Emily Finlay
There’s a reason (several actually) that 70.4 million people are expected to start a freelance business in 2022. No schedule, no toxic work environments, no need to stress over work that you don’t care about anyway. Living that #bosslesslife offers endless opportunities for a more fulfilling, purposeful, and happier experience.
Getting your freelance business to a place that allows you to enjoy these perks, however, isn’t always easy. Your business, work, future, and success all fall solely on your shoulders. If you aren’t intentional about the way you approach freelancing, you will struggle more than you have to.
Making these common freelance mistakes won’t destroy your business, but they may weaken your drive. Prevent burnout and unnecessary complications by avoiding these mistakes as you grow your freelance business.
1. Starting work before starting your business
And I’m not talking about registering a business, though that’s important for legal and tax reasons. I’m referring to the process of defining what you do and why you do it.
You see, anyone can create a profile on a freelancing platform and get hired for a project that same day. If you have the skills you need to complete your work and can create a powerful proposal, you can build your business without ever thinking past the need to make money.
Developing a business that can grow beyond that, however, takes deliberation. When you know what drives your work, you can find and focus on the clients that fit with your values. Identifying your niche, for example, allows you to become an expert in your field, someone who can charge a high price for specialized work.
Clients also typically have different priorities and opinions than you do. If you haven’t defined and grounded your business, it’s much harder to say no when you need to.
Build a sustainable business by taking the time to answer these questions:
- Purpose: Why am I doing this?
- Vision: What impact do I hope to have through my business in 5 years?
- Mission: How do I bring value to my clients and work toward my vision?
- Values: What beliefs and principles direct my efforts?
2. Neglecting your finances
Pop quiz: How do freelancers pay taxes?
If you answered estimated payments, then you’ve got a good handle on your freelance financial responsibilities.
Like all businesses, freelancers must make quarterly income tax payments to the IRS and, depending on where you live, your home state. Freelancers who don’t make these payments will have to pay late fees and interest costs on every dollar they owe, plus the original amount.
Even worse, if you don’t pay your taxes and don’t file a tax return, the government can come after you for the money you owe, even decades after the fact.
Failing to separate business and personal finances is another common way that freelancers get into trouble. Keeping all of your money in one account and every purchase on one credit card makes managing your finances harder. You will have to pore through your statements during tax season to identify any deductible expenses. You may forget to set money aside for tax payments and overspend.
Protect yourself and your business by separating your accounts and credit cards. Set goals for your income and track every dollar that comes in or goes out. Make your estimated payments on time. Make your finances a priority so you’ll have less stress later on.
3. Working without contracts
For freelancers, nothing is more important than the contracts you use.
These documents protect you and your brand from risks such as clients refusing payments, scope creep, and stolen work. You can customize your terms to reflect the work you do and your priorities. Many freelancers use their contracts to specify:
- When payments are due and the late fees clients may have to pay
- Whether they can display work in portfolios
- Expectations for when and how clients can provide materials, ask for edits, and adjust project requirements
- What is included in the project
This last point is especially important for independent contractors. Even though you may have agreed to certain project details over the phone, clients can deny or change these terms if they’re not bound by a contract. Your contracts should always include specific details about project pricing, what’s included in that price, and the processes you expect your clients to follow.
If any questions arise later in the project, your contract should be clear and detailed enough to resolve any misunderstandings. If the client asks for something outside of the scope or tries to decrease your payment, for example, all you will need to do is point to the contract to get the result you need.
Finally, contracts can limit your liability and risks. In the event that your client experiences an issue related to the project and tries to blame you, your contract can protect you from any serious problems. Before using a contract or template, make sure it has been approved by a lawyer to ensure the protection you need.
4. Expecting quick, simple success
Building a powerful, resilient business takes time. Even if you land your dream project with a massive budget on your first day, you will also have periods where finding your next paycheck is a struggle.
Whether you’ve just started your own business or you’ve been doing it for a few years, recognize that this is a long-term project. You need time to build a client base, time to become an expert in what you do, and time to learn from your mistakes and experiences.
Unfortunately, the idea of hustle culture has sold the lie that anything can be achieved quickly if you just push harder or sacrifice more. And it is a lie.
Working more and sleeping less might increase your income, but it isn’t a sustainable business model. You’ll end up burnt out, discouraged that you can’t keep up (because none of us can meet such unrealistic expectations), and ready to give up on your dream entirely.
For greater health and satisfaction, give yourself time to bake and grow your dreams. Stay flexible and adaptable, adjusting your plans to meet life’s demands. Only then can you enjoy all of the benefits freelancing offers.
5. Running a disorganized business
Which deliverables are due next week? How much money are you bringing in every week? Do you have all of your paperwork in order for taxes? Do you have any outstanding invoices or, worse, outstanding bills?
Though administrative tasks may seem less important than completing your work, they are just as essential. If you’re not on top of your business, you might be:
- Losing income due to unbilled client hours, uninvoiced work, untracked client expenses, and unnecessary late fees
- Overwhelmed by a workload, schedule, and responsibilities you can’t control
- Burnt out by the long hours you have to work to keep up with everything
Taking control of your business means understanding what is happening in every area. You need to know what you have in your workload, the status of your pipeline, and what tasks you need to complete. It means tracking your business’ profits and losses to make sure you are making enough money. Whatever is going on with your business, you need to know it.
We created Hectic to give freelancers all of the tools they need to successfully run their businesses. When you sign up (free for the first client!), you get a time tracker to monitor your productivity and an easy way to run your projects, tools for managing clients, and so much more. From creating proposals and contracts to tracking your finances, you can do it all here.
Final thoughts
While these mistakes may be common, they aren’t the only missteps that freelancers make. Use these experiences as learning moments and ways to make your freelance business stronger.
Freelancing is a dream you can achieve. With hard work and a little help from resources such as Hectic, you will be living your #bosslesslife in the best way possible.
Vicky
Arun Kumar
