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How To Get Started With Freelancing In 4 Steps?

15.11.2018 15:34 / Rami Hirvelä

How to Get started with Freelancing_ (1)

[The original Finnish article was written and posted on 12th November 2018]

The shortage of software developers, designers and other professionals in the field of technology arises in the news on a regular basis. Nearly every time, this sparks a discussion about the level of wages and the factors behind it. One of the most provoking, recent articles on the matter was published by Helsingin Sanomat on 23rd October. This article, as well, brings up the wage comparison between employment and entrepreneurship.

Similar publications are cited on a regular basis in the contacts we receive at Finitec from experts considering entrepreneurship. The most typical concerns in these discussions are the risks, the responsibilities, the potential level of wages and the practical arrangements. These discussions have been highly rewarding, so I thought that it might be worthwhile writing a “Freelancing – How to?” blog post.

Since the topic at hand is an extensive one, this first post paints a high-level picture, later we will be deepening the topic by moving the emphasis on smaller subjects. Typically, we divide the principles of freelancing roughly into four parts.

 

1. The Core Product: How to recognize and develop in-demand expertise?

As in all business, everything starts with demand, followed by developed supply. So, the first thing to do is to analyze your strengths. After this, check if your potential and skills match the market demand.

For example, as a software developer, you will receive a useful benchmark for the global market from HackerRank’s annual Developer Skills report, or from Stack Overflow’s Developer Survey. In addition to all public data available, you can always contact our Lauri or me for advice on making your own development plan.

 

2. Marketing: How to present my skills?

To this day, evaluating the skills of potential technological experts has been executed by searching their CV for keywords, as well as browsing their professional history. Since technology keeps evolving at an increasing rate, the ‘CV bingo’ method is becoming rather irrelevant in evaluating professional skills. Don’t get me wrong, CV is still a relevant piece of sales material, but by focusing on describing your projects (goals, roles, technology stack etc.) and your motivations, you will make your message more effective.

Probably needless to say but putting together a pitch will be remarkably easier when your LinkedIn and GitHub accounts are up-to-date and feature your most relevant pieces of work. You don’t necessarily need a website if you’re already well connected and active in other channels but naturally it will give you a competitive edge if you creatively showcase your skills and personality on your site.

 

3. Sales: How to map and gain opportunities?

When your skills are clearly presented in your selling materials, you are ready to start acquiring customers. The next step is to start thinking from where and how to find your first gig.

The typical way to sell your expertise is on an hourly rate. It is advisable to think how much of your time you are ready allocate to selling, administration and contracts. The ‘core competence vs sales and admin’ ratio reveals quickly the reason why most experts gone entrepreneur choose to work with an agency. To make a slightly commercially flavored statement here I can say that Finitec has been the leading tech talent agency in Finland since 2005. To tone that sentence down a bit I should mention that some fresh, warmly welcome competition has arrived in the field. Companies such as Talented, Ten Times and Ework have similar offerings as Finitec.

That being said, if you decide to do sales by yourself, make sure to have a very systematic sales approach. Build statistics of your activities to understand what kind of impact social media, ‘traditional’ contacting and networking events have on the size of your network and, ultimately, relevant work opportunities.

 

4. Starting a company: What are my responsibilities?

Once you have secured your first engagement, it is time to think about starting your company. In Finland you can make contracts even if you didn’t have an up-and-running business set up yet. The first time you will need one, is when you send your first invoice to your customer. Fortunately, starting a business is easy at the Finnish Patent and Registration Office website.

The most common questions on entrepreneurship are often related to fees and taxes. To simplify things, the mandatory fees can be divided into three categories:

 

  1. Personal income tax
  2. Value added tax
  3. Pension insurance for the self-employed (YEL)

Let’s say you register as a private trader and your monthly work is worth 11 000€. You send the invoice to your customer, adding the VAT 24%. The total amount is now 13 640€. After receiving the payment, you pay the VAT (2 640€) to the government. This leaves you with 11 000€, of which you pay your personal income tax, according to your annual income. Let’s say this amount is 4 000€ per month. After this, you pay the pension insurance according to your own estimate, yet at least 120 € per month as a new entrepreneur. This leaves you with 6 880€. Finally, you pay all the extra costs, like your accountant’s fee (~50-90€ per month).

The regulations mentioned above differ slightly from those of a limited company. This is the reason why choosing the right form of business is a hot topic for many beginning entrepreneurs. For this matter and many more, practical advice is available at https://yrityksen-perustaminen.net (in Finnish only).

 

Conclusion

I hope this high-level clarification was useful for you. Becoming a solo entrepreneur is no magic trick, as long as you get acquainted with the people in the field and find out where’s the marketplace for your expertise. As soon as you start working on your first project, things start falling into place and the practicalities of being an entrepreneur will become a routine.

If you are considering entrepreneurship, looking for your next gig, or wondering about your next career step, feel free to book a meeting with me or Lauri. More often than not, our advices have ended up being useful :)

 

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Aiheet: developer, entrepreneur, freelance, sales, how to