Craft an Exit Strategy
For some of you, this step may be irrelevant as you’re ready to go all in on freelancing. That probably means you:
- Are a recent graduate
- Have been laid off or fired
- Are ready to re-enter the workforce after time away
- Have come into a huge windfall and want to finally do something that makes you happy
- Are independently wealthy and have a good idea for a side hustle
If that’s the case, then skip ahead to the next step and start getting yourself some clients.
For those of you with existing jobs or cirrcumstances you can’t instantly extract yourself from, this is for you. We’re going to consider the options. We’ll also help you come up with an exit strategy that won’t throw your life into turmoil or bury you under a mountain of debt.
What's Covered in This Post
How Will You Transition into Freelancing?
The first thing to do is take stock of where you’re at right now. There’s a lot that can impact how you make the transition to freelancing:
If you’re currently employed, what is your goal with relation to this job?
You may not want to quit it at all and are only looking to make extra cash through freelancing. If that’s the case, then you won’t need an exit strategy. What you will need to consider, however, is how much time you can realistically invest in your side hustle. The last thing you want is to get so burned out that you compromise your performance at work and put that job at risk.
So, it’s important to find the right balance between work and your freelance venture.
If you’re currently employed and want to replace your job with freelancing, you should plan a make for the transition. Goal setting will be useful as well. When you have something concrete to work towards on a certain date, you’ll be less likely to rush into a hasty exit that you’re unprepared for.
Now, how quickly you transition to freelancing depends on a number of factors:
How stable is your current source of income?
If it’s not stable, fill as much of your downtime as possible with freelancing work. On the other hand, if your job is stable and predictable, make time every week — it doesn’t have to be more than a few hours to start — to work on your freelance business.
Even if you’re just setting things up, it’s good to stay productive with the free time you have. The more time you dedicate to freelancing, the faster you’ll see progress. And as you become inundated with requests, you’ll feel confident enough to let go of your job.
Are you the only person contributing to income to your household?
If there’s someone who can financially support you when you’re just starting out, then you might not have to make a slow exit from employed life. It all depends on how stable their income is, how much they earn, and how comfortable they are with carrying the load while you get things off the ground. Dependents may also impact this decision.
That doesn’t mean you can’t become a freelancer if you’re alone. That’s what I did. It was tough as I had only replaced about 75% of my full-time salary with freelancing work when I quit. However, after six months of major hustling, I had not only replaced my previous earnings, but had surpassed them. So there are also benefits to doing this when you’re alone as you don’t have to worry about providing for anyone but yourself.
How is your health?
This might seem like an odd thing to ask about, but when you’re left to find your own health insurance and realize how much it costs out of pocket, you might want to slow down your exit.
Freelancing offers an incredible amount of professional freedom and control to those who are successful at it. However, you have to create your own safety nets. And if you’re in poor health or dealing with a condition that requires regular doctors’ visits, testing, and prescriptions, you may not be ready to leave the safety net offered by an employer’s insurance plan just yet.
What I’d suggest is that you research the cost of health insurance (not to mention dental, vision, and any other insurance you might need in your business). This will give you an idea of how much money you’ll need to make from part-time freelancing before you can safely quit your job.
How much money do you have saved up?
Speaking of safety, it’s a good idea to fill up your savings account and rainy day fund before you become a full-time freelancer. A good rule of thumb is to have three times your monthly rent or mortgage saved up.
Some of you might not have the ability to wait for that milestone, and that’s okay. Just know that feast-and-famine is a very real thing in the early days of freelancing. If you don’t have savings to fall back on, you’ll likely need to turn to family, friends, or a loan to get you through those rough patches.
Freelancing can be a very humbling experience if you’ve never had to ask for help before. But I think that can be a good thing. You’ll appreciate your successes more and become a more savvy business person in the long run.
There are many things that can impact when and how long it will take you to fully transition into freelancing. If you don’t wait until you’ve made all the preparations for it, you might jump ship from your job when you (and also those that depend on you) aren’t ready for it.
For a frame of reference, it took me three years to turn my tiny writing side hustle into a part-time freelancing venture. When the demand for my work became too great and I had a good safety net and strategy in place, I quit my job and dove head-first into my full-time freelancing business.
I don’t regret the lengthy journey one bit as it gave me time to figure things out while steadily building a reputation for myself online. Sure, it was exhausting balancing a full-time job with part-time writing, but all that lead time gave me what I needed to succeed. If I’d just up and quit, I don’t know if I would’ve survived the sink-or-swim approach. I personally needed that slow exit strategy.
But it might be different for you. That’s why considering these contributing factors is important in crafting your own exit strategy.