As a freelancer, you may think that your job is to write, design, code or do whatever it is that you do. You freelance because you like the freedom of working for the clients you choose during the hours that suit your life. However, that’s idealistic. The reality is that you’re a small business that sells services. And that means managing yourself as a valuable business commodity.
Profit is king
The first thing to remember when you start out is that profit is more important than revenue and turnover. It’s all well and good to get some money coming in – getting your first invoice paid is a huge buzz when you start out – but it’s important that you don’t get excited and spend all your money as it arrives.
Set a budget
Start by making a budget and carefully track all of your expenses. Then make sure that you don’t spend over your budget.
When other businesses, like restaurants and stores, start out the proprietors know that there’s going to be a period where the money coming in won’t be enough to keep everything running. They always prepare by having some money in the bank. In my case, I had severance pay from the fulltime job I was leaving. That meant I had enough money in hand to cover living expenses for several weeks. If you don’t have that luxury, look to finding some way to start yourself off without being on the poverty line. That might mean starting with a business loan. It’s not ideal but having enough money to cover food and rent for a few weeks will make a huge difference to your stress levels and save you from taking poorly paid work that robs of precious business-building time.
Managing your time as a freelancer may be one of the most important skills you need to master.
Depending on your specific work, you may be in the position where you’re offered various meetings, trips and other part work/part social events. These can either be time wasters or important opportunities. So, the challenge is to try to figure out which it will be.
In a recent post, I showed you how to calculate an hourly pay-rate. When you take time away from your desk, make sure that you get some bang for buck.
Sometimes, that’ll be an immediate payback, like a pitch meeting with a client, selling ad space for your website or interviewing someone for a story. That’s an easy time out of the office to justify.
Other activities, like conferences are a tougher call. However, those need to be looked at as a longer term investment with the payback coming over a year or so.
The key thing to remember is to never do something without thinking about the payback.