How can I gauge market demand for my skills before going freelance?

Question

I am a Mechanical Engineer, currently employed full-time for a large multinational. I am considering the option of leaving my full-time job to do similar work freelance, for a number of reasons that I won't go into here in detail.

So, I am wondering how I can gauge how much demand there will be for my skills in the market, before I take the plunge and quit my current job. I have a family to support and mortgage to pay, so I need to have a good level of confidence that I can earn at least as much as I am now, before I could make the jump.

How do I estimate potential income for switching to freelance work, particularly when I don't actually have any contracts yet? Is it realistic to expect that I could earn more working freelance than I am currently full-time?

Answer 1

Firstly, look at the job boards, JobServe, monster, JobStreetAsia, as appropriate and see how many jobs there are that match your skillset, just as if you were actually looking for a job. The look at the ration of permanent to contract. Of course, the number is important. If you are in a truly niche area, then it might be safer to stick with permanent employment. You could set up a consultancy firm, but that might take a very long time to get off the ground, so I would say that you should stick with perm//contract for now.

Next, are there any contractors where you work? I have had quite a few perm staff approach me quietly over the decades, asking about contracting. I give advice, leave them to decide, and my lips are sealed. The best way to learn is from the horse’s mouth.

You could also try talking to a recruitment agency. Be aware that they are trying to sell you something (their services), and might even give advice based on what they currently have on the books, rather than the true picture. Perhaps if you say you ar considering a move in 6 months an asking for general advice as to perm//contract. Despite the possible disadvantages, no one is better situated to know the job market thanan experienced recruiter.

You are, rightly, concerned about your mortgage – does your partner work? If not, do you have savings? If not, can you save enough during an initial contract to tide you over rough times? After a few years, this should be no problem.

Btw, in my experience, contracts are always for six months, but I always ask how long the project is supposed to last . In my line, that’s generally 18 to 24 months.

Will you make more money? Certainly at the top line; you should at least double your salary. As has been discussed here very often, so I won’t go in to details. You will earn a lot more, but pay have no paid holiday or sickness (family holidays will effectively cost you double); you will also have to pay employer’s social security, in addition to employee’s. I advise a Ltd company. You will pay for an accountant, who ought to save you ten times what you pay for him. At the end of the day, I can say each year the equivalent of my permanent colleagues’ annual salary before tax & dedications. Of course, YMMV. And I am in an area where I have little trouble finding contracts; perhaps a total of 6 months over *cough* decades.

This is just a mechanism. Your question is, at the end of the day, subjective, and only you can answer it.

Answer 2

I think you might be looking at the situation a little bit backward. You're viewing this question from an employee perspective, when you need to be viewing it as a small business owner.

When you go freelance, you are essentially a small business. Sure, you're a contractor, but freelancing means you need to manage every aspect that an employer normally would with regards to your pay, work balance and benefits.

You asked:

"How do I estimate potential income for switching to freelance work, particularly when I don't actually have any contracts yet?"

What's your monthly 'nut' to crack? How much do you need to make each month in order to:

• pay all of your bills/obligations
• pay for healthcare for yourself and your family
• pay taxes
• put money away for retirement
• live a life you enjoy

(Obviously, some of these things will depend on the country in which you live.)

When you have that number, do some research on how much some freelancing gigs pay. The websites listed above will help, but also check salary.com and look for gigs with pay rates listed. Reviewing your monthly needs and the rates that people are paying will give you a good idea of your potential income and whether or not it will work for you.

You also asked:

"I am wondering how I can gauge how much demand there will be for my skills in the market, before I take the plunge and quit my current job."

While you're doing that research, look at how many listings are looking for your skills. Are there 2? 20? 200? If there aren't very many postings that you're qualified for, there may not be a demand for your skills on a freelance basis.

Like any small business owner, you need to assess if your business is viable before you commit time, energy and resources. After you see how many listings are looking for your skills, you should reach out to previous employers or people who know what you do and ask "Who do you know that needs someone like me on a contract basis?"

If you can reach out to 100 people and can't get a single referral, you might not be able to freelance with your skillset. (please know that this is no reflection on you)

If you get 50 referrals, you already know you can get work.

Anywhere in between will be up to your discretion.