Freelancing is a great career move if you want to do the work you love, work flexible hours and enjoy the autonomy of being your own boss. However, running your own business also means you are responsible for the day-to-day money decisions.
If you’re not a financial expert, you can hire professionals for important regulatory tasks such as accounting, payroll, and tax obligations; however, for the everyday stuff, you’re in charge. But how do you know if you’re making the right decisions?
Here are 4 common money mistakes freelancers make and how to fix them.
1. You’re not networking enough
No person is an island, and even if you’re a freelancer working remotely, you still need to build a network, form business relationships and reach out to others.
Networking allows you to develop business relationships and friendships that can be helpful in many ways. Not least financially!
Your network isn’t just a bunch of people from whom you can ask favors from time to time and bounce ideas off but also a valuable pool of professionals from whom you can seek guidance. By networking, you can also build authority so you become the go-to person in your field – a safe pair of hands that your network can refer colleagues to for your services.
Networking, when done well, is very much a two-way street. It requires your input, too.
If you aren’t networking or forming and nurturing relationships within your network, you are potentially leaving money on the table. That’s not just from unexpected opportunities that may arise but also from you proactively reaching out to your network and asking them if they know of anyone who would benefit from your assistance.
A simple email or follow-up to a key player in your network can go a long way, but like anything, to be successful, you need to be consistent and continue to nurture the relationships you build.
This means you actively support your network where possible, too.
Networking (or lack of it), on the face of it, might not seem like a money mistake, but there’s a reason why they say your network is your net worth!
2. You’re not planning ahead
Not properly planning ahead can manifest itself in a number of ways, from not planning for potential dry periods (i.e. not marketing yourself adequately when you have work in and then getting caught up in the freelancer feast or famine cycle) to not planning ahead for events that are inevitable or regular such as tax and accounting obligations, to basic cash flow forecasting (know when cash is coming in/know when bills are due and money going out).
The good news is that a simple schedule can eradicate many of these problems. Having a routine schedule and sticking to it will also increase your productivity. There are plenty of online tools to help you with scheduling and planning; the key is to keep track of what you need to do (and when) and take action, i.e. don’t put things off or procrastinate.
There are other things besides planning you can do to make your freelance business run more efficiently, including automating time-consuming business processes. For example, when it comes to invoicing regular clients who need to be billed on a fixed schedule, you can take advantage of Invoice Ninja’s recurring invoice and auto-billing feature.
Auto-billing is a feature that enables the payments system to capture your client’s credit card details and store them for billing at a future date. This means future invoices can be issued automatically.
Invoice Ninja also has a time tracking extension for Google Chrome so you can log and manage all your tasks. You can also organize and plan your client work with Invoice Ninja’s visual project management tool. Find out more in our short video here.
Try Invoice Ninja for free here.
3. You’re comparing yourself to others
They say that comparison is the thief of joy, but when it comes to freelancing, it’s also the thief of your time and peace of mind. It’s easy to look at other freelancers’ progress and compare it to your own, especially when it comes to the rates they may charge.
You could start thinking you need to increase your rates or, in some circumstances, decrease them to be more competitive.
However, the reality is that most freelancer’s rates differ for a wide range of reasons. They may offer different deliverables or add-on services, have varying levels of experience and expertise, position themselves differently, and target a specific client or target market, and that’s before we get into different locations and overheads particular to them.
No one freelancer is exactly the same.
Your price, among other factors, should reflect your experience, the quality of the product/service, and your positioning in the market. It should also cover your overheads before you can generate a profit.
Trying to keep up with others is a drain on your time, money and resources. Sure, review your rates, but do what works for you and benefits your clients.
4. You’re not attracting the right clients
A lot of money issues by default are due to not attracting the right clients for you.
Take time to ensure your ideal client avatar you identified at the start of your freelancer journey is still the right fit. It may have changed considerably since you first started out.
It could be that your marketing materials and online presence are attracting clients that are no longer the right fit, or your website needs a tweak so it’s clear on your rates, even if it’s an approximate range that your prices start from. Read more about displaying your prices on your website here.
Also, don’t get stuck charging the same rate as you did when you began your freelance journey. You want to be paid what you’re worth, and bear in mind that lower rates can sometimes attract lower-quality clients.
Regularly reviewing your rates (upward) is the path to good positioning and prosperity.
The key is to avoid getting into a freelance rut, staying stuck charging the same rates you’ve always been charging, not learning new skills, or developing in line with the times and client needs.
Freelance success is routed in getting the foundations right, adding value to client projects and regularly updating and reviewing your skills (and rates where applicable).
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Hopefully, you’ve found these tips helpful. If you know of anyone else who would benefit, please share. Thank you!
