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How I Prepared To Be A Freelancer Problogger

Six months ago, I became a professional blogger (or problogger, as the lingo goes) but the process of going professional was easily six months in the making (three years if you ask my wife).

I don’t know if it’s come through in my writing, or if you’ve read long enough to tease this out, but I’m a predominately conservative person with regard to risk (not political leanings). However, given the right opportunities, I’m willing to make aggressive moves that some would consider extremely risky. Resigning my full time position to pursue what is essentially a freelance writing gig ranks as extremely risky in my pantheon of risk. While you’re never 100% safe in your job, it’s certainly more stable than working for yourself. Being self-employed has its benefits, stability certainly isn’t one of them. This article will detail how I mitigated those risks, as best I could, and how I prepared to become a professional blogger.

This article is pretty long and might not be all that useful to many people, but several other bloggers and my friends have asked about how I prepared to become a freelancer/problogger so I thought I’d put it all together.

As an aside, I often joke that I enjoy lumping in all my major life decisions in one small time frame. Two years ago, I proposed to my girlfriend, now my wife, and left my first job within a week of one another. Proposing easily ranked as the more significant of the two (yay! I love you honey!) but leaving my first job, and all my friends there, was difficult but a necessary step in my career development.

I became a problogger four days after getting married. I quit my job four days after I got married, two more important life “decisions” in the span of a week. I figure this way, if things go badly, I won’t know which decision to blame it on. 🙂

Passion is Paramount

Gary Vaynerchuk recently posted a video blog about hustle 2.0 and how you can have two jobs [3]. He talks about how you can work the 9-to-5 and still build your online brand but you have to make sacrifices. You have to skip the television and the video games to work on your projects. You have to hustle your ass off in order to make things work. You can still spend time with the family, but you gotta work your tail off once the kids go to bed.

I totally agree.

You have to enjoy your project so much that you’d rather work on it than watch TV or play video games. If that’s not the case, you shouldn’t become a problogger.

I really enjoy personal finance blogging. I’ve been doing it for over three years and I still enjoy writing for the site every single day. I started blogging because I wanted to talk to people about money management. My friends didn’t care and I saw a handful of “blogs” online about personal finance. I figured I’d do it too. My interest in money management is what I’m passionate about and that’s why I blog about it. The money this site generates is great but as anyone who has worked in a dead-end soul-sucking job can attest to, money doesn’t make you happy… it just prolongs the agony.

Establishing A Plan

Enough with the emotional rah-rah aspect of problogging, let’s get to the finances. The steps I took in establishing my plan apply to whether you’re going to be a freelance consultant or a professional blogger. The plan identifies the aspects of your full time job you will be replacing with your own business.

Step 1: Establishing Income Stream & Growth

Since we’ve already established that you are passionate about your new work, the most important aspect of your job is the paycheck. With your old job, you had a stable income and growth potential. With your new business, you’ll have to establish a stable income stream and identify areas of growth. Reading sites like Problogger [4] will give you an idea of the various ways you can monetize your site from the ubiquitous Google Adsense ads to more targeted affiliate programs. Once you’ve identified potential streams, you have test, test, test those methods. Some sites work well with Adsense, some work better with affiliate programs, you have to constantly be testing monetization methods to see what works for you.

The key here is to establish a plan of attack, implement it, take notes, and adjust it based on your performance. The Adsense ads you see on the left have been optimized for the highest click through rate, that’s why the URLs are red (I’ve tried blue, green, black, and red – red had a much higher click through rate than green, which beat blue and black). Keeping notes is crucial.

If you’re not a problogger and going into freelance anything, you have to take the same steps. Identify your areas of growth and establish a plan for that growth. If you’re offering a new service, how will you get your name out there? If it’s a local service, consider joining the local Chamber of Commerce and networking with bankers, accountants, and lawyers. Those are the folks who are connected to a wide variety of businesses, they can get you in touch with people who may want your service. Consider offering the service for free to a big name, essentially bartering your services for their advertising. Once you have a plan, execute it, track it, and adjust it to how it performs.

Step 2: Health Insurance

When I left my job, I was able to get health insurance through my wife. However, I did do research on independent health insurance policies to factor in the costs involved should my wife ever leave her job. The two places I checked was the Freelancer’s Union health insurance plans [5] and eHealthInsurance. I chose those two because Freelancer’s Union seemed like my best shot at group health insurance (they only offer plans from UnitedHealthcare’s Golden Rule Insurance Company) and eHealthInsurance seemed like a non-spammy health insurance search engine (I see them mentioned on Yahoo! Finance and their results returned big name insurers I had heard of like BCBS, Aetna, Kaiser Permanente, etc). Since then, I’ve discovered you can often get health insurance through your local chamber of commerce, if you’re a member, though I never looked into it.

All the plans were in the $150 range, according to the results of eHealthInsurance’s search, but I never dug any deeper because I planned on using my wife’s insurance. My plan was always that the insurance would protect against the catastrophic, rather than the routine, so my searches always bore that in mind.

Step 3: Retirement

The last important aspect of my full time job that would be replaced by problogging is your retirement. You may be giving up a pension (defined benefit plan) and you’re probably giving up a 401(k) or 403(b) (defined contribution plan), so you’ll want to have something to replace it. Fortunately there are many options to the small business owning including but not limited to SEP-IRAs, Keoghs, Solo 401(k)’s, and the like. I guest wrote a post at Anywired about retirement plans and freelancing [6] that discusses this topic.

Contingency (Backup) Plan

I’m in my late twenties, married, with no kids. In the next forty years of my adult working life, I will have to generate enough income to raise a few kids, to include paying for all or part of their college education, go on a few vacations, and have enough so that I can retire from my adult working life. Do I see myself being a professional blogger for forty years? Do I see myself writing for a living for the next forty years? I don’t know.

I also don’t know if this business is sustainable for forty years, or even four. I don’t know if I will be able to keep up with the changing environment or if some unforeseen event changes everything. This underscores the importance of having a contingency plan in place. My contingency (backup) plan has three important parts and kicks in when income dries up to a trickle.

Part 1: Contingency Plan Fund

Much like how an emergency fund backs up your full time job in the event of an emergency, which could include job loss, the contingency plan fund contains a year’s worth of my full time job’s salary. When you have a full time job, your employer has some flexibility in weathering the changing market cycles. When you are your own business, you have to weather the changing market cycles. Having a contingency plan fund offers you the ability to make smart decisions about your business even if the times are bad because you have money in the bank. If things go south, you’ll feel the pressure anyway. You don’t need added the financial pressure of a dwindling bank account to make things worse.

How did I arrive at a year? I figure that if things decline and I can’t reverse it in a year, chances are I won’t be able to and I should go back to doing what I was trained to do. I think a year is an ample amount of time. You might think that six months is more your style, if so then make your fund six months. The point is to have a buffer beyond your emergency fund strictly for your business.

Part 2: Diversify Your Income

This is a strategy that everyone should employ but it’s especially poignant for freelancers. Whether it’s investing in real estate or other income producing assets (dividend paying stocks or funds, other small businesses), putting your money to work for you in a separate industry is smart. Relying on a single source of cash flow is dangerous, be it Adsense or Corporation XYZ, so making smart investments is always important. How do you identify those smart investments? That’s outside the scope of this article but I personally invest in stock market investments that provide some additional income.

Part 3: Resign Amicably

When you say good bye to your employer, do so amicably and with their interests in mind. For some, this is code for – “you shouldn’t burn bridges.” While it’s important not to burn bridges in case you want to return, I think that you should always try to end any relationship amicably. It doesn’t matter what you’ll be doing on your own (my blog has nothing to do with what I used to do full time), but the industry you’ll be leaving is probably your best shot at recovery should things not work out.

I’m by nature a friendly guy so I’ve maintained friendships with my co-workers and we often talk to each other. I invited a whole bunch to our wedding, not because I thought that one day I might have to return, but because they were and still are my friends. However, if one day I would need to find a job, by leaving amicably I felt as though I still have the opportunity to prove I can return (that is, instead of just submitting a resume into a drop box, I’d actually get it in front of a person).

That’s It!

With a plan forward in place, including a plan for the “what ifs,” I took the plunge six months ago. The hardest part about doing it wasn’t the numbers or the plan, it was that I was afraid. I was afraid of what would happen if things didn’t work out. Would I have arrested my career development? Would I burn bridges simply because I left? Then I decided that my analysis was correct, my planning was sound, and ultimately I couldn’t let fear make decisions for me [7].

The last six months, it’s been an exciting ride and I’ve enjoyed every minute of it. If you’re considering this, either problogging or freelancing, or just want to say hello, send me an email [8] and we can chat. There’s certainly way more to going your own but these were the considerations I contended with before I went I did it.

(Photo: arbron [9])