If you know anything about the "1099 economy," then you know that the modern workforce is shifting toward a larger percentage of freelancers and independent contractors. Professionals in nearly every industry are finding ways to make money with their skills and expertise by taking on projects for a number of different companies, without being tied down to a single employer.
As a new freelancer, you might not be too familiar with the current marketplace or going rates for certain types of work. Therefore, you might make a few "rookie" mistakes that could lose you money or even hurt your reputation among potential clients. Here are a few things all freelancers should avoid if they want to succeed and grow their business.
Charging too little (or too much)
When it comes to rates, freelancers are in the sometimes challenging position of balancing their own financial needs with current market standards. Stephanie Sachs, an account director at boutique tech public relations agency Astrsk PR, cautioned freelancers against undervaluing themselves in the name of attracting clients. [Want to Be a Full-Time Freelancer? What You Need to Know]
"Know your worth," Sachs told Business News Daily. "It might be tempting to offer discounts or lower your rates as a way to entice prospective clients to sign with you instead of the competition. However, make sure you have a clear understanding of the market conditions, and what sets your skills apart from the rest."
"Even if this method works initially and their first client refers them to others, it will be a referral to a customer who is also expecting a low rate, perpetuating the cycle of low-paying clients," added David Cassar, vice president of operations at MBO Partners, a business operating system for self-employed professionals and their clients.
Of course, charging too much won't do you any good, either — companies that hire freelancers are willing to pay slightly more for an experienced, talented worker, but only if that person is truly worth the money. The best thing you can do as a freelancer is conduct sufficient research on current rates for the services you offer in your industry to determine what you need to be charging, Cassar said. To help with this analysis, MBO Partners published a bill rate calculator for independent consultants and freelancers.
Taking on more work than you can handle
It's easy to want to say "yes" to everyone when the freelance job offers start pouring in. But it's important to know your own limits and strategically reject projects to make sure you can truly manage your workload.
"Once people know that you are good at what you do, they are likely to want to give you more work and refer you to friends," said Nik Badminton, regional director, North America at Freelancer.com. "[But] overworking ourselves can have a detrimental effect on the quality of what we are delivering. It is better to do two pieces of work at a high standard than do four pieces of work at an average standard."
"Successful freelancing is all about balance," added Shawn Cadeau, CMO at online invoicing software provider FreshBooks. "Figure out what your standards are, set boundaries on what types of work and clients are best for you, and say no to projects that don't hit that bar. Always remember that when you say no to something, you are allowing yourself to use that block of time to say yes to something that makes sense."
Rushing through projects to meet a deadline
In response to the problem of taking on too much work, some freelancers will try to rush through their projects just to get them done so they don't have to lose that pay or risk inconveniencing the client. Badminton warned against this approach, as a rushed effort is more likely to suffer in quality.
"Remember that anything you do is your legacy and will be seen as part of your portfolio," Badminton said. "Stay focused on quality of delivery, keep communicating and keep an open mind to some changes that may come along."
Cassar noted that overpromising and underdelivering will kill your reputation as a reliable worker.
"Yes, all freelancers need to 'sell' themselves and be confident in their skills and abilities, but not meeting clients' expectations because you underestimated the effort or took on too many initiatives usually comes back to bite you," Cassar said. "At best, [your clients] will be disappointed. At worst, they will label you as untrustworthy or incompetent."
If you're concerned about the timeline of a project, reach out to your client and ask for an extension. He or she is likely to be more understanding of a top-notch result delivered a bit late than sloppy, substandard work that arrives on time.
Not acting like a business
No matter how much or how little freelance work you take on, you are technically a self-employed business owner. If you want to be taken seriously and treated as a legitimate business providing a service, you can't treat your freelance work like a hobby.
"You are ... a business — operate like one," Cassar said. "Build a business plan, establish a legal entity, buy business insurances, file your taxes, keep accurate books and records and issue professional proposals and invoices."
Cadeau emphasized the importance of drawing up official contracts to protect you if there are disagreements with a client during a project.
"Many freelancers operate on emailed assignments and 'handshake promises,'" Cadeau said. "Contracts are fairly simple and easy to put together, and can be reused over and again with a few tweaks. They just need to include the project scope, deadlines, how and when payments will be made, who will retain ownership of the finished product, and what marks the successful completion of the project."
Counting on your current clients long-term
Think about what would happen if any company stopped seeking out new sales leads and only relied on its existing customer base: Business would eventually dry up, and the same principle applies to your freelancing career.
"Don't stop speaking to potential new employers or looking for new work," Badminton said. "Even if you are busy, there still needs to be time to build relationships and hear what people need. The work you have today will finish at some point and having something to do next is important for the modern freelancer."
Cadeau added that, as a full-time freelancer, it's important not to become dependent on a single client for your income.
"Approach your freelance business like an investment portfolio, with multiple investments and a careful eye on balancing risk," he said. "If you lose your big fish, ideally the income from your other clients will still be sufficient to keep your business running in the black."