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From freelancing to incorporating

From freelancing to incorporating

.debug – 12.12.2019.


Dražen Lučanin

December 12, 2019


  1. From freelancing to incorporating Dražen Lučanin @metakermit

  2. About me • Freelance software developer & data scientist •

    Cofounder / partner in: • Punk Rock Dev • CloudFleet • eSquirrel • CraftStrom
  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/
  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?
  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
  6. How can you go
 from freelancer to business owner? Already

    a type of business Even easier
  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
  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
  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”
  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
  11. Learn marketing! • Empathy and contextual awareness • Write good

    content • Educate instead of buying ads • Marketing for developers course:
  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
  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/
  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
  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/
  16. How to incorporate? • Do it as late as you

    can • When you do, get a good accountant
  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/
  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
  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
  20. Invest in your business • Education – don’t be stingy

    on books & courses • Networking • Coworking spaces • Meetups • Conferences • Use your corporate credit card bravely!
  21. 5. Scale your team • Hire professionals for specialised tasks

    • Marketing • Graphic design • Software development • Learn management skills! • https://basecamp.com/books
  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/
  23. Be optimistic & set sail on your own! Dražen Lučanin

    @metakermit https://punkrockdev.com/ Images from http://bratovstina-svnikola-svbarbara.hr/