Exposed: The Pros and Cons of Freelancing

Freelancers will often tout the benefits of freelancing. Just as much as people working full-time might do the same (It’s true! Some people love their jobs!) Startup entrepreneurs will rant and rave about the benefits of starting companies and working at startups. Assuming we like what we’re doing, we’ll promote it as “the way to go” and happily list numerous reasons to support our argument.

So what are the pros of going freelance?

Freelancers will rattle off a number of them as “accepted truths” – but let’s look at things a bit further.

The Pros of Freelancing

1. You get to be your own boss. This is 100% the case…until you land your first client. Then say a big happy hello to your new boss! Many freelancers do have more control over their work lives than people with day jobs, and this certainly can be a pro to freelancing, but oftentimes this argument is taken a few steps too far. Clients are bosses (regardless of how badly you want to call them “partners”) and they can be as, or more demanding than anyone else.

   If possible, freelancers will gain the ability to set their own work schedule, determine their workload, and have more control over their careers. So there is a certain element of “being your own boss” that’s attainable through freelancing.

2. The money is better. Many people choose to freelance in order to work less hours, in which case it’s very hard to argue that the money is better. For those that are planning to freelance full-time they’ll often cite this as a significant pro to freelancing.

   Your hourly rate should be higher as a freelancer. And if you were doing billable work 100% of the time, you should be making more money. But this is where you may run into issues. I always think about cab drivers in this circumstance. Cab drivers (in Montreal) make somewhere around $40-$70/hour based on the rate per minute or kilometer. That’s not too shabby…except for the fact that cab drivers aren’t collecting fares 100% of the time.

   As a freelancer, you can’t possibly bill for 100% of your time. You’ll be doing sales (unless it all comes in as referrals, in which case you still have to do a certain amount of negotiation, pre-project legwork), administrative work, etc. Keep that in mind when you’re thinking about the bags of money you envision hauling to the bank vault.

3. You get to work on a variety of projects. This is very often the case. And for many this is an exciting prospect. Even more exciting is the possibility of choosing what projects you get to work on, as opposed to having a boss handing them to you. Just remember: With variety comes uncertainty. Will the new client be reasonable? Will they pay? Will you be stretching yourself too thin? For some, uncertainty is the spice of life (or at least one of them), but it’s important to realize its potential impact.

   If you get to the point where you can pick & choose projects, this can be a huge advantage. But it takes time to get there. When first starting out, you may be accepting projects that are less worthwhile, interesting or rewarding (personally and cashflow-wise.)

4. You get to work from anywhere. For many freelancers, the appeal of working from home (or the cafe nearby) is too hard to resist. And I certainly see the appeal. But working from home is not without its challenges. You need a good office setup. You need to minimize distractions. You may get roped into doing chores around the house which you previously escaped from since you weren’t around! And you might become isolated. Oftentimes when people return to the world of day jobs from their freelance careers they point to a need for more camaraderie, and a greater opportunity to work with, and socialize with others.

   If you are working at a day job and having the freedom to work anywhere (or at least from home) is important to you, I’d suggest you negotiate telecommuting time. More and more employers are amenable to this type of work setup.

My goal isn’t to burst any bubbles, only provide a perspective that may differ from what many freelancers espouse. Let’s take a look at some of the cons of freelancing…

The Cons of Freelancing

1. You do less of what you really like doing. That’s a pretty broad statement, and certainly won’t apply to everyone. In your day job you may be doing very little of what you really enjoy. But, when it comes to freelancing, there’s no doubt that you’ll do a fair amount of work outside of your expertise, in order to maintain and build your business. Think: Business setup, taxes, accounting, bookkeeping, sales, marketing, contract negotiations, project management, etc. Even worse, wait till a client doesn’t pay on time and you have to hound them — collections is miserable.
2. You have to manage yourself. Some might consider this a pro, but freelancers will often talk about the need for a ton of self-discipline. More than that, freelancers have a huge amount of responsibility resting on their shoulders. The buck stops with you. There’s nowhere to hide. You can’t blame office politics, bad bosses or co-workers, or anything else. It’s much more difficult to have a bad day or even take time off (ask freelancers if it’s harder to go on vacation…) because of the responsibility to keep things chugging along.
3. You have a lack of security. This is one of the most common “cons” people will point out about freelancing. There are three issues when it comes to security: job security, income security and.

   Personally, I don’t believe in job security. Unless you’re part of a union, you don’t have a lot of job security. And to rely on job security as a means of keeping your job is a good way of finding yourself unemployed in a hurry.

   So I don’t consider the “security” offered at day jobs to be much of a pro versus freelancing except when it comes to the steadiness of the income generated. Freelancers need to plan for uneven income. And this goes beyond having some money saved. Think about when your prospects set their budgets and spend their money. Map out month-to-month your busy and slow times, so in following years you’ll be more prepared.

   Freelancers also have a lack of security when it comes to health benefits. Simply put, freelancers are at a disadvantage when it comes to benefits, pensions, and other rights given to full-time employees. Recently in Quebec (and perhaps in all of Canada), they changed the rules governing maternity and paternity leave, so that freelancers could take paid leaves just as employees can. But in most places around the world, those types of benefits are not given to freelancers.

4. You don’t own your work. This is the biggest con of being a freelancer. You’re doing work for someone else, and when you’re done, it’s handed over and that’s that. You retain the knowledge gained, and you may even be given some rights to reuse work you produce for a client, but ultimately you don’t own it. You will most likely not gain any future value from the work (although there are opportunities to negotiate equity deals for work, etc.) Still, it’s not really yours any longer.

   As a result, you’re not building up any equity or long-term value as a freelancer. Your rates might go up. You might get more work. You might earn more money. But at the end of the day you’re still a mercenary going from contract to contract, hand-to-mouth.

   This is why I’m an entrepreneur more than a freelancer or consultant. By starting a company I’m creating the opportunity to build value in something beyond just myself. I want to own what I do (or at least a piece of it) so that there’s something more tangible to hold onto at the end.

Deciding to go freelance is a major step. It has personal and financial implications that go beyond “simple” benefits like working from home, or setting your own schedule. You need to go into freelancing with your eyes open, aware that it’s not the panacea some claim it to be.

The pros of freelancing are attainable, but they’re goals not givens. If you succeed, then you will be working on projects you’re passionate about, you will be setting your own schedule, you will be making more money. Those opportunities exist, but like starting a new company, the amount of personal, emotional and financial investment can be extremely high and needs serious thought.

photo by FlyingFox