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1. Don’t sell yourself short
This first piece of freelance advice is the most important of all.
When you first start working for yourself it’s incredibly tempting to charge low rates. By doing this you’ll quickly become busy and feel like your decision to go freelance has somehow been proven right. Low freelance rates also often creep in because suddenly asking for something like, say, $75 per hour can feel quite intimidating if you previously had a “traditional” job.
The sooner the snap out of this thinking and get used to charging what you’re worth, the better. Freelance rates may seem high to some people, but freelancers have to pay all of their own taxes and medical expenses, cover themselves for holidays and sickness, pay for insurance policies, and fund all manner of other things.
There’s also the very important fact that if you charge bargain-basement rates, you’re going to end up with bargain-basement clients.
If you fill all of your time with low paying work, you simply won’t have any time for higher paying work either.
While you’re building a reputation, you will inevitably have to make some concessions and charge a little less on occasion. But undercutting all of your competition and running yourself ragged for the sake of having work is a really flawed strategy.
There’s an interesting resource for finding freelance rates here. If it comes to it, you can always nose around what your competitors are charging too.
2. Always save for tax
When you first become a freelancer, dealing with taxation will all be very new to you. One undeniable benefit of being employed is that someone else takes care of all that stuff.
The best way to be prepared when that first tax bill hits is to save a proportion of your earned income right from day one. The exact proportion will vary from country to country and income to income.
I’ll tell you from personal experience what happens if you don’t do this. During my first few years of self-employment, I’d spend eight months of each year feeling rich, and four months of enduring blind panic and personal austerity while I saved for the tax bill. This was always (and still IS always) a little more than the “worst case scenario” I had in my head.
Life, when you plan ahead, may not be quite as exhilarating, but it’s a whole lot less stressful.
3. Work hard – but not too hard
OK, I’ll confess I’ve not quite got this one nailed down after over 10 years, but it’s important to try!
A huge difference between working for yourself and “working for the man” is that a lot of the time you actually rather enjoy the work – at least that’s certainly the idea! However, taken too far this can lead to cycles of frantic work, followed by burnout.
The feast and famine nature of freelance work does mean that us home workers have to “make hay when the sun shines,” so it would be ludicrous to suggest anyone sticks to a rigid nine to five. However, some boundaries are good. I won’t take this particular piece of freelance advice any further than that because everyone’s mileage will vary.
4. Track your income
It took me years to start tracking my income in any particularly organised way, and I’m still not as obsessive about it as some. My wife, as an example, could tell you her exact billing for every month she’s been freelancing.
While I personally suspect that my wife’s favourite use of her records is so she can be competitive about her billing(!), keeping such records makes sense in so many ways.
A history of income can help you identify seasonal variations so you can plan around them, accurately predict your tax liabilities, and give you verification that your business is moving in the right direction. Whether you just use an Excel spreadsheet or something more sophisticated, you really should keep track of this somehow.
Note: If you don’t have ready access to Excel, check out Office 365 as a way to have all of Microsoft’s applications at your fingertips for very little outlay. Use this link if you’re in the US or this one if you’re in the UK. You will also find a useful article on computer fundamentals for freelancers here.
5. Know the difference between stretching yourself and blagging
People who lie about their abilities rapidly come unstuck.
However, there is a difference between outright blagging and stretching yourself a little to meet the needs of a client.
When my main freelance income came from IT consultancy, I would sometimes take on work that involved software I wasn’t hugely familiar with. I’d spend hours before the job getting up to speed. This wouldn’t be paid time, but it was a form of “enforced personal development.”
There’s nothing wrong with doing this, especially if you’re up-front with the clients when your experience and knowledge may fall a little short. Telling fibs is very different, and not recommended.
6. Sell work – not time
As and when I write a book on how to be a successful freelancer, this advice will be front and centre. It’s the difference between earning a steady living and achieving true success.
While some professions (and some contracts) will require you to charge by the hour or by the day, this is best avoided wherever possible. Selling your time means both placing a cap on how much you can earn and putting yourself in a position where you’re tied down to being “owned” at certain points in your working life.
If you want to take the “free” out of freelance, this is how to go about it.
If you charge for completed work (or “job and finish,” as I like to call it), what you do and when you do it is nobody’s business but your own, so long as you do the work to a high standard and deliver it on time. You can step out for a hair-do or a massage, juggle multiple tasks at once (including some for multiple clients), and work all night and sleep all day if that’s what makes you happy.
As soon as you start to sell your time, especially specific days of the week, you start to relinquish the control of some of your schedule and hand it to your clients. Avoiding this won’t always be possible, but if you always have it in mind, you will avoid it when it’s feasible to do so.
Think of it this way. A person on $100 per hour, billing 30 hours per week (allowing some time for business admin tasks), and taking four weeks holiday each year, can bill a maximum of $144,000 per year before they run out of time to do any more work. While this is an impressive figure, it’s still a limitation that can only be removed by selling work instead of time.
7. Don’t discount for the sake of it
Here’s one that I personally got really wrong for several years – and they were years when I was selling my time too!
Some people (like the old version of me) are really keen to hand out discounts. It’s particularly tempting when you’re new to freelancing and keen to make a good impression.
The thing I often used to do, which was incredibly foolish, was rounding down my invoices. If I’d been at someone’s office fixing a server for three hours and 20 minutes, I’d say “I’ll just charge you for three.” Every single time I did this I threw money down the drain – and money that I’d worked for. I did this a LOT of times. Over several years I easily lost out on a five-figure sum, just for a practice that – at best – made people “like me” a bit more.
As soon as I stopped doing this (switching to 15-minute billing), nobody complained and nobody said a word. In fact, I think the clients respected me a little more. If you don’t respect your own time, nobody else will.
Discounts are for loyal customers, or for when you need to make the difference between you landing a contract and someone else grabbing it. They’re not for everyday use.
8. Keep communication constant and consistent
There’s nothing worse than a freelancer who goes off the radar, or who doesn’t reply to emails reliably. However, I can personally vouch for the fact that plenty of self-employed people absolutely suck at communication. Don’t be one of them.
If you’ve not read our guide to what it takes to be a successful freelancer, now’s the time.
9. Plan for holidays
Holidays are a minefield for the self-employed. For a start, we don’t get paid for them.
As such, it’s important to get used to the sheer amount of planning that’s involved in taking any time off as a freelancer. Obviously how difficult it is depends on your exact profession.
IT and web work is a particular nightmare here. If a server or website goes down while you’re on the beach, you will get a phone call, and if you want to keep that client, you will be frantically scooping up your beach towel to go and find some WiFi – unless you’ve done some extensive advance planning to arrange cover.
Regular writing jobs create a different challenge – one that’s usually mitigated by writing twice as much in the week before you go away. This will cover you for only one week, however.
Obviously, this situation is unique for everyone. For many, it’s enough to get away, complete with the laptop, and do a little work from a balcony or an unfamiliar Starbucks. However, I’d urge all online freelancers to do a proper tech-detox at least once per year.
10. Don’t get trapped by money
Getting “trapped by money” doesn’t sound all that bad does it?! Well, actually it can be.
As you progress through your freelance journey, you’ll end up (hopefully) gaining loyal clients and plenty of regular well-paid work. Where this can go wrong is if you end up doing too much with just one client. This can land you in a position where you accidentally have all the disadvantages of being a freelancer and all the disadvantages of a traditional job.
What you do have in this situation, however, is regular money coming in, which is why it’s a trap – and a rather addictive one too.
Thanks to the money, you can afford to “drop your hustle.” You stop marketing, knowing the cash is coming anyway. But what you lose sight of is that your portfolio is getting out of date, your skills are all shaping themselves around just that one client, and that (most importantly) you’re putting all of your eggs in one basket. That one client stands between you and destitution – because if something goes wrong there, you’ve no longer got other customers to fall back on.
I’ve never let it get quite that far, but I’ve come close. I took short-term money but didn’t take a long-term view. All that’s needed is a slightly better balance.
So that concludes today’s freelance advice. If you have any questions, please share them in the comments, and I’ll be happy to address them personally!