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Switching to freelance could be a smart finance move

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Switching to freelance could be a smart finance move as the end of furlough scheme approaches’ 1 By Paul Aveyard is Head of Digital at Markel Direct , experts in professional indemnity insurance. As the end of government support schemes near, many employees will find their financial futures become uncertain. Freelancing is an attractive option for those who may find themselves out of work for a period of time – increased flexibility, the autonomy of ‘being your own boss’ and the freedom to work on only the projects you want to – but it’s important to fully understand the steps required to switch to freelance. Markel Direct have outlined the key considerations for those who want to make the move: Develop your business plan for the short and medium term Plan your marketing to potential clients Give yourself a financial buffer (where possible) Decide on a business structure and accountant Insure your freelance business Take time to rest so you don’t burnout Let’s run through each step in more detail. Business plans Developing a business plan for the short (12 months) and medium (3 years) should be the first step. Some basic considerations for your plan should include: What services will you offer? What will be your differentiator from the competition/unique selling point (USP)? What will you charge? How will you market to potential clients? (More on this below) How much do you expect to turnover? How much will you pay yourself? You can find more help on writing a business plan on GOV.UK. Marketing Ensuring you have a pipeline of work is essential when freelancing – not just for staying busy, but also for managing cashflow. To attract clients, raising awareness of your business through social media can be a cost-effective way to reach audiences that may be looking for your services. Make sure the content you are posting clearly illustrates your expertise in the space. Useful guides, hints and tips articles and even free consultations that act as a hook to larger projects are great ways to attract clients. Invest time and money into a professional website that will pay dividends in the long run. Financial Buffer One of the main pain points for freelancers is cash flow. Clients don’t always pay on time, so if you have the funds available, it’s useful to have a pot of money to help you through months where you don’t get paid on time. Paul Aveyard You should also think about seasonality – for example, workload can slow down over the summer and festive period whilst clients may not be in the office as much, and so work may be harder to come by. Having a cash reserve can help you weather those quieter periods. Business structures From a tax and legal perspective, freelancers are different to employees. Whilst there are many different ways you can structure your business, most freelancers choose to operate as: Sole trader – as a sole trader, you are the business and so all profits […]

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