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From freelancing to incorporating

From freelancing to incorporating

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

Dražen Lučanin

December 12, 2019
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  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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