Long-Term Considerations for Freelance Designers

Working as a freelance designer is appealing to a lot of people because of the flexibility and independence. Freelancing also can provide designers in a wide variety of situations with a way to earn a living, and in some cases, the experience that is gained becomes just as valuable as the income. However, freelancing for the long-term presents some unique challenges that should be considered from the start.

Freelance designers are often so focused on the present and the immediate future that a long-term career plan is non-existent, or at least under appreciated. What needs to be done in order to complete that big project? Where will the next client come from?

Many don’t want to deal with the stress and unpredictability of freelancing forever. Without a long-term plan you may earn a decent living, but down the road, you’re likely to find yourself wishing you had been more prepared. Some freelancers are comfortable enough in their careers that they would like to continue to freelance for the foreseeable future. Others would like to eventually expand their business and limit the amount of client work that they must do.

Most freelancers have compelling reasons to pursue their own interests in projects that they own rather than spending all of their time on client work. Obviously, there is nothing wrong with client work, but as a freelancer being paid for your services you will be limited to how much you can earn because you are limited to how much you can accomplish working on your own.

In an article I wrote a few years back, a few readers left some thought-provoking and insightful comments on that post about their reasons for working on their own projects and other thoughts on the subject. One reader in particular, Brian, left a comment that I thought summed it up pretty well:

I really feel freelancing should never really be full time. Or if it is, it should be a path to starting a small agency, or something more lucrative and self sustaining. The ultimate problem with freelancing is that you are limited by yourself. You can only make as much money as you can literally work at one time. Yeah you can raise your rates, learn a new skill, take on bigger projects, but ultimately you can only do so much as there are hours in a day. With a business you really have no limitations. Aside from having other creatives to collaborate and draw ideas from, people to actually interact with on a daily basis, and being a business owner, I feel it is truly the only way to remove the salary cap that is freelancing.

I feel that freelancing should be something you do on the side to supplement your income. Just adding two websites a month to my salary based job adds a nice padding of income. I work at a small agency and it’s nice to be able to get up and go someplace to work. If you’re not truly the business type, look for small agencies that you can rise quickly and get on a closer level with the principals – while building your skills freelancing.

I feel freelancing should be a path, not a destination.

While I wouldn’t agree that freelancing should never be full-time, I do strongly agree that it’s important to see the opportunities that could be just a few steps away in the future. If freelancing is a path and not a destination, a long-term plan is needed to help navigate through that path and ultimately wind up at the destination that we’re after.

How a Plan Impacts Your Career

All of us, regardless of our occupations, need to give thought to our long-term plans and where we want to be later in life. In almost every case, where we want to be in the future is not exactly the same as where we are now. Getting to where we want to be takes movement, and movement requires a plan, or else it’s wasted effort.

With a plan you can identify the distance from where you are to where you want to be, establish some key achievements that will get you there, and set up a plan to meet them one by one.

The core work involved in freelancing day-to-day, week-to-week, month-to-month tasks get the job done, but it may not help you to develop and secure your future unless you make planning a priority. By establishing a plan you’ll be able to see what changes, big or small, you need to make, what skills you need to develop, and why it needs to be done.

Considerations for Long-Term Freelancers

1. Is Freelancing a Temporary or Long-Term Part or Your Career Path?

Everyone has different reasons for freelancing. For some, it can be a starting point that allows them to build their experience and their reputation in the industry before a transition to working as an employee at a design agency or as an in-house designer. For others, freelancing may be a short-term solution after losing a job. And for some freelancing may be a long-term part of their career.

Freelancing is capable of serving all of these purposes, but it is important to consider what you want to get out of your time and effort freelancing. If it is a short-term solution that you hope will serve as a springboard to a full-time job you will probably approach it much differently than if you plan to still be freelancing 10 years from now. If you’re leaning towards that long-term approach there are a lot of things you should consider, and that’s what we’ll look at here.

2. Should You Work Under Your Personal Name or a Business Name?

Most freelance designers work under their own name, but if you are planning to freelance for the long-term you may want to consider using a business name. Both approaches have pros and cons, so you’ll need to consider your own situation to determine what is best.

Using your own name is best for building name recognition and a reputation within the industry, and it’s easier since there is no need to form a business entity (this depends on the laws and regulations of where you live and operate the business, so check to be sure). On the other hand, forming a business may be beneficial if you think there is a chance that you may want to expand at some point instead of working independently, or if you may want to sell the business at some point in the future.

For a more detailed look at this topic please see:

3. Are You Likely to Expand or Hire?

As was mentioned in the previous point, if you are planning to hire other designers or expand your business at some point you may choose to use a business name. There are also other things that you may want to consider if this is a likely part of your plan. First, would you plan to have your team work in a single location, or would you plan to have everyone work remotely? If you’re leaning towards having everyone work from a single location you may want to do some research to see what you will need to spend to rent an office in your area. You may also want to consider the area where you live, and if you would be able to find the right people for your team or if you would have to go somewhere else.

Plans to expand would also impact your need to re-invest in your business, or to come up with capital some other way. Being responsible for employees is a huge jump from working as a freelancer, and it’s something that will require a lot of planning and preparation.

4. What Business Entity Type Should You Form?

If you do choose to use a business name you will need to determine what type of business entity you should form. This is another situation where there is no right or wrong decision, it’s just a matter of what is best for your personal situation. The prudent thing to do is to talk to an accountant and an attorney to get professional advice about which type of business would be best for you, and how it would impact your taxes.

5. Is There Likely to Be a Long-Term Demand for Your Skills?

In an industry that changes very quickly, it’s necessary to consider the specific skills that you have and if they will allow you to continue to earn a living in the future. Regardless of what skills and experiences you currently have, you’ll want to continually work on improving and adding new skills as the industry adapts and evolves. That continual development will come in part from being challenged with client projects, but you’ll likely need to set aside time and money for educational opportunities, whether it be books, attending conferences and training sessions, online memberships to training resources, etc.

6. Is Your Specialization Sustainable?

Going along with the previous point, if you have a specialization is it something that you expect to still be relevant and in-demand several years into the future? If not, you should use those same skills that you already have in other ways that will bring more stability. As an example, a designer who specialized in MySpace pages a few years ago is pretty much out of luck today if he or she has not adapted.

Regardless of whether you specialize or not, the industry will change over time and you’ll need to be able to learn new things and stay current with the skills that are in demand. But if you have a specialization you may be a slightly higher risk for the long-term. That doesn’t mean that you shouldn’t specialize, but it does mean that you should be aware of the risks associated with your specialization and be prepared to adapt if necessary.

7. Will You Need Advancement Opportunities?

Most people who chose a particular career expect to be able to advance and work their way up the ladder over the years. With freelancing, it’s possible that you could be in essentially the same position for a very long time. You’ll have the opportunities to work with different clients and to mix things up in that way, but if career advancement is a concern it’s something that should be given plenty of thought before deciding to embark on freelancing for the long haul.

As a freelancer, there are ways to get the same benefits that you would get from career advancement as an employee. One of the biggest motivations for career advancement is a higher income. As a freelancer, you will be  in control of your prices (of course you will need to be able to find clients that also think your prices are reasonable) and you will gain experience and hopefully becoming more valuable to your clients over a period of time, so increasing your prices periodically is possible and reasonable.

Another motivation of career advancement is greater responsibility and the ability to have a bigger impact. This type of advancement is also possible by expanding your business and converting it from a freelance operation to a design agency with employees. Although it is not for everyone, if career advancement is a major concern for you this may be something to consider.

8. How Much of Your Income Will You Re-Invest?

Something that many new freelancers overlook is the need to re-invest in the business. Putting some of your income back into your business is necessary, especially if you plan to freelance long-term. Some examples of expenses include hardware and software, educational and training resources, events and conferences, marketing, etc. How much you will need to re-invest will depend in part on your goals and plans, but it’s something that needs to be considered in order to make sure that you have enough money to live on and to run the business.

9. Will You Be Insured?

One of the biggest reasons that many people prefer to work as an employee rather than as a freelancer is the benefits that are provided by employers, most significantly health insurance. Without being a part of an employer-sponsored plan health insurance can be rather costly. Many freelancers are able to get coverage through a spouse’s plan, which is an ideal solution if it is an option. For those who don’t have this option, there are a wide variety of types of health insurance plans available and you may be able to get something that would give you coverage in case of an emergency without paying high monthly premiums.

In addition to health insurance, you may also want to consider business insurance. Talk to an insurance agent to see what is available and what would meet your specific needs, but errors and omissions insurance is common.

10. How Will You Save for Retirement?

Another benefit that many employees receive is a 401(k) that allows for retirement savings. Without an employer-sponsored program, there are still plenty of options for freelancers to save for retirement, but it will take a little more effort. IRAs (Traditional, Roth, and SEP) are common choices but speak to a financial professional to get personalized guidance. If you plan to freelance for any extended period of time, retirement savings is something you should consider regardless of your age. Without taking action in this area it’s easy to lose track of time and realize that you’ve missed out on a few years where you could have been saving.

Steps to Planning for the Long-Term

1. Set Aside Time

Freelancing can be a pretty hectic and busy career. Setting aside some time to think and plan is the first step. You may already know exactly what you want to do down the road, but chances are you could use some more time for planning how to get there.

2. Think About What You Enjoy

What aspects of freelancing do you enjoy? What other types of work do you enjoy that freelancing cannot give you? Think about what you would like to do in the future and how freelancing can fit into that plan. If you want a lot of things that freelancing cannot give you, you’ll need to think about how you can eventually make a transition.

3. Think About How You Can Earn a Living Doing What You Enjoy Most

The ultimate job satisfaction will only come when we’re able to support ourselves and our family doing something that we truly enjoy. If there is something that you’ve always loved but never had the opportunity to pursue it professionally, try to identify opportunities to combine your interests and your career.

Freelance web designers have a unique opportunity in the fact that they are skilled and able to build websites for themselves to own and operate. For example, if you enjoy traveling it’s possible that you could build a website of your own focusing any aspect of travel (photos, a blog, reviews, bookings, etc.) and potentially down the road that could turn into a full-time income for you.

4. Set a Deadline to Meet Your Goal

Even though your plans will be long-term, it’s still helpful to have deadlines or target dates of achievement. Deadlines for this purpose aren’t intended to label your career as a success or failure, but rather to give you an idea of where you are now and to keep you motivated to move forward.

5. Set More Detailed Checkpoints

Once you have a big-picture goal in mind, work backward and think about what needs to be done to get you from where you are now to where you want to be. These smaller goals and objectives will keep you on track and focused on the actions that will help you to achieve your ultimate career goals.

What’s Your Opinion?

For those of you who freelance, what are some of the most important considerations regarding long-term freelancing in your opinion:

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