When should I turn my freelancing job into a business?

Introduction

When I started freelancing, the question of whether or not to transition from an independent contractor to a business owner was the last thing on my mind. I just wanted to get paid for doing what I enjoyed, which seemed like a pretty good deal at first. But in time, I realized that being an independent contractor had severe limitations. For example:

1. How do you want your day-to-day life to look?

Before diving into the business side of things, thinking about how your day-to-day life will change is essential.

• Do you enjoy working alone or with others?

• Are specific hours of the day better for you to work?

• How much time do you want to spend freelancing?

• Do you need to be around people, or do you prefer working in solitude?

• Do you choose a steady stream of clients, or would you instead work on a project once and then move on to another one?

• Is your preferred way of communicating with clients via email or phone calls, video calls, or face-to-face meetings?

• What tasks do you like doing most in your job (i.e., designing websites vs. writing content)?

3. Do you enjoy the work you are doing?

The second question to ask yourself is if you enjoy your work. The idea of freelancing may seem like an excellent way to control your career and make a lot of money. However, it's not all fun and games.

The reality is that freelancing can be a challenging lifestyle if you don't enjoy the work itself. You need to be passionate about what you do, or else it will be impossible for you to find fulfillment in your career as a freelancer.

One of the best ways to figure out if this is right for YOU as opposed to someone else is by asking yourself these questions:

• Do I like the people I work with?

• Do I want my boss/team leaders?

• What environment am I working in? (office space, home office, etc.)

• What type of projects am I working on? Are they interesting enough for me?

4. What are your long-term goals?

Evaluating your long-term goals is essential, but examining your short-term ones is equally important. Suppose you're planning to start a business. In that case, it helps to determine how this will relate to your overall vision for the future and what kind of lifestyle you want.

As an example, let's say that you want to eventually own a home on the beach in Boca Raton; however, if your current financial situation doesn't allow for this type of purchase right now, then maybe starting up a small business (such as selling products or services) would be an acceptable alternative and would still allow for some upward movement within your career path.

5. Do you have a consistent income?

You'd be surprised by the number of freelancers who have no idea how much money they make. If you're one of them, it's time to get your act together and find out. You need to have a consistent income to run a business, which means knowing how much money you are making and how much money you are spending. After all, if we don't know whether or not our business is profitable, we can't make any decisions about whether or not we should invest more time and effort into growing it.

You also need to know what percentage of gross sales goes toward expenses—what's known as profit margin—and how much money must be made each month (or quarter) after expenses for your business model to work financially. If the number is too low, then perhaps it's time for some changes!

Think of the day-to-day life you want to live, and ask yourself if you're satisfied with your work. If so, this is a positive indicator that freelancing may be right for you. But if not, it might be time to find a different job.

6. Who is managing your time right now?

While working on your business, you want to ensure it's still a job. You don't want to work 100 hours weekly to grow the business. It's essential to have some sort of balance between your work and personal life.

You need time for yourself and your family, friends, hobbies, health, and more. This is what we call work-life balance (W.L.B.). Having a good W.L.B. means having enough time for everything in your life and managing stress properly at work.

7. Is it essential to have a flexible schedule, or do you prefer a more predictable routine?

When starting as a freelancer, it's tempting to want your own schedule. You should know that having flexible hours is not always easy. This can be done quickly if you want to work from home and take frequent breaks.

However, if you prefer working in a coffee shop or at the library where many people are around and available for consultation when needed—or if having a set schedule would make it easier for others (like family members) who depend on your income—then flexibility may not be possible for very long.

Another consideration is travel: Do you plan on traveling frequently? If so, finding clients who allow remote work might prove difficult because these types of clients will likely want someone who can meet with them face-to-face, at least occasionally, so that they can keep tabs on their projects' progress or provide input into its direction as necessary.

Through this process, you'll probably discover that post-expense profits are lower than expected. This is a good thing! Now you have the information to change your business model before investing further in growth.

For example, suppose post-expense profits are insufficient to cover your living expenses. In that case, either rate must be raised or costs cut. On the other hand, if your goal is to live off of savings and investments later in life, it might not be worth the risk of starting something that could threaten those goals. In this instance, it's better to wait until you're more financially stable before making significant changes to your career path.

* One thing most people don't consider when thinking about their long-term plans is how much time it'll take them to get there. For example: If I want ultimately, it's up to you whether or not flexibility is essential.

8. Could you see yourself hiring people to help you with your business?

If you find yourself able to hire other people, it may be a sign that your business is doing well. This could mean it's time to start thinking about expanding your operation or making a business plan.

If this sounds like something you'd be interested in, take a look at the resources on how to run an effective business:

Consider each of these questions carefully and reflect on what type of work and lifestyle will best serve your needs and abilities as a freelancer before deciding to transition from an independent contractor to a business owner.

Consider each of these questions carefully and reflect on what type of work and lifestyle will best serve your needs and abilities as a freelancer before deciding to transition from an independent contractor to a business owner.

• What is my goal?

• Do I want to grow my income? (If so, consider taking on more clients.)

• Do I have the time or desire to do the administrative work needed to become profitable at this point? (If not, continue working with existing clients.)

When working on your business, you want to ensure it's still a job. You don't want to work 100 hours weekly to grow the business. It's essential to have some sort of balance between your work and personal life. You need time for yourself and your family, friends, hobbies, health, and more. This is what we call work-life balance (W.L.B.). Having good W.L.B. means having enough time for all these things in you. What type of work do I most enjoy? Do I want to focus on a specific niche, or am I more interested in generalist freelance jobs? (If you enjoy both, consider taking on specialized work while continuing your work as an independent contractor.

Conclusion

If you've made it this far, congratulations! You're well on your way to making a decision about whether or not to make the transition from independent contractor to business owner. As we've covered in this article, there are many factors to consider when making this decision—but don't let yourself get overwhelmed by all the details. The most important thing is that you take time to think through each question carefully and reflect on what type of work and lifestyle will best serve your needs and abilities as a freelancer before deciding if it makes sense for you.