Freelance Nation

The US has become a freelance nation. Whether out of necessity (reduced hours/loss of job) or desire (flexibility/control over hours), more than 53 million Americans earn income from work that’s not a traditional 9-to-5 job – that amounts to 1 in 3 workers, according to Sara Horowitz, the founder and Executive Director of Freelancer’s Union. Horowitz notes that while the trend of Americans piecing together an income stream through more than one source is more than two decades old, in the past few years, there has been an acceleration, because “online work platforms, such as Uber, Airbnb, Etsy, and Elance, that connect workers directly to consumers and clients are completely reimagining the work relationship.”

In many respects, freelancing can be the perfect answer for those who are seeking to boost income both during their work lives and to supplement Social Security during retirement. The allure sometimes goes beyond money: a survey by staffing firm Modis found that more than 50 percent chose flexible work hours as the perk they most desire. Flexibility can mean a variety of things, from working at home to not having to be in the office at the same time each day.

If you are considering starting a business or dipping your toe into the freelance pool, one of the best ways to do so is to experimenting while you have a job. More than a quarter of the total number of freelancers–14 million workers–are moonlighters, who have a full time position. About a third of them say they would like to quit and freelance full-time.

Whether you are just starting out or trying to make the leap to full time, you need to treat the endeavor like a business, not as a side business or a hobby. That means you should create a business plan that explains the new venture and your background; what differentiates your business from competitors; identifies your target customer; and includes a competitive analysis of organizations/other freelancers in your space. You will also need to project the numbers, to determine if any start-up financing will be required.

You also need to be disciplined about how time you will devote to your side business: it has to be enough to judge whether or not it could be self-sustaining, but not too much as to drain you and cause you to underperform at your real job. By spending 10 to 20 hours a week, you will probably get a sense of whether or not you like doing it and how much work it takes to run your own business.

If the experiment goes well, you may choose to simply keep that extra income stream and not make the jump to becoming a full time freelancer. But if you are ready to go it alone, be sure to beef up emergency savings so you have a year of expenses stashed away; consider the cost of purchasing your own health insurance through either through a professional network, like the Freelancer’s Union or through HealthCare.gov; establish a separate business checking account; consider creating an LLC; and be sure to have a system to pay your taxes.

Finally, you don’t have to do this by yourself. There are great, free resources available to help you develop your idea into an ongoing concern. The Small Business Administration offers advice and information on starting or growing a business; and financial assistance for new or existing businesses through guaranteed loans made by area bank and non-bank lenders. There are also special resources devoted to women and veterans. For more information, go to SBA.gov and search for your city.