Freelancing Pros and Cons

To the salaried worker, sitting in a cubicle, watching the top executives reap most of the rewards from their efforts, it is tempting to dream about chucking the 9-to-5 job, and exploring the alternatives. Every such "salary slave" has probably, at one time or another, wondered what their lives would be like if they were to become freelancers.

The barriers to such a change are continuing to dissipate, if not disappear entirely. A growing number of service sector jobs are no longer tied to a corporate site, but instead can be accomplished just as effectively off-site. This is especially true for any jobs based on information management, of which there is a growing percentage in the United States, as more people become "knowledge workers".

Furthermore, US corporations of all sizes continue to choose outsourcing as a strategy for increasing operational flexibility and reducing direct labor costs. This requires them to be more amenable and open-minded to farming out projects to freelancers — domestic as well as foreign.

This can be bad news to union employees who assumed that they could follow in their parents' footsteps, and work for a well-established corporation for decades, until retirement, at which time they would receive a pension. Yet it can be good news to the working stiff who has been stiffed too many times by precisely that type of corporation, and who wishes to have far greater control over their professional destiny.

If you are the latter type of individual, then you may feel blessed that almost every field that can be done as a corporate employee, can nowadays be done on a freelance basis. But it's not as easy as replacing the dress clothes with pajamas, and declaring that you are your own boss. Freelancing has many advantages, but just as many, if not more, disadvantages.

The Upsides

There are countless perks to working for yourself, and I can only touch on some of them here. You can set your own hours. For instance, you can sleep in every morning, as long as you are able to complete all of your needed work. You can choose to work in the evenings, if that is when you are most productive.

You can schedule off-site meetings to match your personal schedule, and to avoid rush-hour traffic. Even better, if you never have such meetings, then you will no longer be losing time, gas, and serenity commuting to an office.

Freelancing allows flexibility in other respects. You have greater freedom to choose the type of work — pursuing new projects that best match your skills and interest, and turning down those that don't. It is much easier to increase or decrease your workload, to match changing demands from your family, such as homeschooling or illnesses. Instead of negotiating unsuccessfully with your employer to make your job part-time, if needed, you can simply transition current projects to fellow freelancers.

You also have a greater say in the type of people with whom you work. A salaried employee usually has little control over the integrity and social skills of their supervisors and coworkers. But a freelancer can evaluate potential clients before accepting any projects, and screen out those who demand too much, pay too little, or are otherwise undesirable.

By not being tied to a particular corporate office, you can usually work in the comfort of your home. For most types of work, you can put your business information and tools on a laptop, and join the growing ranks of mobile professionals. This is especially attractive to those who prefer spending their winters in more temperate climes.

As a freelancer, you have the potential to make more money, because revenues that would otherwise have to go toward paying for all that corporate infrastructure — such as a huge building or an even larger "golden parachute" for the incompetent CEO — can now go to your bottom line. You can adjust and optimize the fees you charge to match changing market conditions and your growing skills.

The Downsides

But working outside of the corporate world is certainly no bed of roses. Dreamers in cubicles often speak of "being my own boss", with no understanding that, as a freelancer, you don't have one boss anymore — you have many, and they are called clients. If you don't satisfy your clients' demands, then you won't get paid.

You can set your own hours; but ask any small business owner — including a sole proprietor — whether they could still make the same amount of money working 40 hours per week. After they have laughed uproariously and ruefully, they will likely describe to you their seven-day work week.

Rather than your home office being more like a relaxing home, your home may become more like a stressful office, as you spend mornings, afternoons, and evenings glued to your computer. You must stay on top of the influx of email messages and phone calls from clients, finish the work for those clients, get paid for it, market your services, and keep your skills current.

Switching to freelancing will be a learning experience like no other, and not all of the surprises will be pleasant. This is especially true the first time you calculate your business taxes, and you discover that you effectively have to pay twice as much Social Security taxes as before, since your former employer used to pay half of them. Another nasty surprise is learning that a client, for whatever reason, does not plan on paying your latest invoice. Possibly the worst surprise is realizing that you were so busy that you forgot to make your quarterly estimated tax payments.

As a freelancer, you no longer benefit from, well, having benefits, such as medical and dental insurance. You also lose the economies of scale enjoyed by sizable corporations. For example, if you need paper copies of a report, you will pay much more in money and time driving to your nearest office service retailer, than what your corporate competitor will pay to have the same work done in their copy center.

Switching Sides

To determine if full-time freelancing would be a wise alternative for you, you can learn more by reading books and articles written by actual freelancers — professionals who have experienced firsthand the joys and tribulations — and not just cubicle mates who are speculating idly.

Yet nothing beats gaining that experience yourself, either through contracting or moonlighting. Working for a contracting firm allows you to still receive a steady paycheck and benefits, but also experience a greater variety of projects and clients. Moonlighting is the harshest and most effective way to gauge your freelance potential (aside from quitting or losing your job). You still have your salary and benefits, but often at the expense of sleep and family time.

If you decide to break the shackles of the "golden handcuffs", first seriously consider the disadvantages as well as the advantages. And don't forget to pay those quarterly estimated taxes. For some reason, the IRS never forgets.