How to Freelance: The Low-Risk Path From Software Developer

Ah, the eternal opportunistic question: how to freelance?  You work as a software developer, making $100K per year or something. This is a great wage, and so you have a great life, sitting pretty high up atop Maslow’s famed hierarchy. But then you figure out that Steve in your group is actually a contractor, and a little later, you figure out that they pay Steve $70 per hour. A quick google search for “work hours per year” and fast math tell you that Steve makes $145,600 per year (so you think, anyway). Suddenly, you feel less like a prosperous citizen and more like a sucker.

How can I get some of that Steve money?

Not far behind that thought comes another. I should become a contractor! And then, finally, we get back to the titular concern: how to freelance?

What to Do Immediately

Perhaps you’ve heard of a Chinese Proverb. “The best time to plant a tree was 20 years ago.  The second best time is now.” We can apply that same reasoning to your activities for going on your own.

I’m talking here about building a brand for yourself. Usually, this orients around making yourself a website, but it generally means making yourself an established commodity. Maybe you speak at conferences (that your buyers attend — more on that later), give webinars, or have a podcast. But almost certainly, in the middle of all of that, you have a website and you use that to establish yourself.

I’ll get to why you need this stuff in a minute. But just trust me and plant one 20-year-overdue seed right this moment. Start thinking of a name for your business. You could use your last name. Doing this would have made my business entity something like Dietrich, Inc or whatever. But do this and you’ll probably regret it sooner than later for various reasons. If you start thinking of names now, then when the time for more action arrives, you won’t have to agonize and settle.

Pick something easy to pronounce, memorable, and something that won’t confuse the daylights out of people trying to type it into a URL bar. For instance, I once briefly considered naming my content business “Five Nines Content,” in order to convey reliability. Imagine me telling someone that name and then they go to type it into their phone’s browser. “Uh, is that the number five and the number nine… or the number nine five times… ugh, forget it!”

Anyway, start this brainstorming right now. Open Trello or Evernote or whatever and start peppering it with ideas, good, bad and indifferent. Zero risk, zero commitment, and nearly zero effort.

Freelance Like You Mean It

As you contemplate how to freelance from afar, start to get used to the idea that you’re a business and not a worker. Rapper Jay-Z once said, “I’m not a business man — I’m a business, man.” A while back, I quipped this into a blog post title advising developers to think like this.

I’ll offer an opinionated piece of advice here. You should incorporate, probably as an LLC. You could operate as a sole proprietor, using your personal social security number for business documents. Or you could file a “doing business as” (DBA) to put a business-y facade on the same thing. But when you do that, the only thing separating you from a moonlighting hobbyist becomes your resume and sales pitch. Put some skin in the game, and start learning how business works from the very start. You should have a good name by now, too, thanks to your brainstorming head start.

Don’t Let the Man Get You Down

Now, you might balk a little since I promised a non-risky path to joy. Here’s the thing, though. Incorporating is bold but not risky. You’re out a little money for the incorporation fees, but you’ve probably spent more money on Netflix in the last year. But founding a corporate entity in no way jeopardizes your current situation since you don’t need to do anything with it just yet. You can operate without income indefinitely, and you can even take tax breaks for years without the IRS raising an eyebrow. If they don’t care, no one will.

What about non-competes? The draconian kind that jealous employers make you sign at metaphorical gunpoint?  That could cause you problems down the line. So if you want to freelance at some point, but want to go the low-risk route, start interviewing for jobs that don’t subject you to this. Once you get a nice offer, quit your current job and jump.

Grow Your Trees

Once named, incorporated, and working as an employee somewhere that doesn’t try to own your soul, you can start to lay the groundwork for operating as a business. This means creating your website, first and foremost, and starting to add content (probably in the form of a few landing pages and a blog). You’ll then use this as the cornerstone to start establishing credible authority around what you want to do for pay. For instance, if you want to get gigs doing legacy rescue of Java codebases, write about legacy Java codebases.

This is a long play — make no mistake. Audience building, speaking gigs, podcast appearances, etc., will come. But for right now, you’re establishing the paper trail that an independent pro needs. Better you’d done this 20 years ago, so start ASAP.

Understand Your Buyers and Speak Directly to Them

But one more thing as you do this. For the love of God, don’t make the mistake that I did and that so many software developers make. Don’t get caught up in building Stack Overflow reputation and impressing other software developers. This is tempting, but points, Twitter followers, and techie blog readers are vanity metrics for freelance programmers because they impress your peers and not your buyers.

I’ve described this dynamic at length, but this behavior mainly impresses journeyman idealists, who have no buying authority. When you run your own business, you don’t want to talk to some guy with an algorithm trivia gauntlet anymore than you want to talk to an HR rep or a recruiter. Ultimately, those people aren’t your buyer and they don’t matter. You want to talk to, and thus impress, and thus blog and speak to, buyers — the people who do matter. These are probably managers, directors, or even executives. If those people really want your services for a contract, they’ll ignore their senior principal architect regardless of how many gold Stack Overflow badges he has.

Understand the Look of Your New Pipeline

Now, you’ll need to understand the idea of a work pipeline. This refers to your upcoming work. For instance, right now, I have a couple of short consultative gigs I might do this summer and a few potential Hit Subscribe clients interested in starting this summer. Those opportunities form my pipeline.

When you work as a salaried employee, you only have a pipeline for a week or two every few years. Your boss says the wrong kind of magic words at perf review time, you get furious, you call a recruiter and BAM, pipeline. You wind up with 100 prospects and then you go and beg them to give you work. Er, excuse me — you “interview” with them.

Way too many new freelancers (myself included many years ago) just duplicate this frankly terrible work-finding strategy. But instead of begging for salaried gigs, they become Steve, give up their 401Ks and health insurance, and beg for contracts. Often they stick around for shorter periods of time, but they have the same idea.

I once thought the secret to getting out of this trap was to find 4 different organizations to hire you for 10 hours per week each. It isn’t. That’s a pure fantasy, and I chuckle a little at my innocence for thinking that would happen.

The way out of this trap is to have a constantly stocked pipeline and to take on shorter duration projects with clear exit criteria. And doing that means having grown trees — a wide audience of potential buyers that know you and want to pay you. With this situation, you can roll off your gigs every month or two and you won’t need to scramble to find the next one. And you certainly won’t have to beg journeyman idealists for a stamp of approval.

How to Freelance? First Dress Rehearse

At this point, you should have a business entity with a nice name, a growing reputation, and relative freedom to do your own thing after hours from your job. You’ve still incurred no risk up to this point, and no sense starting now. Keep paying your mortgage, buying clothes for your kids, and going to the Caribbean each winter.

In fact, now is the time to continue your education. You understand how to form an LLC now and how to setup a website. But you have little understanding of the nuts and bolts of a business. So teach yourself… with a little, tiny moonlighting gig.

Once you’ve established your profile a bit, you’ll get nibbles here and there in the form of vague inquiries. Or, if you don’t, seek them out a little. Look for small projects and don’t worry much about the competitive hourly rate (if you want a good rule of thumb for what you can reasonably charge on the market, divide your salary by 1,000 to get your hourly rate). Your goal now is to learn how to make a client happy and complete a job, soup to nuts.

This teaches you how to deal with contract negotiation, proposal writing, managing the project, invoicing, and keeping your books. And, in the theme of this post, it lets you do it with really low stakes.

If that goes well, ask for referrals from your now-pleased client and try to scale up your moonlighting. If it goes poorly, learn and try again.

Grow and Boomerang Your Way to Independence

By this point in the execution of the gameplan, you’re likely months or years in. And you face a good problem to have.

You make decent money working full time. And you now make some pretty killer money moonlighting since you’ve gradually raised your rates and boosted your cred. You also spend time continuing to grow your marketing and brand, in order to keep your pipeline stocked with buyers.

All of this is great. You can easily pay your mortgage and another one on your new lake house, and you can buy designer clothes for your kids. And that annual Caribbean vacation? You’d upgrade that to an all-inclusive Monte Carlo resort, but who has time to vacation or even see family?

Eventually, you’ll hit a point where your full-time job starts to interfere with your burgeoning freelance practice. And that’s the time to flip the switch, with almost no risk. But as you do this, you have one last de-risking play left. You can try to boomerang your erstwhile employer — approach them about becoming a client instead of an employer.

If you execute on all of this, you can go from gainfully employed to gainfully self-employed with little risk.