Financing Your First Steps as a Full-Time Freelancer

By James OBrien January 23rd, 2013

So, you’ve made the leap from traditional employment to full-time freelancing as a writer. The jump is one thing, but much money will you need to weather the transition?

And, if you haven’t done it yet, can you plan ahead to make your leap a success?

Here are some key steps to consider as you move from the office world to the home office. Any full-time freelancer who’s just made that courageous change will need to take stock of how to protect themselves against the potential costs of injury and the legal liability that comes with writing for your own clients.

Financing the Leap

A timely unemployment check has jump-started more than one full-time freelancing career.

One of the changes you’ll encounter as you move from traditional work to that of the independent writer is the way cash flow alters during your initial weeks and months.

The concept of money-in-hand means what you need to live per month, over the span of however many months it takes to create a full-time freelancing income that equals that amount.

To understand that equation, figure out the baseline of what you need to make to cover all your fixed expenses. 

When it comes to making it work in your first several months as a full-time freelancer, you’ll need a way to cover what could be a cash-flow interruption (as you move from the tradition weekly/bi-weekly paycheck), and then a strategy to cover what can be the slower pace of payments that come at the start of an independent writing life.

Here you have a choice in how to meet this challenge:

1. Save (and/or Frontload Assignments)

“Saving six months worth of expense money is a pretty hard thing to do.” — Mridu Khullar

If you’re working a full- or part-time traditional job, create an account into which you place some portion of every paycheck. You’re saving toward your initial freelancing bridge goal.

In other words, if you expect it will take you 3–6 months to ramp up to a sustainable bridge between traditional and independent-writing revenue, then that’s your goal before you leap — a goal but not necessarily a prerequisite.

“Saving six months worth of expense money is a pretty hard thing to do, and while it’s ideal, it’s not always possible, or necessary,” said Mridu Khullar Relph, a full-time independent writer.

“My advice is that you have enough assignments over the next few weeks or months that will sustain you, or money coming in that you can count on,” she said. “It’s not exactly money in the bank, but knowing that you’ve got, say, eight assignments due over the next four weeks means that you’re doing okay and will manage to keep up some work and income coming in.”

2. Cross the Streams 

“I was able to test out the freelancing waters under less pressure than someone who is looking to freelance full-time.” — Khaleelah Jones

In this case, this means you start freelancing on the side while still working your traditional gig. The idea is to create a second revenue stream that overlaps with your day job until you’ve built it up to a point that you can make the leap from one to the other.

Khaleelah Jones, founder of Something With Words, said she got her start in very much this way.

“I was lucky in that I was able to take a ‘test run,'” Jones said. “I started freelancing on the side as a way to generate extra income, then took the leap when I left my job to go back to school for a master’s degree. I was able to test out the freelancing waters under less pressure than someone who is looking to freelance full-time. I was therefore able to work out the kinks, especially on the financial side, and grow my client base while in school, which I believe was a huge benefit.”

Of course, if you’ve landed in independent writing because you’ve been laid off from a traditional job, then the unemployment insurance is likely to help the initial start-up costs. It’s a hard road for many, but a timely unemployment check has jump-started more than one full-time freelancing career.

Protecting Your Writing Business, Protecting Yourself

What happens if you write something that results in a lawsuit from a source or subject in the story?

If you haven’t taken the time to incorporate, you could be subject to the kind of liability that dips right into your own pocket and assets. To prevent this, form an LLC around your writing business. The cost of doing this differs from state to state, in the U.S., but the range of the expense is something in the order of $50–$400 in fees, plus the price of a professional to help you do it right — figure an additional $500–$1,000.

Another consideration that many freelancers put off until much later — and sometimes it’s too late when they do — is health insurance. A couple of weeks of serious illness can undercut your best-laid plans when it comes to revenue, especially at the beginning of your new independent-writing career.

If you’re not able to plug into a significant other’s insurance plan, price out what a COBRA plan would look like in your region — and whether you would qualify.

Long-term, put in some time as a full-on freelancer and then contact an organization such as The Freelancer’s Union. They can connect you with the health and dental care that will help you to protect your hard-won progress.

If all of this seems expensive, that’s because it can be. But it’s not so pricy that you can’t plan for it and make your transition from traditional work to independent writer a reality.

Beyond this, there’s still the costs setting up an at-home office, but that’s a topic for another time. For now, get to planning, and best of luck!

Image courtesy of grivina/Shutterstock

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