Safety in Numbers--and Dollars
If you fail as a freelancer, the reason will likely not
be that you arent good at what you do, but because you
didnt set aside the financial resources to keep you
going until your business got off the ground. The solution?
Create a substantial bank account balance before you even
think about quitting your full-time job.
How much do you need? A rule of thumb says at least 6 months
to a year of living and operating expenses, but you may need
more, depending on how difficult you feel it will be to establish
yourself and build up a client base. If youre entering
a competitive field, it may take up to a year or more before
you're earning as much as your old salary.
Also budget for the following items:
- Equipment: Computer, fax machine, new phone line, answering
machine, office supplies, stationery, business cards.
- Health insurance: Unless you are covered by your spouses
plan, set aside money to pay your premiums.
- Taxes: You now are responsible for all your withholding
and Social Security payments. See a qualified accountant
to find out how much you need to set aside or even pre-pay.
- Operating costs: Gasoline, phone bills, internet access,
and anything else you need to spend money on.
- Professional organizations: Dues and membership fees,
as well as lunch meetings.