Being a freelancer has plenty of advantages over being a salaried employee. Having worked on both sides of the employment fence, I can happily say that I’d never go back to being an employee. Freelancing has brought me flexibility, autonomy and a profitable way to make a living. But being a freelancer isn’t without its issues and challenges.
The volume of client work can change from being an overwhelming torrent to a distant trickle. Clients can start missing their payment dates and quibbling over the payment of your invoices. And previously good clients can turn into the customer from hell.
This is all part and parcel of running any kind of business, of course. But when you’re the Chief Executive of Everything (CEE) the buck stops with you – the freelancer.
So, what can you do to iron out some of these ups and downs and make the freelance experience a little smoother? Here are five top tips for overcoming the challenges.
1. Have a broad client base and don’t limit yourself to one or two customers
When you first start out as a freelancer, it’s tempting to find a couple of good clients and to split your working week between these two customers. If you’re working on a retainer contract, this brings in some regular income, fills up your work diary and gets you some experience. So, what’s the problem with this approach?
As the old saying goes, don’t put all your eggs in one basket. If you only have two clients, when you lose one customer that means a sudden 50% drop in your revenue. Unless you can quickly find another client to plug the gap, this loss is going to impact on your cashflow, your ability to cover your costs and the profitability of your business.
To avoid this trap:
- Keep your client base broad and work with at least three or four different customers – this keeps your portfolio broader and less risky
- Avoid getting tied into retainer work that takes up more than two days of the week – don’t let one client predominate
- Remain loyal to good clients, but also look around for new clients
- Keep your client base flexible and build a large network of contacts
2. Set up clear payment terms and get them signed off with your clients
Getting paid as a freelancer is one of the biggest hurdles you’ll face. Salaried employees expect their pay to appear in their bank account each month, regular as clockwork. Freelancers are at the mercy of the client’s accounts payable team, and it’s not unknown for invoices to be paid weeks, or even months, after the agreed due date.
Late payment can have a huge impact. If you’re working to a budget, with set costs and bills to pay, overdue payment can have a catastrophic effect on your cashflow. Having enough liquid cash in the bank to cover your outgoings is vital, so it’s important to ensure you get paid on time, every time – and to make your payment expectations clear to your clients from the get-go.
To improve your payment times:
- Agree payment terms with every client and stick to them (14-30 days from the invoice date is a good standard to aim for)
- Charge out late fees for every month an invoice is overdue (generally this means charging 1-2% of the total for every month the bill is late)
- Include payment terms, due dates and late payment fees on all invoices
- Add online payment buttons to your electronic invoices, so it’s easier to pay you
3. Vet your clients before taking them on (and don’t be scared to sack them)
Every customer that comes along is a potential client. But are they going to be a GOOD client? A bad client can take up your time, cause stress and resentment and, ultimately, end up being a drain on the business. To build up a portfolio of trusted and reliable clients, you’ve got to do your homework. This means making a judgement call on whether this prospect is the right client for you and the future of your business.
To make sure you’re taking on the right client:
- Do plenty of background research on the business, it’s products, its customers and the people you will be working with
- Call or meet the client to see if there’s potential for a good working relationship
- Ask around your network to see if any peers have worked with the business
- If a bad client relationship is dragging you down, give them notice and resign
4. Reach out to other freelancers and build your network
By definition, being a freelancer will usually mean working alone. But this doesn’t mean that you can’t reach out to other freelancers or to the wider freelance community. Dealing with the challenges of being self-employed alone can be disheartening. It’s more productive to connect with other people who are in the same boat.
Often, a fellow freelancer will have the answer you need, or will have encountered the same problem you’re now wrestling with. And, once you have some experience under your belt, you can offer your own advice and tips to other newbie freelancers.
To get the most from the freelance community:
- Get active on social media and connect with other freelancers in your area
- Join groups like Freelance Heroes or other online forums that cater to self-employed and freelance people
- Talk to other people in your coworking space, regular coffee-shop office or library – it’s all about the connections you can make
- Subscribe to magazines like Freelancer Magazine, or freelance email lists
- Meet other freelancers in person so you socialise and share your experiences.
5. Focus on the ideal work/life balance and don’t burn out
One of the easiest freelance traps to fall into is to overload yourself with work. In the back of every freelancer’s mind is a little voice saying ‘Say yes to this project, you never know when the next piece of work will come along!’. But that’s a voice you should learn to ignore – or at least listen to with some caution.
Taking on more work than you can humanly handle is not good for you, the client or the long-term prospects of your business. If you’re tired, overworked and stressed, you’re more than likely to turn out sub-standard work, or miss client deadlines. That’s going to ruin your reputation and could result in you getting less work from valued customers.
To keep your work/life balance on track
- Stick to set working hours each week, and break this up into available slots
- Track your capacity and don’t take on more work than you can feasibly handle
- Take regular breaks and make sure you spend time away from the screen
- Block out time for family duties, meeting friends or taking part in social activities – time away from work is time well spent
- Don’t let work take over – work to live, don’t live to work
Going Freelance: Building Work Around Your Life
Getting your work/life balance on track is one of the key themes in my book, ‘Going Freelance: Building Work Around Your Life’. It’s your 101 guide to setting up as self-employed, finding the best customers and running a successful freelance enterprise.
You may be just starting out as a freelancer. Or you might be an experienced freelance business owner looking for some deeper advice and tips. Either way, this book is an ideal way to set the right foundations for your freelance future.