There are many words one could use to describe a freelance career – among them are fun, flexible, challenging, exciting, and interesting. But one word that few seasoned freelancers will use is ‘easy’. Although freelancing empowers you to work as independent agent and may offer a more flexible lifestyle than a corporate career, it can also be extremely demanding.
Whether you’re a graphic designer, a writer, a developer, a trainer or a videographer, you’ll probably face long hours, unpredictable revenue streams, and high client expectations. Because you’re flying solo, there is little room for error – underquoting on a big job, taking on more work than you can handle, and unreasonable client demands can all put a big dent in your profits.
Here are a few of the most common mistakes freelancers make, along with tips to avoid them:
- Not staying on top of the finances.
- Spreading yourself too thin.
- Failing to set terms and conditions with clients.
- Neglecting the non-billable aspects of the business.
Let’s jump in to the tips.
Mistake #1: Not staying on top of the finances
Many people move from a full-time job to a freelance career with only a vague idea of the financial implications. Your earning power might look high when you look at it as a per-hour number, but it’s important to remember that you’ll need to pay for many things yourself that your company would have supplied when you were working full-time.
Inexperienced freelancers often discover that their earnings fall short once they have made provision for things like business expenses (accounting fees, computer equipment, stationery, etc.), annual leave and sick leave, and personal income tax. Some also don’t take into account that not every client can be relied on to pay cash on delivery or even within 30 days.
How to avoid this mistake
- It’s important to build a buffer of three to six months in your bank account, so that you can keep going when clients are slow to pay or business is quiet.
- Keep financial records – for example, on a basic cloud accounting package or spreadsheet – so that you can understand your expenses and income.
- Don’t just look at your bank account – keep track of the money due to you and the money you must pay out in the future.
- Find a tax practitioner to help you file accurate tax returns and to ensure you claim all deductible business expenses against your income.
Mistake #2: Spreading yourself too thin
When freelancers are chatting, the conversation will inevitably turn to the ‘feast or famine’ nature of freelance work. Because you know that there could be dry spells in the future or because you simply want to maximise earnings, you might find yourself taking on more work than any person can reasonably complete in a working week.
This is a recipe for burnout – trying to sustain 70-hour weeks for too long could negatively affect your health. Plus, if you are trying to do more work than you can handle, your deliverables may slide. You could miss deadlines or produce work that is not up to your usual quality, in turn harming your relationships with your clients.
How to avoid this mistake
- Find a freelancer buddy you can trust and agree to share overflow work with each other.
- Politely turn down work rather than agreeing to it and fail to deliver. Thank the client the opportunity and stay in touch.
- Outsource non-core work, such as your admin, so that you can focus on stuff that generates revenue.
- Agree service levels and delivery times with repeat clients (see next section).
Mistake #3: Failing to set terms and conditions with clients
If you’re running a home-based freelance business, you’re not going to have corporate lawyers and accountants forcing you to dot the i’s and cross the t’s when you engage with your clients. If your clients are mostly individuals or small businesses, it’s easy to let things like contracts or terms and conditions slide.
The result can be that your clients don’t pay you on time because you haven’t made a formal agreement about your payment terms. Or you could get a client who expects instant turnaround times and 24-hour availability because you have not outlined the service levels you are willing to offer.
How to avoid this mistake
- Draft a standard set of terms and conditions for your business – a good place to start is Google templates for freelance contracts.
- Include the basics – payment terms, delivery dates, deposits for work etc. – on your quotes and invoices.
- Ask clients to acknowledge that they have seen and understand your terms and conditions.
- When dealing with large companies, you probably won’t get to set your own terms. But do scrutinise any supplier contracts they ask you to sign carefully.
Mistake #4: Neglecting the non-billable aspects of the business
The freelance world is a non-stop hustle and you may decide that you need to spend every hour on billables as long as the work is flowing in. But in the meantime, problems could be stacking up for your business because you are not looking after the essentials like networking, marketing, upskilling yourself or administration.
Some of the consequences could include missing tax deadlines because you’re not on top of the admin; work drying up after your present engagements are finished because you have not been selling yourself; or failing to keep pace with the skills and capabilities the market needs in a year or two from now because you don’t spend enough time building your skills.
How to avoid this mistake
- Allocate time in your calendar each week for the things that aren’t billable, yet are important for running a successful business.
- Again, outsource work you don’t enjoy or that doesn’t generate income, especially if someone else can do it below your usual hourly rate.
- Remember to build allowance for the time you spend on training, admin, marketing, and so forth into your rates. It is part of the cost of running your business.
- Make technology work for you! For example, use accounting software to automate some of your admin. Or set up a website to promote your business. With GoDaddy’s Website Builder, you can get this asset up-and-running in less than an hour.
Learn from your mistakes
Most freelancers make mistakes when they start out on their own or branch into a new service or industry. The important thing is to treat mistakes as learning experiences, so you can avoid them in the future. Getting discouraged by a setback or mistake would be the biggest mistake of all.
This article was first published on: https://godaddy.com/blog/4-mistakes-to-avoid-when-you-embark-on-a-freelance-career/
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