In this article I will be sharing some of my most valuable financial tips from a decade of freelancing. I hope these can serve you as well, and give you some good ideas when it comes to running your own freelance business. Being a freelancer is serious business, and there are many things to be aware of and remember. Lets get started!
Make a budget
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Making a budget is crucial. You have to have plans and goals financially no matter what you do. This is sometimes underestimated, but you have to make one if you really want to succeed. With a budget you can see if you are on track or not, what you need to change, where you have big costs and so on. It’s a great way of keeping an overview of your business. Anyone can make a budget, it doesn’t take a degree in economy. All you need is to get an overview of all the money that come in and go out and put them into system.
Track your time
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To be able to make a living from freelancing you need to track the time spent on each project. If you bill too few hours, you won’t be able to earn enough to keep going. If you bill too much, well – then you can most likely say goodbye to your clients. Getting a time management application for this can be a very good idea, unless you are into doing it old-school with a pen and paper. Just pick whichever system that works for you, and make sure to also include time spent on research and other preparations for specific projects.
Set your hourly rates properly
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Many sell their services too cheap trying to get into the market. This usually will lead you to failure within short time. To be able to set your hourly rates how they have to be, you must have a full overview of what everything costs for you and divide it into hours. Then you will be able to see what you have to make to get even. After this you will have to make a decision on how much you should have left. In many countries there are set average tables for what freelancers usually get paid in different niches, so you may want to check that out as well. To save you some of that work, check out the hourly rate calculator over at Freelanceswitch. CLICK HERE to visit it.
Make offers that are easy to understand
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When a client is getting an offer you should take some extra time while calculating it. Make sure to include everything and make your own copy of the offer to keep – with explanations to how you’ve calculated it. This way it can be easily altered if the clients wants something else included or if you need to have a look at it yourself afterwards. This way you do a very important part of the job beforehand. This will also help you when you are going to send out the bills.
Make offers that can be altered
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Make sure to include in your offers (at least the bigger time-consuming ones) that the price can be changed by up to a certain percent due to market changes or unexpected costs. The usual percentage to use seems to be around 10%. This way you will cover some extra work in case it turns out that something is a bit more time-consuming than you thought at first.
Bill your clients regularly
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To not lose track of how much clients owe you, you have to get set routines for billing. If possible you should have a specific date monthly to send out the bills, or have a routine of sending them out due to the agreement with your client. This way you will have a good sense of how much you have coming in and make sure it doesn’t take too long before you get paid. And while you’re at it – make a routine for how to send reminders to those who haven’t paid in time.
Invest in your business
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A certain amount of what comes in should be spent on your business. This can be upgrading software or your own knowledge by taking a class or buying books/magazines. For most freelancers it’s very important to stay updated on the latest technology and what goes on in the market. Because of this you should have a post in your savings that is marked for that purpose.
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Another thing you would want to spend some money on is the marketing of your business. This can be done be either by investing of your time to do certain things for yourself and/or paying someone else to do it. It can be the redesign of your website and portfolio or a simple thing as buying an ad through an advertisement system. With all the competition in the market it’s very unlikely that your products will sell themselves from day one.
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I repeat this a lot in many of my articles, and it can’t be mentioned too many times. You have to put a savings post into your budget. No matter how well you earn – it won’t help you much in critical moments if you’ve spent everything. You will run into situations when you need to repair equipment or buy something new. You may also experience that a client doesn’t pay when he’s supposed to – or that a project takes more time than expected. Because of this, that buffer of savings can be very valuable.
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When it comes to office supplies, coffee, equipment + + , shopping smart can make a huge difference in your budget. Don’t get the cheapest of everything if it takes away quality. But there’s often someone selling that exact keyboard you’re getting a little bit cheaper, a cheaper insurance company and so on. What may seem like a tiny dollar here and there can quickly turn into hundreds and even thousands of dollars over a whole year. You should also think through it before going out to eat every day. Buying something in bigger quantities can help a lot.
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Make sure you have insured yourself, along with your equipment. This monthly/yearly fee can seem “unneccessary” if nothing happens, but when that moment comes when you need it – you will see that this is an investment in the safety of your future. Check out different insurance companies, listen to the advice you get and get offers from different ones before you decide. Thinking that nothing bad ever will happen to you is an unrealistic thought that can cost you a lot of money and maybe your business if not taken seriously.
Be prepared to adjust
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If you have a budget with set plans for the next months or year, there is always the chance that something will not go as expected. The good thing is that you have a budget that you can monitor occasionally to see the signs early on. Because of this you should aim to have the ability to adjust on short notice. Be prepared to work extra hours in some periods to make ends meet, and be prepared to put in extra hours during the end of deadlines.
We hope these tips were useful to you. Remember that there can be variations from country to country when it comes to laws and regulations. Still most of these tips should apply to most freelance workers out there and hopefully be helpful advice on your road to success!
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