Working freelance isn’t as carefree as it sounds. You’re the boss of your business and you need to work smarter. Take the next step and start managing your freelance business like an entrepreneur.
Back when you dreamed up your freelance business, your imagination painted such an awe-inspiring picture of the life you were about to live. A life filled with flexibility and freedom.
You saw yourself sitting on a sunny coffee shop patio with your laptop, sipping on a latte while you knocked out your favorite kind of work, without anyone telling you what to do and when to do it. You were excited to work less and spend your extra free time hanging out with loved ones, pursuing other creative ventures, and cooking elaborate wholesome meals at home.
Fast forward a year or two and the reality looks a bit different. You’re working all hours of the day and on the weekends, chained to your stand-up desk. You’re juggling accounting, business development, project management, and deliverables. You’re just getting by financially, and you’re surviving on takeout and copious amounts of caffeine.
You’ve passed the threshold of being a young, starry-eyed freelancer — and you’re realizing you need to become an entrepreneur. To avoid sabotaging your livelihood and your sanity, you need to manage your freelance business with an entrepreneurial mindset.
Working freelance means you’re the boss of your business
Working freelance has such a carefree ring to it and many spirited freelancers get stuck in this carefree mindset. Yes, you are your own boss. But, being the boss is freaking difficult.
Think about the way you used to see a CEO in your past life when you were a salaried employee. Did you like your CEO? Did you understand where they were coming from when they were absurdly demanding on a Friday afternoon?
What working freelance really means is that you are working your ass off. Because, just like the CEO you used to misjudge, you’re running a business.
- Competition is always right on your heels.
- You have to figure out how to balance indescribable highs and lows.
- You’ll wear many hats that you don’t want to wear.
- You’ll take risks that may or may not work out.
- You’ll never stop thinking about your business.
As with any business, there are business owners who keep moving forward and those who just don’t make it. Let’s look at some of the do’s and don’ts of managing your freelance business so you can avoid falling into the latter camp.
Top 4 do’s: How to successfully manage your freelance business
1. Do build a cash reserve.
Cash flow is one of the most important things you need to master with your freelance business. Employees can get away with living paycheck to paycheck. You can’t. Many of us have learned the invaluable lesson of cash reserves this year when forces beyond our control impacted our freelance business, our clients’ businesses, and well… everybody’s businesses.
Building a cash reserve prepares you for unexpected situations. As a contractor, no matter how incredible your work is, you will be the first on the chopping block when the economy tanks and businesses start downsizing.
Having a reserve allows some breathing room. Even when business is going well, you can be more choosy about the clients and projects you take on. Freelancers get discouraged with cash reserves, because they hear six months or 12 months being thrown around. Start small and be patient — work toward that one-month milestone and build up from there.
2. Do keep looking ahead.
Keep looking ahead with your freelance business, because guess what? Your talented competitors are never far behind. In 2019, the independent workforce consisted of 41 million Americans. This year, freelancers need to be more conscious about looking ahead.
Competition is even tougher now. Since remote working is the new norm, businesses are broadening their geographic reach with full-time employees. Many have been laid off and they are on the job hunt. You once had the upper hand here and now you’re wading through a bigger talent pool.
Looking ahead goes back to building your cash reserves, but also to keeping your pipeline filled at least a quarter ahead. Six months or a year is even better, but more difficult during these times. Keep making time for biz dev, so you don’t finish a project and have nowhere to go.
3. Do track your time all the time.
When you’re working on a client project, you diligently track your time using a freelance management tool like AND.CO to make sure you are staying within the scope. What about all of the other tasks you handle?
Caitlin Pearce, executive director of the Freelancer’s Union, shared this humbling data: “Freelancers are spending literally 50 percent of their time doing the prospecting, marketing, and administrative work that they need to grow their solo businesses.”
Tracking admin hours will unveil the true cost of doing business. If you’re considering freelance tools, you’ll make an easy budget decision when you account for the time you’re spending trying to “do it all” versus paying $X per month for an efficient solution.
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4. Do audit and improve business processes.
You have a lot to keep up with as a freelancer. It can be very easy to go, go, go and never stop to audit and improve your business processes. At least once a year, take a step back and uncover opportunities to simplify tasks and save time.
If you follow the previous step and track your time, you’ll quickly identify these areas for improvement. Now you can find the appropriate solutions. It’s important to find dedicated freelance management tools, rather than using technology that works for “all businesses.”
You have freelance management tasks that can absolutely be automated, like recurring payments for retainer clients or tracking expenses by importing credit card and bank transactions. Your freelance business is unique and any technology you bring on should support your specific needs.
Top 4 don’ts: How to unsuccessfully manage your freelance business
1. Don’t put your business at risk.
Anyone who runs a business is a risk-taker. You have to be, otherwise you wouldn’t be here in the first place. You would play it safe with a job where you get a consistent, direct-deposit paycheck. Managing your freelance business really comes down to protecting your livelihood.
Obviously, you need contracts that are clear, secure, and easy to execute. You also need to make sure you get paid.
Invoicing should be breezy — as should receiving payments electronically. If you’re waiting around for paper checks in the mail, you’re doing it wrong. If your clients will only pay you by check and they’re always behind with payments, find new clients.
Lastly, don’t put all of your eggs in one basket. Diversify your clients, your business offerings, and your revenue streams.
2. Don’t make proposals an afterthought.
Proposals are still a key transactional document. You get a verbal agreement from a new or existing client, and guess what? They want you to whip up that proposal and send it over. If creating proposals is manual and difficult, you’re making life harder than it needs to be.
Automating your proposals allows you to save time and produce the best possible content. Remember that your proposal isn’t just a formality, it’s the way to seal the deal with new business. You want to put your best foot forward, not rush the proposal off in some generic template.
Customize the proposal for your prospect’s goals and requirements. Demonstrate that you are the right partner — and someone that cares about the partnership — by creating high-quality proposals.
3. Don’t work in isolation.
Doing everything yourself will only get you so far. You will hit walls both creatively and professionally. It’s harder to be innovative when you don’t have additional brainpower to tap into. It’s harder to grow your freelance business when you are one human that can’t be everywhere at once.
Teamlancing is the future of freelancing. When you partner with other freelancers, you expand your business reach to deliver fresh offerings and innovation to your clients.
Take a website project, for example. If you’re a content creator, you’re able to knock out the messaging and SEO. But, what about the design and UX? You’ll probably end up teamlancing anyway, either with your client’s internal team or other freelancers or agencies you don’t know. Embrace teamlancing, build your preferred team, and offer a one-stop solution where you get to work with familiar processes and people.
4. Don’t lose sight of your personal mission.
Hell, some of us freelancers actually write mission statements for our clients but we don’t know what our personal mission is. Your personal mission isn’t like a traditional mission statement about what you do… it’s more about why you’re doing it.
Why are you running this freelance business? Why did you take the risk in the first place? Why do you continue to work hard to keep things going? Your personal mission is what gets you out of bed every day. It may have nothing to do with the type of work you do. It’s more about fulfillment.
Things will inevitably get tough for your freelance business — we’re looking at you, 2020. If you lose sight of your personal mission, it will be that much harder to keep pushing and succeeding.
You’re not an employee anymore… you’re the boss. Your freelance business will be all-consuming if you don’t make this mindset switch. Want to keep doing what you love? Start thinking more like an entrepreneur. You’ll find opportunities to keep your business moving forward, even when the going gets tough.