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Ask HN: In the current crisis is starting freelancing doable?

130 points by iraldir 7y ago

Hey everyone, I'm a full stack JavaScript dev in London with 10 years experience, working as a tech lead in a big company. Because of the Coronavirus directly impacting our revenues, we are being put at 80% pay / 80% time. Do you think in the current climate it would be doable to start freelancing / consulting? I've already got an LTD setup because I used to be a contractor, but would like to look at turnkey work, where I'm given a project for a fixed price.

DataSciGuy_401 7y ago
My sense is that freelancers become a lot more attractive in the short / medium term because: - WFH / remote work will be the norm for a while, and if there's no benefit to having a FTE in the office with you, why not contract lots of work out? - freelancers are a lot more flexible in terms of overhead than FTEs, and the economy will likely be jittery for a while
ujjain 7y ago
Contract work has been under attack by IR35, fortunately this has been postponed by a year. These are uncertain times. A lot of contractors have moved back to permie and competition is high. You can try to obtain a 6 or 12 month contract if you have a decent stack of emergency cash (e.g. £25k) lying around. I wouldn't overanalyze it. Try to see your options out there. If you can get 3 contract offers in 1 month, then obviously you're still fine. If you can get 1 contract offer after trying for 3 months, I'd consider not taking it. Analyze and feel the market, so you can form your opinion instead of just going based on stories that other people produce. Some people can't find a low-paying job in the best of times. Some people will have plenty of opportunities in the worst of times.
- bluehatbrit 7y ago
  This seems pretty sensible advice to me. I've seen it go both ways for contracts at the moment, some are really struggling and others are doing really well. As ever, with contracting you're always taking on some risk when you come to the end of a contract. Much of your ability to get a contract will depend on your network (as well as skills and experience). A lot of it depends on whether OP is looking to do full time contracting and leave their current job or just fill the 20% of their time they have now. But either way, the best idea is to go and look for the work and see what's around.
  - cs02rm0 7y ago
    +1 The picture seems to be mixed, not just in the contract market. That might mean those out of contract are swarming around what's available, but you only need to land one contract to get started. Personally, I don't know anyone who's not moved to a new contract for the same client over the financial year boundary, but that's obviously just anecdotal and most of the contractors I know are in the same sector.
- arichard123 7y ago
  IR35 may be less of a thing now anyway. It's purpose (for those not in the know) is to stop people being taxed as companies while working as, effectively, employees. There are no hard and fast tests for this, exactly, but a number of smaller tests which taken together would paint a picture. One of these tests is "Where do you work" another is "Whose equipment do you use" and another is "Can you substitute someone in place of you". If the answer to these are "Home" "Mine" and "Yes if I could find someone but that's not the plan" then I don't think IR35 applies to you. Clearly that's going to cover a lot of contract work at the moment. Now, I don't know about Freelancing in terms of big businesses and what view their legal departments take, but UK small business doesn't give 2 hoots about IR35. I read with some amusement a couple of years ago in Private Eye that their freedom of information request to know how many people had been investigated and prosecuted for failure to declare IR35 status had been refused on the grounds that "the answer would undermine the rule of law" (more or less - my memory isn't perfect).
  - BerislavLopac 7y ago
    The problem with the recent -- currently postponed -- changes is not with the IR35 itself; it has been a thing for quite some time now. The changes are about redefining who is responsible for determining the IR35 status: in the old (still valid) regulation, the responsibility is in the hands of the contractor's company, while with the new changes it falls down to the end client. The reason this change is not welcome by the contractors is that many end clients -- primarily large banks and similar corporations -- do not want to bother checking each individual contract; instead they tend to make blanket decisions and declare all external contracts as inside IR35. And being inside IR35 is the worst of both worlds: you get taxed as if you're a full employee, but you're still not entitled to full employee's benefits like paid sick days or holidays.
    - bambataa 7y ago
      I must admit I’ve never really understood this argument against IR35. Contractors don’t get tax breaks to compensate for the lack of employee benefits. They get higher day rates to compensate for that. How the tax is handled isn’t part of the deal. If my last contract had been inside IR35 it would have still been better than perm pay for that reason. Too many contractors seem to view lower taxes as one of the perks of being a contractor and in that sense I think the reforms are well-intended though I wont’t say the implementation has been perfect.
- tomlagier 7y ago
  Just my anecdata - I've been trying to start freelancing after an aborted roud-the-world trip. I've moonlighted in the past and have a decent, if generic resume (FAANG, popular tech stacks). I've been looking for about a month now and have had two good proposals fall through, with three others being considered. The two that fell through were squarely due to COVID - businesses being ruled non-essential mid negotiation. So far it feels tough, but doable. If I go another month without a good project, I may consider going back to W2.
PunchTornado 7y ago
From my experience in the last 2 months, companies are scaling back their IT projects now. Got several contracts that were supposed to start later this year and they were canceled. So there will be more competition for less bread. But you can try.
- stevehawk 7y ago
  Counter to that, a lot of companies are scaling up their web/mobile presence and offerings because they can't let their customers into the building. I'm a contract programmer and business is arguably booming.
  - chuck3201 7y ago
    I'm also a contract programmer and looking at job sites the work is completely drying up. There are still a few contracts going but its a small fraction of what was available 2 months ago. What makes you say that business is booming?
  - tomlagier 7y ago
    What market segments are you seeing this in?
    - stevehawk 7y ago
      I mostly operate in the banking industry right now.
      - tomlagier 6y ago
        Good to know. Feels like a strong place to be. I'm just starting out and most of my contacts are in advertising in one shape or another, which hasn't been nearly as active. I wonder if the best way to get started in a niche is to just start cold-emailing with a service.
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toyg 7y ago
> we are being put at 80% pay / 80% time. Uhm, you want to check the fine prints. If you've been furloughed, which is typically what people on "80%" are, then the Treasury is paying your salary, but you're NOT supposed to work AT ALL. If you are actually working, you and your company are effectively committing benefit fraud. > Do you think in the current climate it would be doable to start freelancing Everything is doable with enough grit and enough resources; IR35 is a big concern though, because it has cut demand significantly by scaring companies away from contractors - even if the postponed changes are postponed again next April, HMRC will keep the finger on the trigger. This said, this is probably not the right time to sell in general; it's the right time to buy / invest / build while prices are rock-bottom. > would like to look at turnkey work That's not a great move at the best of times, unless that "turnkey" is highly automated (in which case it's likely to go away soon as somebody starts selling the fully-automated version). Fixed-price is a recipe for getting screwed.
- singlow 7y ago
  I thought the 80/80 was getting paid 80% of rate for 80% of hours, which was just a way to make 65% look bigger. I didn't think it meant working those 80% of hours for 80% of pay, which is just an hours reduction.
- hanoz 7y ago
  It's highly unlikely he's been furloughed. I don't think a big tech company would make the mistake of having staff on that scheme working anyway, they would be in a lot of trouble if they did, but as the limit is £2500 per month I'm sure the OP would be on noticeable less than 80% of his previous pay as a London tech lead if he had been. The 80% rate of the furlough scheme does seem to have prompted a lot of companies to think this is a suitable rate for a hard times haircut to give thier staff generally though, even they are still working 100%.
  - ghaff 7y ago
    A previous employer cut everyone's salary by 20% during the dot-com bust and I've heard the 20% figure thrown around quite a bit over the past month--with or without a reduction in hours. It seems to be a figure that a lot of companies settle on as a significant cost savings in the aggregate while not being such a big cut that (most) people can no longer afford to pay their bills or otherwise feel forced to just walk out the door.
PappaPatat 7y ago
I say (from experience) during hard times is the best time to start. You will not be lured into massive fixed costs and start with the absolute minimum and required, which you can scale up when your business start flying. As long as you start tight, you will stand a good change.
- chuck3201 7y ago
  What fixed costs would a freelancer have?
  - loriverkutya 7y ago
    - an accountant - web hosting - email service - company phone
- koffiezet 7y ago
  Highly depends on the pool you'd be swimming though. As a Javascript dev, I would not want to be looking for a contract right now...
MichaelMoser123 7y ago
i used to be a contractor in 2002. I was not a big success, but it paid my bills for that year. If you have similar inclinations then my advice is to stick with your current job, as long as possible...
Joe8Bit 7y ago
The contract market in London is in a difficult place at the moment. IR35 has generally made buyers weary (in a way they weren't before) as well as limited the type of work contractors are given; budgets have also been very tightly squeezed because of Corona, it's hitting contractors pretty hard. As a 'buyer' of these services myself, full-stack JS dev contractors are in one of the most oversaturated parts of the market and many in my network are attempting to find full-time work at the moment. Those that aren't are having to compete on rates in a way they never have before, definitely a buyers market. The other side of this is how much more volatile contractor work is than before, many companies with a mixed full-time/contractor team see their contractor pool as the most 'expendable' when cuts need to be made. Many people in my network have had existing long-term contracts ended with little to no notice. I've also seen limited evidence the pushing back of IR35 to next year is changing the policies towards contractors at large corporates, where (by volume) most contractors get their contracts. In short, I don't think it's the best time, but: if you do make the jump, make sure you have contracts SIGNED before you make any big decisions. Not a hand-shake or an email, a written contract. If you can get that, then you'll be in a good place.
- bambataa 7y ago
  This has been my experience as a contractor. My contract got ended early and some early leads ended with the client putting all contractors on hold. OP, if you can get something on the side then go for it but it seems very risky to go full-time at the minute. That said, you have a lot more experience than me.
- sbacic 7y ago
  Interesting. How is the market in London for frontend devs, specifically ones working in the React stack (plus some GraphQL)? I was in London last year and got the impression that it's a pretty lackluster market - high cost of living, average earning potential. I did some back of the napkin math and realized it only made sense if I worked remotely and occasionally visited London (once a month, twice a month maybe?). What do you think is the going rate in London for short-term (up to 3 months max, preferable 1-1.5 month contracts) freelancers that don't live there but can occasionally visit for meetings and such?
rwieruch 7y ago
It depends on your clients. Don't put all your eggs in one basket which I did. My two current clients in Germany are heavily invested in the automotive industry. They have everything on stop for the manufacturing and their software department is not working their full 100% capacity. On the other side, I hear lots of good news from people who are bringing physical services to the web. The digital revolution is just starting here and people have to keep up with more and more demand. So yeah, I think there is lots of opportunity. It really depends on who you are aiming for as clients.
- HeyLaughingBoy 7y ago
  > bringing physical services to the web What does that mean?
  - bdcravens 7y ago
    I presume companies who would never have considered online are being forced to rethink their position. For example, I take Pilates and my instructor quickly rethought how to do the exercises in order to continue remote sessions. Now that she's done that work, her clients in the future will not be limited to the local area.
- hinkley 7y ago
  I worked at a consultancy that advertised some pretty high-brow ideals, in several disparate areas I care deeply about. But pretty quickly 75% of their revenue came from just two customers and ideals are a luxury you can’t afford in that kind of a situation. It became a body shop in all but name. Even a founder left shortly after I did. I really struggled with the sense of betrayal from that and it’s a big data point in the “ask more questions” strategy I’m trying to cultivate. You can’t fire a customer when they are your only customer. At the very least, no matter how things get on any contract, save some time an energy to keep courting new revenue from other sources. That’s a big part of the job, and one I don’t think we as developers have enough perspective on.
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msrpotus 7y ago
If you can find clients to hire you, anything is possible. I started freelancing during the Great Recession (because I couldn’t get a job) and was able to make it work. Find at least one client before you quit, though. And make sure you have at least 6 months of savings so that even if that client fired you on day 1, you’d be okay.
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AznHisoka 7y ago
Just anecdotally, I've been hearing from friends that work from Upwork hasn't been affected from COVID. I think platforms like Upwork/Fiverr might even be more enticing for employers during recessions. Of course the pay there is not very competitive, but just giving you 1 data point.
- dep_b 7y ago
  I don't see less work on a similar platform, but I do notice that the competition for that work is more fierce. Though I expect given the fact that the demand never slowed down the musical chairs game will be over soon and the supply of developers will dry up.
- dpau 7y ago
  personally on upwork i have noticed a decrease in "good" job postings and an increase in proposals. anecdotal. but i think it's a mistake to assume that any business has not been fundamentally affected by covid in some way.
  - bdcravens 7y ago
    I'm sure it's also going to become a buyer's market, so the prices will drop. Does Upwork have a "UK only" option? I know they have a "US only" option, where you can bypass alot of the worst projects and the race to the bottom.
dep_b 7y ago
The requirements to start as a freelancer, in any kind of economic climate: * You have an accountant * You are not afraid to draw up a contract * Have a skill that has higher demand than supply and will remain so for a foreseeable time * Have worked on paid side projects a few times * One existing customer is interested in hiring you for 3 months (worth of money) or more Ensure you set aside 50% of which 2/3rds for tax and 1/3 for bad times. Maybe you pay less tax in the end. Yay! "Free" money! Never get in the reverse situation. If you don't have customers: don't do it. I have been making a lot of contacts in the 15 years+ I have as a professional and it's still hard to find work right now. If you're good for a few months then we're out of the pit in terms of demand for sure.
- themodelplumber 7y ago
  Huh. I know a lot of people who did almost none of this and freelanced their way into successful businesses. Why is having an accountant necessary? Where I live, even simple books from the office supply store and basic tax software will tell you what you need to know as a beginner. Personally I operated my business just fine for 15 years without an accountant. Drawing up a contract, similar, but here I would certainly mention that you can also consult a professional if needed, like a business consultant or attorney. You can also write a letter contract and communicate well enough that contracts don't matter that much in the end, which is the case for a lot of freelancers, guessing the majority. Knowing what skill has high demand is less important than finding a team or business that likes you and needs you. If you are in tech, someone probably needs your help. Many times they will find a way for you to stick around anyway, if it's a good psychological complement. If no one can pay you for three months worth of money, you get to decide how long you hang in there. Personally I found a veteran graphic designer who was excited to work together and started sending work immediately. Within 3 years of that I was turning down more work than I was accepting. But there was never any promise of income. Setting aside 50% would have been impossible due to medical bills at the time. I was lucky to have free rent via the in-laws and a wife who was working as well. Still, when freelancing picked up the problem quickly became burnout and setting boundaries. This has been the same with many of my peers. Many of us went through 2008 and even the dot com crash together. Demand was never really a problem except at the very start, but the perception of an urgent need to hustle for every last client can easily break you.
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DrNuke 7y ago
You have a network for sure and a lot of relevant people are still however working, so just spend a couple of days networking from home, making cold calls and preparing a portfolio?
evanmoran 7y ago
It's completely dependent on your ability to close the deal. If you can get the business then yes, if not then no, and it's hard to tell which will happen without you trying to get a deal signed. I'd recommend reaching out informally to places you have contacts and going from there. If you get no traction then you know the answer. Also, make sure you setup the contract with short milestones as some companies will slow in paying.
colinloretz 7y ago
Definitely. With such an economic contraction, you're going to see companies hiring contractors for a while because they don't have to commit to the full overhead of an employee. We saw a huge influx of freelancers in 2008-2009 and as the economy grew pre-covid19, more and more freelancers took jobs at companies because of salaries, benefits, etc. We will very likely see a repeat of that. Things to make sure of: make sure your rates take into account your overhead. You're going to have to pay for your own insurance, pay withholding taxes, business licenses, account for some time off/sick days, etc. After years of freelancing, attempting to set aside money for taxes and never paying into retirement, I started using an app called https://www.catch.co/ https://www.catch.co/ to track all of this and it allowed me to focus more on freelancing and less on the overhead.
sillycube 7y ago
why not start a side project but doing freelance / consulting? Contract work can take up a lot of time and energy.
jbverschoor 7y ago
If you have to ask this, then just don’t
saluki 7y ago
Aside from the legalities regarding your employer/employment. I expect more companies are going to be using freelancers for projects and tasks to minimize using employees since everything is currently uncertain. I wouldn't recommend using online services to find projects. Reach out to your network (outside of your employer/co-workers) to find projects. Research what to charge and how to manage your freelance projects. Now could also be a good time to use your 20% time to build up an audience for future info products or start stair stepping from products to a SaaS (Rob Walling, see below). You might enjoy StartupsForTheRestOfUs.com podcast, start in the archives with episode 1. Build Your SaaS is a great podcast as well. Good luck.

chuck3201 7y ago
> How the tax is handled isn’t part of the deal. It kind of is though? There is a reason why company directors are able to withdraw money as salary or as dividends - their income is less stable, they take more risk, so they are allowed to take more profit in good times but they feel the pain more in bad times too. Also, as limited company contractors, we haven't received any meaningful support from the government over Corona. Most contractors pay themselves a minimum salary of around £719 / month. The only government support available to such people now is to furlough themselves which gives you £575 / month, which is only a tad above universal credit. I'm not complaining about that though, its fair enough because we are NOT employees, but thats also why HMRC should stop treating us like employees too.
- bambataa 7y ago
  The day rate being higher accounts for the uncertainty. There is also nothing preventing a director paying themselves a monthly salary (e.g £2k) to flatten out the highs and lows. I very much doubt the directors of larger businesses are paying themselves a tiny salary and taking dividends. It seems to be only IT contractors who see it like that. Maybe it’s more widespread than I thought. If you deliberately structure your income to minimise tax you can’t really complain that it also minimises the support available. Edit since you said you’re not complaining. I understand in-IR35 contracts aren’t eligible for furlough? That’s definitely an example of poor implementation imo.
  - chuck3201 7y ago
    > The day rate being higher accounts for the uncertainty. Thats partially true, but if you look at outside IR-35 contracts, they might go for £400 / day. While the same kind of work but inside IR35 goes for £600 / day. So HMRC are effectively pushing the burden of a flexible work force entirely on the shoulders of contractors and the clients they work for. This is a huge disruption to both businesses and contractors alike, its also questionable if it will even raise enough revenue for HMRC to make the disruption worth it. > I very much doubt the directors of larger businesses are paying themselves a tiny salary and taking dividends. It seems to be only IT contractors who see it like that. You're right, directors of big businesses are paying themselves salaries in the 6 figures and taking out even larger dividends. But for myself, I am usually only in work about 6-9 months a year, I've never worked a contract for more than 6 months, when I'm not in work I spend that time learning and up-skilling to invest back into my career and business. I cannot realistically put myself on a salary of £2k / month when its perfectly feasable that I might be out of work for 6 months or more at any one time. The bottom line is that my working conditions and the benefits I receive (or lack thereof) are much closer that of somebody running a "real" business than it is to a permanent employee, so I should not be taxed as an employee. > I understand in-IR35 contracts aren’t eligible for furlough? Honestly I have no idea! I've only ever work outside IR35. I would have thought that inside IR-35 would be comparable to gig-economy workers and sole-traders so they should get 80% of their average earnings over the last three years. But again I am not certain of that. EDIT: If you're talking about people who work the same contract job for 2+ years and are effectively employed by their client despite working through a limited company, then yes I would agree they are cheating the system. But instead of going after those people, HMRC are making the majority of contractors like myself who are genuinely self-employed, pay for the sins of a minority of contractors who are actually in disguised employment.
BerislavLopac 7y ago
I'm not exactly sure what you mean by "this argument against IR35". My comment was trying to explain what the changes are about, not whether IR35 should exist of not.

dep_b 7y ago
My accountants saved me enough money every year to be basically free, while I don't need to worry about all kinds of stuff. I did my taxes myself often as well, but I didn't like to do it (instead of doing billable work or having spare time). Contracts: I really suck at them. I rarely do them. I got lucky so far, perhaps 2 clients that managed to pinch me but then again assholes will be assholes with or without contracts. But hourly work is easier than fixed price. Especially when it goes sour. > Knowing what skill has high demand is less important than finding a team or business that likes you and needs you True. I'm a specialist in mobile remote communication solutions which should be somewhat sought after right now but I can't find matching clients. I should have networked way more the last years than I did, and I don't consider myself a bad networker. > Still, when freelancing picked up the problem quickly became burnout and setting boundaries. The worst thing that always happens that after a slump in work I'm going basically YES YES YES YES YES YES to all work and I've never been in the situation that when one job finally came through at least two others I've YES'ed came at more or less the same time. So going from 0 to 60 hours per week for a few weeks. Which after a week or four really starts to turn into 30 hours worth of productivity while being behind your computer for 70.
- themodelplumber 7y ago
  > My accountants saved me enough money every year to be basically free This is true for a _lot_ of people. :-) "basically free". It made me smile because it's usually not "saved me megabucks," but rather "their work allows me to focus on other things and that's worth something to me."
- jlevers 7y ago
  As a consultant with no accountant -- in what areas did they save you that much? Entirely taxes?
  - dep_b 7y ago
    Yeah all kinds of tax laws I didn't know existed, places where I could earn a bit more, starting a company together with my wife so the earnings are divided instead of going into one big pile where the top part gets taxed most. But also a US$1500 bill that never was paid by a customer by going over bills vs the business bank account's movements.
poulsbohemian 7y ago
>Drawing up a contract, similar, but here I would certainly mention that you can also consult a professional if needed, like a business consultant or attorney. You can also write a letter contract and communicate well enough that contracts don't matter that much in the end, which is the case for a lot of freelancers, guessing the majority. Having had to take legal action against multiple clients, I assure you that it really does matter in the end.
- themodelplumber 7y ago
  I hope for your sake that's not the majority of your work! Personally I've found that if I have to reference a contract to make a point, it's almost always a red flag-level event for that relationship.
  - poulsbohemian 7y ago
    Hey Marc! Good to "see" you again. There's a sad old saying in business that you know you've "made it" in business when someone sues you. There's something to that unfortunately, that if you are in business long enough, chances are you'll be on one side or the other of legal action. It happens. You misjudge a client, maybe they have some personal issues that bleed into a business, maybe there is a market downturn and they make some question choices. Things happen. Point being, the posters in this thread recommending the use of lawyers and accountants to protect your interests are spot on imho.
    - themodelplumber 7y ago
      Hello Jeff! (Have we met? Apologies if I'm forgetting something...) I see what you mean, but given the context I wonder if there might be some projection at work here, since your experience with law is so deep--so tell me what you think of this clarification: I could also recommend lawyers and accountants; however not so much with the current discussion context in mind--that being the case of a beginning freelancer working in tech. For such an individual, getting sued is typically way out of the immediate area of concern and almost certainly game over, at least in energy expenditure if not financially. Case in point, one meeting with a business attorney and the time he spent drawing up only a contract _for working together_ resulted in one of my business partners receiving a bill of almost $3K. He told me, "I'm so glad I never bothered retaining an attorney until it was absolutely necessary." To a brand new freelancer, building a professional team is often an anticipated risk, but it's still a risk; they are often slow to move in that direction while building capital and reputation. I think rightly so in many cases. Given your business though--you've clearly "made it"--congratulations and I wish you all the best with all the trimmings, etc. ;-)