve your craftsmanship issue as well coz you will be solving newer, better problems and that will drive the satisfaction. And yes, all of this is 100pc possible. The salary which I make or a lot of people make is equivalent to 10-15people's salary in a service company. How did this happen? By treating your career as a startup and treating yourself as the product which is always having iterative improvements.
making you ready
That's it for today. Keep the tweets and replies going on. Love those interactions. You have been asking about how to get started with freelance. When I was a kid and I wanted to learn how to drive my Dad's bike, he asked me to remove it from stand, get it inside our verandah (without starting), and then put it on stand. I did this for a year almost. Then one day he took me to ride it and started trusting me with the bike. I asked him once that why the parking routine for a year? He said, "I was teaching you to handle bike's weight and making sure you're ready to ride alone."
Freelancing is also like riding a bike alone. I didn't want you to get all excited and started with my tips. I wanted you to learn to handle the weight before turning the ignition ON. I think you're ready now. Keys will be delivered to you soon.