This post continues the series about the challenging yet rewarding entrepreneur's way, and I'd like to shed some light on my experience and learned lessons so far.
The very first question a freelancer gets is: how and where to search for work?
My experience is for obvious reasons limited to the IT domain. Let's start with things probably everyone knows:
I can think of the following sources, in the order of preference:
Below I'll elaborate on each of these items.
Your contacts (personal or professional), a.k.a. your social network, is the quickest and the easiest way to get hired. If your CV is handed over directly to the hiring manager, the likelyhood of getting in is immensely higher. Some researches claim that 30-50% hires in the USA are based on a referral, and the probability of getting hired via this route is four times higher.
Hence the advice: expand and maintain you social network, participate in meetups and hackathons, follow IT blogs, learn new stuff on Coursera and so on. Among other things, it's a great way to stay up to date in your area.
From my own observations, I can conclude that the best rates are offered by large organisations: banks (ING, ABN Amro, Rabobank), government institutions (ministries and their subsidiaries like Rijkswaterstaat, (D)ICTU, police), telecoms and other technology companies (KPN, Philips), transport operators (KLM, NS) etc. They often have a separate portal for contractors, although it doesn't mean they can hire you directly. In most cases they outsource hiring administration to external parties, broker agencies, which take care of contracts, invoicing, payments etc. Otherwise the customer would have to deal with every contractor himself, and that's a lot of paperwork.
As I mentioned above, a broker takes care of (most of) the administrative hassle and serves as an intermediary between the freelancer and his/her client. This service is obviously not free though pretty affordable, with a typical margin of 1-5 euros per billed hour. That translates to a tangible monthly amount but it's not worth complaining for you cannot bypass this scheme anyway. Most large companies never hire contractors directly.
On the contrary, you can feel happy if there's only one broker between you and the money source. These days it's not so uncommon for an IT specialist to be "resold" along a chain of two, three or even more intermediaries. Which has a detrimental effect on the freelancer's earnings and payment terms.
It's also good to know that besides "honest" brokers the freelance job market is swarming with "scroungers" that would charge you 20% of the hourly rate or more for their service. My advice would be to avoid those by all means—unless the rate is so high that you don't care (or you're desperate for work). It takes a good market knowledge to be able to separate the sheep from the goats, so keep reading if that isn't the case with you.
Interim contracts are often advertised on special freelancing websites. There's a number of them in the Netherlands: 4-freelancers, IT-contracts, freelance.nl, Qwery, to name a few. Unfortunately, what often happens is that vacancies posted by "honest" brokers get cross-posted by "scroungers" numerous times on different websites. It makes it difficult to trace back the original advert, not to mention figuring out who the ultimate customer is.
Observ, a project started a few months ago by a colleague, proved very helpful when I was looking for a contract myself. Observ is a free IT contract aggregator that collects, classifies, and merges all the numerous copies of the same vacancy scattered across various websites. It also marks ones advertised by a "honest" broker (a blue link icon, betrouwbare broker):
Even if you don't plan to use this service for actual searching, you may want to have a look at it to figure out which brokers are safe to work with.
Once you've found an attractive vacancy, you start the process of offering (aanbieden) your candidacy. Just like with a regular vacancy, you are commonly required to send in the following two documents:
I won't go into details about a perfect CV here as this topic has already myriads of books dedicated to it. What's the most important is that it must match the described profile as closely as possible, because the recruiters dealing with the torrent of incoming applications are often not aware that Tomcat is also a servlet container.
The cover letter must be concise and straight to the point: why you think that you're really, factually the best possible match ever. It's usually written in Dutch, and it must reference the original position and not just say something like "your company is the best and hence we're made for each other."
It's worth mentioning that interim contract applications are usually handled much faster than those for regular vacancies. Firstly, since it's mostly about a short-term assignment, the client is often in a hurry and doesn't have the time to be very picky. Secondly, your psychological portrait and personal quirks are of a lesser importance for the same reason. For example, I was hired after just a single interview. That said, sometimes the clients are picky: once a potential customer asked me to develop a sample application with a back- and a front-end, which wasn't worth the time investment in my view.
One of the trickiest questions is: what's the maximal amount you can ask for so that you're not turned down? The correct answer can only be known to an insider. Sometimes, very rarely, the rate (or an agreeable range) is specified in the advert. Brokers are often the party that is best informed about the client, so if you can get hold of the broker's phone number, it's worth making a call. In other cases you'll have to rely on your own knowledge of the IT market and the circumstances of the client. Don't forget to adjust the rate with the broker's margin as that'll also be charged to the end customer.
You usually specify your desired rate when applying, and possibilities for further negotiations are limited. That is, a refusal is often definitive. And vice versa, once a rate is agreed upon, you'll have a difficult time trying to raise it afterwards.
Risk management is another complex topic. I already posted about the risks of entrepreneurship, which in a nutshell can be expressed with the formula: "you get paid while on an assignment and get nothing otherwise." Therefore it takes a good deal of financial planning—and a proper buffer to cater for all current expenses should the situation prove difficult. It's also a good idea to start thinking about available options ahead of the end date of your current contract.
Persistence is arguably the most important aspect of running a business, which is always mentioned in relevant publications. You should never give up, be it your first fail or hundred first. It's obviously worth learning lessons from your failures though, and then trying over and over again.
The Chamber of Commerce (KvK) often invites successful businessmen and -women for their sessions. Every single of them has had their ups and downs, but what made them successful was exactly that after a slip they would get up and carry on.
My knowledge in this respect is pretty theoretical to be honest, yet I'm quite certain about my own persistence.
To be continued.