We are in the largest freelance economy of all time, and more and more entrepreneurs are taking the plunge. But for every successful freelancer there are many more who quickly give up and move back to their corporate jobs.
While some people quickly realize they simply don’t enjoy freelancing, others are forced to give it up when they make avoidable mistakes.
The good news is that you can learn from their mistakes! If you are interested in becoming a freelancer, here are six things which can help you become successful.
Many freelancers continue to work full time while they build up a client base. But if you want to focus full time on freelance from the get go, we recommend you have at least five to six months’ worth of living expenses saved up beforehand.
It is unlikely you will be able to make a steady income immediately, and without the stability of a 9-5 job you might end up scrambling for money. Make sure you have an emergency fund in case you are in an accident or your car or computer breaks.
In addition, you should try to anticipate what costs you will have starting out. Will you need to pay employees? Rent an office? Buy new gear or equipment?
Like any business, you will need to invest into your freelance job. To give yourself the best start possible, you must have (at least a little) money on your mind.
Often freelancers fall into the trap of undefined goals. They know they want to freelance to get away from their office jobs, but they aren’t quite sure what they want to achieve as freelancers.
Do you want flexibility? Do you want to earn enough to save money, or just enough to pay rent? Do you want independence, or control over who you work with?
If you want to be a successful freelancer, you need to know exactly what you want to achieve. Then, once you have identified your priorities, write them down and plan. All your actions should contribute to that plan.
For instance, if you goal is to pick and choose clients, you must build up a strong portfolio in a niche instead of taking odd jobs broadly.
You should check in on your plan regularly to ensure you are taking the right steps forward.
It can be tempting to relax as a freelancer. You have more flexibility and control, but that does not mean you should take your work any less seriously.
This is especially true when it comes to paperwork. If you want to be successful, you must keep track of all your records. You don’t necessarily need any expensive programs to do this either. You can manage your finances using something as simple as an excel sheet, so long as you commit to it.
It is also important to document your jobs and sign contracts. It may feel overly formal, but having deals in writing will help define client expectations and compel them to pay when the time comes.
While I have mentioned that it is important to know your income and expenses, freelancing comes with an extra layer of money management.
You will need to pay different taxes, along with overhead and operational costs. These can all add up quickly! In addition, you might only be paid a month or more after you complete a job.
Because of this, you should lay aside roughly 30% of your income for taxes, and calculate how much your other costs will total. Lay the cost for these aside as well! These can include software packages, rent, utilities, processing fees and business registration.
Keep your raw income in a separate account and then pay yourself from that account twice a month, much like you would an employee. Save the rest to cover your expenses!
When you start out it can be tempting to take every job offer you can.
But successful freelancers generally fit into niches. They might illustrate only children’s storybooks, or paint only wedding invitations, or write a certain type of code.
If you want to build up a truly impressive portfolio be selective about who you work for. A good client will be one who offers work that you are interested in, and which you are able to do well.
If a client doesn’t pay you on time, or is difficult to communicate with, don’t keep working with them! The longer you freelance, the faster you will be able to avoid and recognize difficult clients.
Your time is valuable. Focus it on projects that you are passionate about, so that you can continue to grow in the right direction.
One of the most common questions freelancers have is about pricing. How much can you demand? Ask for too little, and you’ll end up overworked and frustrated. Ask for too much, and you risk losing jobs. So how do you calculate a fair fee?
An effective method is by looking at a full-time job in your industry. If you plan on providing cleaning services, find out how much a full-time employee is paid annually.
For instance, a full-time cleaner might receive $25,000 a year. Depending on how many days during the year they work, they might earn anything from $10-14 an hour.
Keep benefits like health insurance and retirement funds in mind. How many hours a week do you plan to work? How much would you need to charge to reach a fair annual pay?
The trick is ensuring that your hourly pay is similar to the hourly pay of those employed elsewhere in the same industry.
Of course, once you have been freelancing for a while you can raise your prices. But this is an effective way to calculate your rates going in.
With these six things in mind you’re guaranteed to have a better start than most. Stay on top of your finances, work towards your goals and be picky when it comes to clients.
- Lena Klein