From Barely Making it to Making Profit
Many freelancers start out in the first few months by either losing money or just barely making enough to cover living expenses. This is often why many end up hating the lifestyle, and run back to the cubicle. For others, it’s the one reason why they don’t enter the freelancing world in the first place.
However, freelancing is a business like any other. Like a traditional business owner, we deserve to work hard and reap the awards later. We deserve unlimited potential, and the ability to live comfortably like the owner of a salon, mom & pop shop, or even a corporation. We deserve a profit for us and our businesses.
In this post we’re going to look into how to break away from the barely-making-it frame of mind, and step into how to achieve a deserving profit for your business, not to mention put some extra cash in your pocket for leisure.
Change Your Freelance Business Mindset
How much do you treat your freelance business like an actual business? In order to make a profit like a business, it’s time to get serious. The freelance lifestyle can come with some unwanted side-effects: laziness (sleeping in everyday till noon), confusion (how is all that money gone?), and even desperation at times (how will I find my next client?!).
Running a business is all about organization, and really, none of these problems should exist on a regular basis. With organization and self-discipline, anything is achievable, including a steady workflow, schedule, and income stream.
Step #1 to making a stable profit: Be willing to do so. Be willing to do the hard work.
Know When to Outsource
The most profitable freelance businesses outsource a great deal of their work in order to take on more clients, and to give their clients the best possible outcomes for their project. However, much of this is knowing when to outsource, and when to just do the job yourself. Do you have enough clients in order to keep yourself afloat while still paying others to do a portion of the job?
Check out Danny Outlaw’s views on exploiting what you’re good at to run an efficient business: Episode 23: Exploit What You’re Good At.
The key is knowing how much you can spend on outsourcing when you’d like to, but still using the power of teamwork to be more productive. By splitting up each project with other contractors, you can spend more time marketing, gaining clients, and building your brand.
Step #2 to making a stable profit: Know what you do best, and use outsourcing to make your business more efficient. Then, take on more clients. Yet, still be financially responsible and know when you can and can’t afford to outsource in certain areas.
Set Smart Rates
Set rates that will make you a profit in the first place. Re-examine how much you charge for certain project types, and organize your rates, quote documents, etc. Set rates to make a monthly goal of $x amount. No longer think in terms of how much you need to make, but rather how much you want to be making.
Always do quality work and treat yourself like a business in front of clients. This will make you a premium brand, someone worth paying a bit extra for quality.
Rule #3 for making a stable profit: Start thinking in how much you want to make, including a profit, and become a ‘premium’ freelancer by charging more but also providing top quality.
Spend More Time Marketing
Just like any other business, set a marketing budget and market like it’s your full-time job. This is especially essential the first several months of starting up a freelance business. There is no need to spend hundreds on an ad for a top blog, but spending a bit by creating an ad in some local papers definitely won’t hurt.
Think locally at first, because this is an easier way to win over clients. Then, expand to online marketing — free at first, then to a budget. Always be sure to keep involved in the community (as an individual) and your business in the public eye.
Rule #4 for making a stable profit: Market more and market smarter. If you spend more time marketing, feel free to outsource some other work (above) to keep up. Profitable businesses have many clients at a time.
Keep Track of Your Finances Better
Managing personal expenses is nothing like managing business expenses. We can tend to get by when not paying much attention to our personal budget, but a business budget requires a bit more effort. Track you business’s income and expenses separately from the personal budget, and track it religiously.
It can help to set up a separate business bank account, or just use your own system of keeping things separate. Put all income made from the freelance business into that separate account, and only spend money for the business through that account. If you don’t have the money in the business account, don’t spend it on the business.
Give yourself a set ‘paycheck’ on a set schedule, and don’t break it until absolutely necessary. This can help to specify how much you actually have to spend at any given time. Also, by giving yourself the same amount each month, you can better see how much your business is making (or losing) on its own.
Rule #5 for making a stable profit: Track your finances separately, and give it top priority. After all, finances are what making a profit is all about!
Thanks for the great post – it doesn’t matter how long you’ve been freelancing for but we often get into a rut or get too hectic to think straight and easily forget the basics, to only wake up when we get to the ‘where’s the money gone’ phase.