Getting laid off showed me how to succeed working for myself

was psychologically devastating.

.

After my severance pay ran out, I needed to start earning a income. Initially, my earnings as a freelancer covered only about half of what I had made as an employee, but with so many projects to manage, I couldn’t find time to look for a new job. I knew something had to change, but first, I needed to pinpoint exactly what wasn’t going right.

I recently had an epiphany, a shift in how I view my professional worth and time. Reflecting on my career, I realized I have a poor perception of my work’s value. I seemed to believe my accomplishments were merely a means to provide for my financial needs, and nothing more.

After a week or so of looking for a job, I gave up the search. But it would take me another couple of months to break free from the idea of myself as an employee — a mindset that was holding me back financially.

Early on as a freelancer, I chose work based on criteria that fit what would typically make sense for a traditional employee: I found one client who needed me to work between 20 to 30 hours a week and thought this was my perfect match. This filled more than half of my weekly schedule. The catch? I used the hourly rate they offered as a reference point based on what I had earned as an employee.

This client offered me $30 per hour, which was slightly higher than my annual full-time salary would have totaled at $29 per hour. My initial error was not accounting for the payroll taxes, health insurance, and 401(k) benefits that my employer covered beyond my salary – expenses I now would be paying out of pocket. That’s why traditional advice suggests charging at least double the hourly rate for freelancing work as you would for a traditional job.

My second mistake was letting one major client do the bulk of my work. This approach was helpful when I was transitioning from a full-time job, but it tied my work hours too closely together and made it hard for me to adjust my schedule as needed to build a sustainable freelance career. Just like when I was laid off, I remained too dependent on one client, leaving me exposed to the whims of that company.

My biggest error was viewing my pay as an hourly wage. Being an employee meant putting in a certain amount of time – eight or nine hours a day, five days a week – and being available for my team. My salary was based on that 40-hour workweek.

As a contractor, I only get paid for the actual work I complete, not just for being available. When I’m paid by the hour, surprisingly, I lose out when I become more efficient at my job – essentially being penalized for getting better at what I do. Early on in my career as a freelancer, I noticed that taking on smaller assignments from other clients was more profitable than keeping my one main client, since they paid me per project rather than per hour. This allowed me to earn approximately $150 per hour for the same work, simply by billing for the value I provided.

During my first year of freelancing, I made significantly more than my previous full-time salary, an additional $6,000. In the second year, I generated $163,000 in revenue, working only a majority of three days per week.

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Making a change in your charging method is easy, but what I really had to adjust during that initial period was my mindset from that of an employee to that of a freelancer.

I took a job with the company that eventually ended up letting me go because I was ready to leave my previous job. Looking back, I knew I was getting into a company that wasn’t being well-managed, but I was eager to change my work situation and couldn’t envision finding anything better with a new employer. So I ignored the warning signs. When they laid me off, I was certain I needed to find a new job right away to get back on a stable income path.

This early transition into freelancing made me realize I could achieve stability being my own boss, and I adjusted to that new life. I had to think differently about evaluating clients and billing them for my skills and expertise rather than focusing solely on the hours I spent. I also had to let go of the idea that one large client was more dependable than having numerous smaller ones.

The layoff was the wake-up call I needed to take matters into my own hands and make a change. Without it, I might have kept looking to various jobs for fulfillment and financial security. The layoff pushed me to take control and figure out how to be self-sufficient, and as a result, I developed the mindset and skills that have enabled me to support my family successfully through self-employment for the past five years.