Becoming a freelancer in any field of work is a big decision and if you are already considering it, there must be some good reasons to do so. However, there are some financial aspects everyone should consider first, before taking that final step. Let us go through some of these next.
Consider both Profit and Profitability, Before Finalizing Your Decision
If you are making such a major shift in your professional or business model, it is obvious that you are doing so in search of better results on many fronts. One of the primary reasons to go freelance is, of course, profit, so this decision must be in favor of making your time more profitable. However, there is more to discerning profitability than just the profit amount itself.
Whereas profit can be determined at any point by subtracting all expenses from the total revenues generated, profitability is much more complex than that. Profitability is a measurement of the company’s overall success rate, which is calculated based on profit margin ratio, gross margin ratio, and ROI ratio. To know more about estimating profitability, and how that estimation can help you to determine whether the decision to go freelance would be a good one for you at this point, check this post on advancepointcap.com.
Do You Have the Financial Background to Back It Up?
Whether you are a professional or not, leaving the security and assurance of reliable income is a financially daunting decision to make. Therefore, you must have the necessary financial background to keep you going for the initial stages. Major investments might be necessary for the purposes of buying equipment, paying the rent, marketing and branding your business, etc. The necessary funds could be arranged via loans, prior savings, investors, and partners, but the financial background should already be in place by the time you finally become a freelancer. In other words, you need to arrange most of the funds before taking the plunge, not after.
Estimate Your Chances of Success
We previously touched on the topic of estimating your expenses and profitability, but there is another related aspect of freelancing that you should also consider. This would be the success rate of freelance ventures in your field of work. Do your own market research, look online, and talk to people in the same field to get a feel of what to expect. A low success rate is never a good sign and if you cannot find a few reliable names in the sector who have made it after going freelance, then it might be a good idea to reconsider your options.
Sometimes, if your chances of success are not great in a particular field, you just need to switch over to a related field of work with better prospects. However, until and unless you have covered everything we just discussed here, it might be a good idea to hold off for the time being and continue in your current job until such time something changes.