Moving from Salary to Freelance
I am currently working as a motion graphics artist and general video production person at a small firm in Austin, TX. I have been with this company for 1.5 years, and this is my first job out of college (UT Austin-Film), so I have 1.5 years of experience with After Effects, Final Cut Pro, Photoshop etc, in addition to being highly proficient with cameras, computers, and all the pertinent technology. I have advanced rapidly in my skills during this time, far outpacing my meager salary in my opinion.
My day rate is effectively $120 per day (dividing my yearly salary by working days), and I am working a regular 8-5 work week year round with no benefits. I am wondering if moving to freelancing could be more profitable. My company hires freelance artists to do comprable level work and pays them day rates of $300 or more, though they don't work year round. At that rate I assume I could either make more money if there is enough work, or I would be able to work less days, have more free time for other activities and continue to support myself.
Does anyone have any experience quitting their full time salaried job to go it alone? Has anyone been able to do this and continue to do freelance work with their previous full time employer?
(If my current company were to provide health benefits, this question would likely be moot...)
I suggest that if you enjoy working there, keep doing so until it makes sense for you to quit. You've worked on your first post-college job for more than a year, good job; that's a key part of a resume.
Do you have a client base? If no, then don't quit. Start to moonlight. Freelance on the side. When and if the client work overtakes your employed work, then it makes sense to talk to your employers about either reducing your hours or bringing your position to a close. If you have a solid relationship with them, it's fine and appropriate to let them know you are moonlighting, but will ensure it does not conflict with your job.
Or you could just quit and freelance. I've essentially done that; but from another industry. The road is long and hard. I don't recommend it.
Can you make more money as a freelancer than an employee? Absolutely! How good are you at sales? Well you're a motion graphics designer; so probably not that great. Will YOU make more money as a freelancer? Probably not.
The better question for you is, do you want the other benefits of being a freelancer?
- Able to set your own schedule, almost always.
- Choose your projects and clients
- Lots of vacation/time off opportunity, if you can afford to not work
- Be your own boss. Not true; you trade one boss for as many bosses as you have clients, sometimes 2-3 bosses at each client site.
- You'll probably work all the time and never take vacation
- No stability until you develop the business end of your business
- No benefits unless you buy into them with other groups
- You'll wear many hats: sales, marketing, web design, accounting, legal, plus what you actually do.
Making money or working less are NOT reasons to freelance. Freedom of schedule is.
I agree with everything Cory said, and I just wanted to add a few other thoughts and point you to some additional resources.
"My day rate is effectively $120 per day (dividing my yearly salary by working days), and I am working a regular 8-5 work week year round with no benefits. I am wondering if moving to freelancing could be more profitable. My company hires freelance artists to do comprable level work and pays them day rates of $300 or more, though they don't work year round. At that rate I assume I could either make more money if there is enough work, or I would be able to work less days, have more free time for other activities and continue to support myself."
First, please be aware that Creative COW posts get very high Google rankings, so be mindful of what you post as future searches on your name may come back here.
Posts like this come up pretty frequently on the Business & Marketing forum [link]. You can ready plenty of great advice there -- search on terms like price, pricing, freelance, etc. You can also read Walter Biscardi's great series of articles on setting up a business:
Don't underestimate your expenses. You will be responsible for your own employment taxes (your employer is currently contributing 15% above your salary). You will be responsible for your own retirement and health care. You will be responsible for purchasing, maintaining, and upgrading your own equipment. You will be responsible for insurance costs. You may have to hire an accountant and a lawyer. You will still be responsible for all these bills, and many others, whether or not you have enough work to cover them in any given month. What are your monthly expenses? How many months' reserves do you have in cash in the bank?
Don't overestimate your work. You'll be working 40-60 hour weeks trying to build your business, but only a fraction of that time will be billable. Can you support yourself when you're only billing 10 hours a week? Is your network deep enough that you'll be able to draw in significant additional work quickly once you go freelance? Can you continue to develop and expand your network? Until you can build up your client base, you'll be relying very heavily on your first client or two. What happens to you if their work dries up?
Don't overlook all the things that your employer does behind the scenes. Right now, you are free to focus on motion graphics and video production, and your employer is focusing on things like sales and marketing, keeping the books, and mopping the floors. As a freelancer, you'll have to do all these yourself, in addition to your actual billable work.
As a freelancer, if you're not working, you're not billing. Vacations are unpaid. Sick days are unpaid. You sell time, and as long you're sleeping, you still have unsold inventory. You must be able to manage yourself well -- you'll have to work enough to make the kind of money you want, but not so much that you burn out or start taking time from other things that are important to you.
It is true that sometimes it works better for both parties when a staff employee leaves and freelances for their former employer. That changes a fixed cost (salary) to a variable cost (billed time, assigned as an expense to a specific project), and some companies actually prefer that when cash is tight. If your employer's cash is not tight, though, they are not likely to be happy about paying you the same amount for half the results. How you handle your "breakup" is critical to your first major relationship.
I hope that I have scared you at least a little bit. There's a lot more to successful freelancing than just the work you're already doing.
That said, I don't mean to discourage you, or push you one way or the other. I just want to make sure that you're well informed as you make this big decision. If you can deal with constant uncertainty, if you maintain your design and production skills while developing sales and managerial skills, and if you can continually motivate yourself, then you can absolutely enjoy a very successful and rewarding career as a freelancer.
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Walter has just condensed a year's worth of graduate business school learning and thousands of dollars worth of "hard-knocks" training into one simple post for you - you should pay very close attention. He's absolutely right about every word.
Couldn't agree more with what's been posted. I'm his boss. Andrew if you want to go freelance let me know tomorrow, we can accomodate that.
(dramatic music sting, fade to black)
Well, hopefully that works out okay... but it is also another example of why it would be nice to have a place where people could send questions without "outing" themselves, a sort of "Dear Abby" section, where the moderator would filter thru the questions, pick the best ones to pass on, anonimize the sender, and open the topic up for helpful suggestions/advice and for others to learn from it.