On May 1, 2014 I will be celebrating my fifth year as a full-time freelancer. (Whoohoo!) The longer I freelance the more often I am approached by others for advice on how to get started. While many things will differ depending on your type of freelance business, there are at least five things that I would recommend to anyone. The first being to start off your business knowing that there will likely be a lot of ebb and flow in your income. You will need to build up a significant amount in your savings to handle the leaner moments during your first year of business.
Three Months Worth of Savings
If you already have a full-time job, consider taking on some extra freelance work, in addition to your current job, in order to build up your savings account before you quit. There is no magic amount that is the right amount to get started – a good rule of thumb is to create a budget for your average monthly costs and then save up enough for three times that.
If you have never done a budget before, starting one can be as simple as keeping track of your current spending for a couple of months in order to determine how much you will need to pay in the months ahead. Some budget items will change once you are a freelancer (i.e. you may use less gas in your car once you start working from home) but for now just figure out how much you will need if everything were the same. You can make adjustments later. I have found mint.com to be an extremely helpful tool on tracking my actual spending versus my budgeted amounts. And it’s free!
At Least One Repeat Client
For the first two years of my business I had a lot of fluctuation in my income. Most of my projects for clients were one-0ffs. A customer would come to me with a specific need, for example a brochure design and once the brochure was printed I might never hear from them again. (Or if I did it might be months later before they had another need.) I quickly determined that gaining clients I could have an ongoing relationship with would be very valuable to creating a regular income.
I’m not saying that you shouldn’t fulfill work for clients that just need that one thing from you, but that having clients that use you on a monthly basis will save you from eating through that savings account you built up all too quickly. Creating that monthly relationship, before you go solo, will give you healthier head start on a steady stream of freelance income.
A Web Portfolio
There will likely be times that you ARE able to meet prospective clients at your local coffee shop to show them examples of your work, but until you get a web site up you are reducing your client pool tremendously. Once you put up a web site you are now able to pitch your services to a much larger audience of potential clients. I live in Indiana and over the last five years I have literally worked with businesses and individuals from all over the United States from my home office. Whether they Googled my web site, or I pitched my services to them, I still used my web site to show examples of what I had done in the past to gain those clients. (I also highly recommend referrals but that will be covered in another blog post).
FreshBooks.com (or similar)
For about the first year of my business I kept track of my income and expenses using Microsoft Word and Excel. I found this to be super clunky. I had to keep track of how long people were taking to pay and manually send reminders etc. I had considered buying Quickbooks until someone recommended I try out FreshBooks.com for free.
With FreshBooks.com I was able to juggle three clients for free to check it out … and I was quickly hooked. This program allows me to look more professional, streamline my invoicing and late payment e-mails, and it is also a huge headache saver come tax time! I’m sure there are others like it out there, but I know this one is a keeper.
Here is a referral link if you want to check Freshbooks.com out yourself https://suzannewesley.freshbooks.com/refer/www.
If you don’t set approximate office hours for yourself it is easy to get caught in one of two freelance patterns – either 1) you get addicted to the freedom and take too much time slacking off and not getting enough business, or 2) you work around the clock! Either one is bad for your fledgling business. It’s OK to occasionally take the day or just the afternoon off, or even to work at untraditional times in order to get a project finished when you promised it would be done. However, make sure that you are balancing your work life and your personal life in a healthy way. I now set my office hours between 9AM – 4PM Monday through Friday EST. This keeps me from getting phone calls during my family’s supper, or those ’emergency’ weekend projects from cropping up when I have other plans. I do work outside of those hours when I want or need to, but it’s by my choice. As your own boss you do have that flexibility.
(You also have the right to charge rush fees if your clients have waited too long to contact you, and now need you to work outside of your office hours to get a project done by their deadline. But we will cover that topic later . . .)