From freelancing to incorporating

.debug – 12.12.2019.
https://www.debug.hr/

Transcript

1. From freelancing to
   incorporating
   Dražen Lučanin
   
   @metakermit
   

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2. About me
   • Freelance software developer & data scientist
   
   • Cofounder / partner in:
   
   • Punk Rock Dev
   
   • CloudFleet
   
   • eSquirrel
   
   • CraftStrom
   

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3. Freelancing
   • Gaining popularity
   
   • EU
   
   • 11 million freelancers in the EU
   
   • 5% of the total workforce
   
   • Forecast: more freelancers than
   employees by 2035
   
   • Croatia
   
   • 30% more active sole
   proprietorships for intellectual
   services last year
   https://analyticshelp.io/blog/global-internet-freelance-market-overview-2018/
   

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4. Why go beyond

   basic freelancing?
   • The challenges of freelancing:
   
   • Finding clients
   
   • Volatile income
   
   • No sick leave
   
   • Work–life balance and possible burnout
   
   • So what can you do?
   

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5. A short story
   • Captain Ernest Tijan (1880. – 1950.)
   
   • Kostrena sv. Barbara – small town on the Adriatic Sea where a lot of sailors lived
   
   • From 1854. until 1902. sailors in Kostrena acquired stake (owned or co-owned)
   in 68 sailing ships
   
   • ~1000 residents, ~150 homes
   
   • On average every 2nd home co-owned a ship – unique in Austria-Hungary
   
   • These sailors essentially went from workers to business owners
   

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6. How can you go

   from freelancer to
   business owner?
   Already a type of business
   Even easier
   

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7. Ways to decouple your revenue
   from your personal time
   • 1. Classical investment
   
   • 2. Create a new product
   
   • 3. Negotiate an equity stake with a company
   
   • 4. Start a new company
   
   • 5. Scale your team
   

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8. 1. Classical investment
   • Buying an Apple product vs. buying a piece of Apple’s business
   
   • The only way to outrun inflation is to expose a part of your assets to the
   stock market, ideally by investing in diversified low-cost index funds &
   cutting out the middle-man (financial advisors, asset managers)
   • Resources:
   
   • https://www.bogleheads.org/ – Jack Bogle’s advice (& Warren Buffett’s)
   
   • Understand what you’re investing in – https://www.investopedia.com/
   
   • The Only Investment Guide You’ll Ever Need by Andrew Tobias
   
   • Facebook group: http://bit.ly/financije-hr
   

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9. How to set money aside?
   • Low capital gains tax in Croatia
   
   • Lower your life expenses
   
   • Can’t?
   
   • Know anyone down your street with a lower income?
   
   • Raise your rates!
   
   • http://meetup.com/zagreb-freelancers/
   
   • If your client can’t afford the raise, go to “3. Negotiate an equity
   stake with a company”
   

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10. 2. Create a new product
    • Organise a training workshop

    i.e. productise some of your expertise
    
    • Write a book
    
    • Create an online course
    
    • Course on making courses – http://bit.ly/teach-earn
    
    • If it seems like a lot of work, find a publisher to pay you
    upfront to minimise your risk
    

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11. Learn marketing!
    • Empathy and contextual awareness
    
    • Write good content
    
    • Educate instead of buying ads
    
    • Marketing for developers course:

    http://bit.ly/marketing-devs
    

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12. 3. Negotiate an equity stake
    with a company
    • Risky, but potentially lucrative
    
    • Super undiversified
    
    • You have a lot of information
    
    • In the company’s interest
    
    • They’ll save money (although also dilute themselves)
    
    • You’ll be a more motivated worker
    

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13. Learn how to negotiate!
    • Information asymmetry – company better informed
    
    • Do your research – Glassdoor, other companies on the market, past /
    present employees etc.
    
    • Anchoring – HR expert on the other side of the table
    
    • Prepare a strategy upfront
    
    • Take your time to consider the next step
    
    • Option to walk away
    
    • https://www.freecodecamp.org/news/ten-rules-for-negotiating-a-job-
    offer-ee17cccbdab6/
    

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14. “But I don’t care about
    money that much”
    • Defence mechanism
    
    • The company isn’t a family
    
    • https://m.signalvnoise.com/the-company-isnt-a-family/
    
    • It is your duty to negotiate well
    
    • You owe it both to yourself and to your (future) real family
    

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15. 4. Start a new company
    • Build your own product – e.g. a SaaS
    
    • Led Zeppelin – started as session musicians, eventually
    formed a super-group that became one of the greatest
    rock bands in history
    
    • Excellent free course – https://www.startupschool.org/
    
    • Launch as soon as you can! Inspiration – https://levels.io/
    

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16. How to incorporate?
    • Do it as late as you can
    
    • When you do, get a good accountant
    

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17. In Croatia
    • A fairly good option as far as Ltds in Europe go
    
    • especially if your main interest is taking all of your
    profits out of the company right away
    
    • Hope you like stamps, Fina, “doprinos za općekorisne
    funkcije šuma”…
    
    • https://start.gov.hr/
    

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18. Estonian e-Residency
    • Everything online
    
    • A great option if you’re planning on investing your profits into your
    business
    
    • 0% corporate tax as long as profits stay inside the company
    
    • 20% corporate income tax if & when you pay out shareholder
    dividends
    
    • Referral link (by end of year) for a chance to win a free trip to Tallinn
    
    • http://bit.ly/estonian-e-residency
    
    • Join our Facebook group for lots more info – http://bit.ly/e-residents-hr
    

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19. Other options
    • US company https://stripe.com/atlas
    
    • Probably better for VC investment (if you need it)
    
    • Watch out for US Witholding Tax
    
    • Lots of startup incubators all over Europe
    
    • Whatever you choose
    
    • Get the bureaucracy out of the way
    
    • Focus on your business
    

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20. Invest in your business
    • Education – don’t be stingy on books & courses
    
    • Networking
    
    • Coworking spaces
    
    • Meetups
    
    • Conferences
    
    • Use your corporate credit card bravely!
    

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21. 5. Scale your team
    • Hire professionals for specialised tasks
    
    • Marketing
    
    • Graphic design
    
    • Software development
    
    • Learn management skills!
    
    • https://basecamp.com/books
    

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22. Hope for the best, prepare
    for the worst
    • Keep a savings buffer
    
    • Consider corporate insurance, legal counsel etc.
    
    • Don’t put all your eggs in the same basket – try several
    things until you find what works
    
    • Launch quickly! https://levels.io/12-startups-12-months/
    

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23. Be optimistic & set sail on your own!
    Dražen Lučanin
    
    @metakermit
    https://punkrockdev.com/
    Images from http://bratovstina-svnikola-svbarbara.hr/
    

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