Freelancing is a great gig if you can manage it, but it’s not as easy as it looks. For instance, when you’re just starting out as a freelancer you may forgo contracts to get a gig. But what happens if the client skips out without paying? How do you pursue it? Is there any recourse? Learn this and more with these smart business tips for freelancers from experts who mastered the art.
Treat your work like a business
Just because you’re the boss of you as a freelancer doesn’t mean your professionalism or commitment to quality should diminish. Especially if this side gig is something you’d like to grow into a full-time venture. Communicate with clients, produce high-level work, and meet deadlines just like you would at your place of employment.
Cast a wide net
Freelancing can be slow going at first. But if you pound the proverbial pavement with a quality product you’ll slowly start to build your client base. Don’t limit yourself to a select few, either. Take whoever comes your way at first to get your name out there. That income will also help keep you on a solid foundation as you grow despite that some clients may not work out.
You’ll quickly find as a new freelancer that you’re president, CEO, secretary, janitor, and every other job title that comes along with your new little business. To stay focused on the revenue generating parts of it, automate what you can.
“In business, there are countless intricate parts that keep it running,” says businessman McCall Robison. “If you don’t find ways to automate your business, you’re going to be stuck working on all of those parts manually. Automating parts of your business will free up your time to focus on more important tasks.”
Leverage your day job
A lot of people dream of quitting their life-sucking nine-to-five job for full-time freelancing, but don’t be hasty. You might not enjoy being under your boss’s thumb all the time, but your job comes with plenty of perks that freelancing doesn’t. Health insurance and that employer-matching 401(k) are good examples.
“Maintaining your current career and easing into the freelance world lessens financial stress, since profits aren’t likely to be huge in the beginning. Also consider a mentor; the website SCORE is a great place to find one.”” adds small business expert David Bakke.
Be tax savvy
One of the most critical business tips for freelancers is to be tax savvy. The fact is, freelancers should be thinking about taxes from day one since their taxes aren’t automatically deducted from their income. And those who aren’t prepared could be in quite a financial bind.
“When you’re balancing freelance and a full-time gig, the tax burden isn’t so great, but it can be a real shock when you make the transition or when you significantly increase your freelance earnings,” explains freelance copywriter and content strategist Alexandra Sheehan. “When my freelance really started to snowball, I owed more than $10,000 in taxes, and I held a full-time job for more than half the year. Set aside 25% of your freelance income for taxes. Also, make sure you have your finances in order from a bookkeeping perspective too. Come up with invoice processes and naming systems, record every transaction, and keep all your receipts, invoices and other documentation for expenses. A separate bank account that you use solely for freelance/business purposes makes it easier to track down incoming and outgoing transactions.”
Also consider hiring an accountant who can help you navigate the self-proprietorship landscape, including setting up quarterly taxes that you can pay after your first year in business so you can at least mitigate your tax liability.
Another business tip for freelancers is to focus of promotion. Social media is a great way to network with potential client. But I’m also a big fan of in-person networking events where you can meet potential clients, show off your personality a little, and establish a rapport.
Organizations like the Freelancers Union are offer resources, unique freelancer financials advice and a monthly meet-up in major cities across the United States; it’s also free and has a large nationwide membership base. Trade sites, online groups and event resources like Meetup.com and Eventbrite are also great for finding opportunities to network.
“My freelance earnings didn’t take off until I choose to specialize,” says R.J. Weiss, founder of the financial blog The Ways to Wealth. “In my case, I specialized as a landing page designer on the Unbounce platform. Specializing in a field that was both new and growing fast allowed me to quickly gain customers. It also allowed me to earn a much higher rate than before.”
Crunch the numbers
Before you begin freelancing, it’s important to get an idea of how much the overhead will cost you versus how much you can charge for goods or services. Sarah Moe, business coach at Flauk, explains: “Let’s say you want to start a bakery and sell scones. But if it’s going to cost $5 to make each scone and you can only sell them for $4, that’s not a profitable business,” she says. “And don’t forget to include your hourly rate. Just because you’re working for yourself doesn’t mean you shouldn’t pay yourself. If each scone takes you five minutes to make, you need to factor that in to your pricing.”
Profit First by Mike Michalowicz is a great read on this subject for all new freelancers.
If you want to be success, you need to listen carefully and ask lots of questions. “Freelancers who ask detailed questions are the ones most likely to do the job correctly,” offers Steve Wang, a 15-year human resources veteran and resume writer. “Then again, freelancers who act like they need no guidance or help, are usually the ones who screw things up.”
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