A Teenager's Guide to Effective Freelancing

At the beginning of August, I gave a talk titled “A Teenager’s Guide to Effective Freelancing” at a web conference called Tomorrow’s Web

Paul has asked me to write this outline of the talk I gave. I hope you find it useful.

The reason I did the talk was because I was concerned that a lot of young people in this industry are jumping into freelancing or setting up their own (illegitimate) companies without thinking much about the consequences. In a lot of ways, I was unprepared for the realities of working for myself straight after finishing my A-Level exams, and I wanted to give the opportunity for others to learn from my mistakes

Although a big part of me really enjoys freelancing, another part thinks I would have been better off if I’d gone to university, or if I’d got a full time job with an agency. Working for yourself isn’t easy, especially if you’re a teenager.

Young people typically have a poor representation in this industry, stereotyped as being arrogant and cocky, churning out bad code and designs for quick cash. But the majority of young people I know care a lot about improving the industry and the quality of work they produce.

Being young in this industry will open a lot of doors for you, but it will also be a barrier when you’re trying to win jobs because people still perceive us in this way. But if you just try and be the best that you can be at what you do, and keep your feet on the ground, it shouldn’t be a problem.

The Pros of Freelancing

You Are Your Own Boss

One of the great things about being a freelancer is that you are in charge of your own time, there’s nobody to tell you what to do, and if you fancy a day off, you don’t have to write a fake sick note.

Varied Work

Every day is different, and every project is different. One day you could be designing a website, the next you could be writing a CMS. You’re as flexible as your skills.

Varied Hours

If you’re not a morning person, you can start work in the afternoon. You can also fit it around other things, and if you want to take some time off to go out with your friends, you can reschedule when you work.

It’s Challenging

It’s a challenge. You’re constantly learning new skills, and you can adjust your work to stretch you more depending on the projects you choose to work on.

Money

You have the potential to earn a lot of money, which can’t be a bad thing.

The Cons of Freelancing

You Are Your Own Boss

Being your own boss may be a really exciting proposition, but working for yourself is not easy. If things go wrong, it’s your fault. You’re in charge of everything, your finances, all the boring admin stuff, not to mention it can also be incredibly lonely.

Varied Work

You don’t get to do what you love doing all day. Your typical day will consist of meeting with clients, doing your finances and taxes, writing proposals, and then doing whatever it is you actually work as. You have to be good at all these things, and not all of them are very interesting.

Varied Hours

One month you could have lots of projects on and be up late every evening trying to meet the deadlines, and the next month you could be twiddling your thumbs with no work lined up. Freelancers typically have to work longer and more irregular hours than people employed by someone else.

It’s Challenging

Freelancing is hard enough for an adult with industry experience, but you’re going to be learning on the job, whilst learning how to work for yourself. And if you’re freelancing whilst studying, it’s even harder.

Money

Finally, you have to think about money. If you’re employed by someone, you get holiday pay, there’s someone else to worry about your taxes, and you’ve got some protection if you suddenly find yourself out of work. With freelancing, you’re pretty much on your own. One important thing to bear in mind, and something that I’ve been struggling with, is finding somewhere to live. If you want to rent a house, or get a loan, credit card, mortgage, you’re more of a risk so prepare to be initially turned down for these things. Especially if you can’t prove your income.

Limited Company or Sole Trader?

This is your first dilemma. You have the option of setting up as a company, or a sole trader. A limited company means you trade under a name rather than as an individual, and a sole trader is basically another word for freelancer. Which one you become is something you’re going to need to work out for yourself because it depends a lot on the type of work you do, but here’s why I decided to become a sole trader. As a sole trader you don’t have to pay corporation tax so there’s also less paperwork. There’s less risk if it all goes wrong, it makes a lot of sense when you don’t have employees, and keeping accounts is a lot easier and generally cheaper. You can always make the transition from sole trader to limited company later.

Roles

As a freelancer you’re going to have to be lots of different people at once, doing all the roles that an agency would hire people to do. You may not be good or confident at all the roles, so it’s a good idea to learn the basics of all of them.

The Creative

Even if you’re a developer, you’re going to have to do a bit of design work. This covers the sites or applications that you make, right down to the stationary that you produce. The way you present your ideas and work matters, so learn the very basics of design. Read Mark Boulton’s book,

The Developer

The same goes if you’re a designer, you have to learn how code works so that you understand your work better, and client projects may demand it. Read Richard Quick’s book Web Design in Easy Steps

The Accountant

You’ll need to know a bit about finances to make sure your accounts and books are in order so you don’t get any nasty surprises from the taxman. Attend a free Business Link course on Bookkeeping and Accounts (UK only)

The Businessman

To be a good freelancer, you also have to be a good businessperson. You’re going to need to talk to clients, manage projects to make sure they don’t go over time and budget, and deal with all the legal aspects of freelancing. Attend a free Business Link course on Starting Up (UK only)

The Marketeer

You’re going to need to be a good marketeer in order to win clients. Read this article by Paul Boag on Selling your Services

Fix Up, Look Sharp

Maintain your Profile

If you don’t have one already, make yourself a personal site. Keep a blog, upload your CV, and use it as a sandbox to experiment with. Don’t forget to keep your portfolio up to date with all the work you’re doing.

Keep a Contract

Writing a contract may seem really scary, but it’s probably a lot more simple than you think. If you want to know more about what should go in it, I’ve done an article on my blog about Writing Your Service Contract

I Get Money

Business Banking

You’ll want to set up a separate business bank account to make it easier to do your taxes. Each bank offers a different deal for setting up a business account – a lot of people like Abbey because it gives you free business banking for life. I like Natwest because they’re closest to where I live, and I’ve heard lots of people say good things about First Direct who are a purely online bank which offers 24 hour phone support. Which is good if you’re nocturnal.

Startup Costs

You’re going to need a bit of money in the bank when you first start up to pay for set-up costs. This may include things like a computer, software, mobile phone, stationary, business cards and hosting.

Working out your rate

As the saying goes; time is money. If you value your time, charge more for it. The less you charge for your time, the less you appear to value it, and the less people will take your opinion seriously. A good way to find out the minimum you need to charge to break even is to use the Freelance Switch Rate Calculator. It’s really good and I recommend you give it a go.

Keep Track of your Money

You need to keep track of all the money coming in and all the money going out. This is so that you can work out how much tax you need to pay. Keep all your receipts and invoices.

Ask for money up-front

Don’t be afraid to ask for money up-front. It’s ok to ask for up to a 50% deposit before you start on the project. This means if the client cancels the project halfway through, you’re not out of pocket.

Taxes (This bit’s UK specific)

I can’t talk about freelancing without talking about taxes. I know too many teenage freelancers who are not trading legitimately, and it can lead to a lot of problems further down the line.

Why Should I Register?

You cannot call yourself a company until you are registered with companies house. You cannot call yourself a freelancer or a sole trader until you register as self employed. If you make money and do not register with the Inland Revenue within 3 months, you are trading illegally.

The Tax Trinity

I’m going to very quickly cover what National Insurance and Tax Returns are, but I thought I’d mention what VAT is since there are some lucky young people earning quite a bit of money. You only need to pay VAT if you’re earning £68,000 a year or more, although you can pay it voluntarily. This may sound like a dumb idea, but some people think you look more professional if you’re registered for VAT.

National Insurance

National insurance is something that your employer sorts out if you are employed by someone else. If you’re a freelancer, you have to do it yourself. You have to pay £2.40 a week for national insurance, and this covers things like your pension. This rate stays the same regardless of how much you earn.

Tax Return

A tax return is different. You pay this every year, and it’s based on a percentage of what you earn.

Doing your Self Assessment

I use an online app called FreeAgent. I upload my bank statements, and it works out how much tax I need to pay. It also creates invoices that I can send to my clients, and it has a big online community where I can ask questions. It’s still pretty daunting though, which is why it’s a good idea to prepare yourself for it.

Be Ye Not Afraid

The first thing you should do if you’re thinking about setting up is to call the Business Link. Just phone up and say “hi, I’m thinking of becoming a freelancer” or “Hi, I’d like to run my own company”. They’ll then send you a business pack, and you can go on free courses that will help you set up. The free courses are also perfect networking opportunities, because you’ll be in a room with people who are all setting up their own business, and will most likely be needing your services. You can also get grants and vouchers and free pens, so give them a call and see what they can offer you.

Mistakes To Avoid

Charging too little

In my experience, the majority of young freelancers charge far too little. Not only is this bad for you, but it is bad for this industry. It gives a misrepresentation of the value of our services.

Offering too many services

You don’t want to try and offer lots of services, because you’ll end up being mediocre at everything. I see a lot of young freelancers offering print design alongside web design, SEO and backend development. These are all completely different things, and to be really good at any of them, you need years of experience in that field. So stick to offering one service.

Taking on too much

Never take on more work than you think you can handle. While I was studying, I took on a fair bit of freelance work, and ended up burning the candle at both ends. It affected the quality of my schoolwork, freelance work and my personal life (which I didn’t end up having a lot of that year!)

Referring to yourself as “we” rather than I”

This one annoys me quite a lot. If you have a professional website for your work and it’s just you, do not refer to yourself as “we”. People don’t care if it’s just you, what they care about is the quality of your work. And if they find out it is just a one-man band, and you’ve been giving them the impression it’s more than that, they’ll think you’re being dishonest.

Linking from your professional site to your non-professional Twitter profile

The Internet is a powerful thing. Don’t badmouth clients on Twitter. They may be watching you, and prospective clients may be as well. Be kind to the hand that feeds you.

Not having a contract

Not having a contract when I started was probably the biggest mistake that I made. Because of your age and lack of experience, people will try to take advantage of you. If you don’t write a contract, clients can run away without paying, and there’s not much you can do about it. They can then take the work that they haven’t paid for, and sell it to others and make money off it. Not only does a contract protect you, it makes you look more professional.

Awesome Tips

Business Cards

Keep some business cards handy at all times. You never know when you’re going to need them.

Buy a laptop instead of a desktop

I recommend you get a laptop instead of a desktop. They’re a bit more expensive, but you can take them to client meetings, do work on the train, and if there’s a sudden powercut, you don’t lose half an hour of work.

Backup to the cloud

Make sure you backup all your work. An external drive is a good idea, but it’s no good if it’s in the same place as your computer. You should keep them separate in case they are stolen or your house blows up. I use Dropbox which saves my files to the Internet every time I make a change. It also means if I log onto a different computer, I can still access all my files. It’s free up to 2GB, and also lets you share files between other users. Much better than emailing big files to clients.

Get a Skype Number

To save a bit of money, get Skype, which lets you make phonecalls over the Internet. I didn’t want to give my mobile number out to clients because they will call very early in the morning sometimes, so I got a Skype number. This is just like a normal landline number (mine’s a London one), but it calls your Skype account and clients can leave answerphone messages.

Useful Resources

Freelancing Applications

  • http://www.meltdowntech.com Ben Everard

    A fantastic guide Anna, made me think about many aspects of the job that hadn’t crossed my mind before.

  • http://jkg3.com Jamie Knight

    Hiya,

    Nice post there Anna, goes along with a great presentation. Lots of useful information with a bit of luck many more young people can enter the industry legitimately.

    The only area i think you may have missed (or not emphasized) is that you must be using legal software on the right license type. Many young people (and companies as it happens) fall down as they do not use legitimate copies of their software.

    Although many of the popular packages are expensive when brought new, there are both cheaper options and cheaper ways to get your hands on the software.

    With things like IDEs and places to write your markup there are many both free and paid for. On the mac i use Coda as my main coding environment. Its relatively cheap (£99) and is perfect for my development needs. I also use MAMP pro & fireworks CS3. All the software i use each day was purchased for less than £300 over the course of about 6 months.

    I purchased my copy of fireworks (which was boxed and sealed) from eBay, just after CS4 came out. It cost me about £110. It retails for almost triple that! in reality having the most up to date version of the software is not that important when you are starting out and taking advantage of the deals as new versions are released can save you a small fortune.

    Great article anna, look forward to seeing you speak sometime.

    ^licks^

    Jamie & Lion

  • http://www.cennydd.co.uk Cennydd

    In some circumstances setting up as a sole trader is higher risk; you are personally liable for all debts accrued. A Ltd company, as a separate legal entity, can offer you some protection from this.

    And there’s one beneft of registering early for VAT, which is that you can claim back VAT on any of your expenditure. Useful if you need to buy a lot of software, new laptops etc. Just bear in mind it means your rates are likely to be higher than your non-VAT competitors.

  • Dave Kirk

    Very detailed, well written article Anna, and although you were writing it under the title of a teenagers guide, pretty much everything is relevant to all ages.

    It’s really nice to read an article that isn’t full of self promotion.

    My only slight disagreement is where you say that being a Sole Trader is less of a risk if it all goes wrong. As a sole trader you a 100% liable personally, so if you get sued, owe debts, etc then it is you who is liable for this. As a limited company you have limited liability (hence the name :-)), and my understanding is that you are only liable to the value of the shares that you own in the company.

    I may not have the details exactly correct but it would certainly be worth getting professional advice about this for anybody starting out.

    • http://summeraway.com Steve McLintock

      Great article Anna! I recently setup http://summeraway.com and although it isn’t really to do with freelance I got some really good tips from it, thanks!

  • http://maban.co.uk Anna Debenham

    @Jamie “In reality having the most up to date version of the software is not that important when you are starting out”
    Couldn’t agree more. I’m still using the Macromedia Studio 8 suite which I bought for around £80. It still does the job.

    @Cennydd “You can claim back VAT on any of your expenditure. Useful if you need to buy a lot of software, new laptops etc.”
    Good point. The only reason I didn’t register voluntarily for VAT was because I didn’t want the hassle of dealing with 3 different types of taxes rather than 2 while I’m still getting to grips with it.

    @Dave “My only slight disagreement is where you say that being a Sole Trader is less of a risk if it all goes wrong. As a sole trader you a 100% liable personally, so if you get sued, owe debts, etc then it is you who is liable for this”
    Yep, fair point, and you’re right, it’s a good to get professional advice, especially if a lot of money is changing hands. I guess in this case I was thinking of very small business operations with small amounts of money changing hands. If you set up as a sole trader and you get into a large amount of debt, assets like your house could be at risk. Although if you’re a Limited Company, sometimes you still have to make personal guarantees, so it swings both ways.

  • http://jose-mota.net José Mota

    Absolutely brilliant, Anna. I agree with Dave, it’s not just for teenagers, it’s for everybody!

    Even though I have a full-time job now, I used to freelance and had a terrible experience because not only because I was starting fresh but also because I wasn’t that proficient with some techologies. Making sure you spend enough time preparing the project before implementing it is a huge plus.

    Registering for tax paying can be a PITA in some countries. For instance, in Portugal — the country I live — registering takes a lot of redtape and money and most of the times it doesn’t look that profitable. I guess it’s just a matter of commitment and work expectancy.

    Congratulations, Anna! Would love a meetup in a future.

  • http://www.matto1990.com Matt Oakes

    Great article. I’m 18 and at the minute I do web development in my free time. Next year I’m off to university, however at some point I’d love to set up my own freelance business in the future and might do a bit while at university if time allows it.

    One question I always have is is there a market for freelance web developers. I can do design but it never looks brilliant (see my site for an example) but I love making the backend bits work. Is there a market for freelancers doing that type of work or do people come to freelancers looking for the whole package of designer, developer etc?

  • http://cargowire.net Craig Rowe

    Just an additional thing to say in regard to licensed software (although more related to product/service startups than web agency style freelancers).

    Microsoft run a scheme called BizSpark (http://www.microsoft.com/BizSpark/) where as a startup you can gain access to a large chunk of MS software for free (with a very minor cost after 3 years). It may not be for all companies/individuals as there are restrictions (http://www.microsoft.com/BizSpark/Faqs.aspx#Startup-Question2). For example, it is more geared towards people making products/services than web agencies but it may be relevant to some.

    It may be that there are other companies or organisations providing similar schemes so it’s always worth a hunt around.

  • http://maban.co.uk Anna Debenham

    @Matt – It shouldn’t be a problem at all. You could either team up with a designer, do freelance work for an agency, or learn a bit more about design fundamentals. Maybe you’ll find this book useful http://www.pragprog.com/titles/bhgwad/web-design-for-developers

    Oh, and I should probably pimp Paul’s blog post on it too http://boagworld.com/design/when-developers-design

  • http://www.freeagentcentral.com Ed Molyneux

    Anna – best article on getting started in freelancing I’ve seen in a while, and thanks for mentioning FreeAgent!

    One of our goals in building FreeAgent is that it should really simplify the paperwork and bookkeeping side of things. You can then make decisions about your business (Sole Trader or Ltd Co? VAT registered or not?) based on what the right thing to do is, rather than how much extra paperwork is involved.

    Anyway, best of luck with freelancing…

  • Christophe Divina

    Anna, I really think that this is the most easy-to-understand, informative and practical piece of advice about freelancing I have ever read so far. I’m not a teenager but I’ve found your post extremely helpful. You’ve really made my day! Thanks!

  • http://www.matto1990.com Matt Oakes

    @anna Thanks for the tips :) I’ll give the article a ready and I’ll buy the book if the extracts looks good. I know how to do XHTML and CSS fine, it’s just putting it together into a design I find tricky :P

  • Kath

    This is a really good article and I’ll be passing on the link to some freelancers that I work with.

    Just a note where you mention Business Link. In Scotland, you can contact Scottish Enterprise’s Business Gateway http://www.bgateway.com and if you’re under 25, you may also be able to get startup advice, and possibly grants, from the Prince’s Scottish Youth Business Trust (PSYBT) http://www.psybt.org.uk

  • http://www.miggle.co.uk/blog Alick Mighall

    Great article. Re ‘You are your own boss’ – this is true, its a pro and a con. However, in the time I’ve plied my trade as a freelancer I’ve tended to always think of my clients as the boss. The dynamics can often be the same as in any standard manager/staff relationship. The client (manager) will set objectives, which create expectations that you as the service provider (i.e. staff member) has to manage. The downside can be, that where as boss/staff relationships in regular jobs will be governed by employment law, in the freelance world, its going to be largely governed by how well you’ve defined the terms of engagement between you and your client. You need to make sure the relationship isn’t open to abuse!

    I’m actually currently interested in touching base with people in the Sussex (ideally Brighton) area who are looking at starting out as freelancers – you can contact me via my site.

  • Justin Lison

    Honestly, this article really helps someone to avoid common mistakes that many freelancers face and though it is admirable for that I feel that there is more to freelancing than running with a ball that you’ve actually gotten to roll somehow. What about the long term objectives of any business that must be in check at all times, to measure the effectiveness of your business model? A good way to keep in check with the business’s grand strategy to achieving any success can be done with the simple use of a “balanced scorecard.

    If you have never used a balanced scorecard it is easy to follow and can keep you in check with the strategy you have defined as “your” business strategy. To use this quick system you must first identify your business strategy, because the balanced scorecard will be needing it to measure how well closely you are following it. Then with your strategy identified the scorecards are constructed with just four criteria of measurement. These four criteria are 1) Customers, 2) Financial, 3)Internal Business Process, and 4) Learning & Growth. Using those four criteria, relate each to your business strategy by identifying objectives, measures, targets, and initiatives relative to each of the four scorecards. Once that task is completed define intervals of time that would allow you to analyze your business model against the “balanced scorecards” to see how effectively you have managed your tasks. It could save certain areas of your business that you simple chose to avoid, for one reason or another. There is no better tool to measure the vision and strategy of a business organization. Thus it was certain worth me mentioning in response of such a relevantly similar topic.

  • http://www.d-sear.co.uk Gareth Thomas

    Lots and lots of really good information here, not just on going into the web industry. This all applies whenever you setup on your own.

    One thing that is often overlooked is the use of FOSS software when pricing this sort of business up. Cards on the table, I am a card carrying geek and don’t even have a machine with Windows installed in my home. But, looking at the ‘free’ alternatives can save some of the initial capital required, without having to worry about licences.

    Software like GIMP (I wish they would rename that), Inkscape and OpenOffice.org will allow you to have nearly professional level tools for very little. OpenOffice I think is a no brainer really – that can save hundreds on an application suit that is not core to your business.

    Actually, it would be interesting to know if there are any freelancers/web agencies managing without the expensive licences. Perhaps there is a feature on the ‘free’ alternatives available here.

Headscape

Boagworld