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Starting a Freelance Business? Avoid These Key Mistakes

Starting a Freelance Business? Avoid These Key Mistakes
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With the rise of the gig economy, small businesses of all trades are shifting toward a larger percentage of freelancers. No matter what your expertise, there are likely opportunities for contract work. Rather than working the traditional 9-to-5, professionals reap the benefits of tackling assignments on a per-project pay basis.

As a new freelancer, you might not understand how to find, charge and work with clients, and it's expected you’ll probably make some novice mistakes. Here are a few things all freelancers should avoid if they want to succeed and grow their business.

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.

"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."

Depending on your field, you should research what rates are standard. Professional organizations offer industry standards for specific services, and there are also open-sourced databases out there of what other freelancers were paid by certain types of clients.

When you can receive checks at any time, you might be compelled to take on every assignment you can. However, it's important to understand your own limits and reject projects. Since you're self-employed, you create your own schedule, so it’s easy to book too much work in short amount of time.

To stay on top of your workload, keep some sort of planner, whether it's physical or digital. This will help you keep track of assignment deadlines as well as make time for other important tasks, like managing invoices and filing taxes. This way, you can have an idea of how much is practical and realistic.

Additionally, once you start building a portfolio within a particular niche, you can move away from working as a generalist. With niche knowledge, you can become a specialist and limit your work to a specific topic or subfield.

No matter how much or how little freelance work you take on, you're still a self-employed business owner. If you want to be treated as a legitimate business, you can't treat your freelance work like a hobby. To operate like a business, you should dictate time towards developing a business plan, creating a legal entity, filing taxes, and maintaining accurate bookkeeping.

Additionally, stay consistent with contracts. Although many clients work on an informal, handshake-like agreement, it's best to keep everything professional and use contracts with every business transaction. You should keep your own contract template on hand, in case a client doesn’t typically utilize contracts with their clientele.

Marketing is important for any small business. When you're a freelancer, your name and reputation become your own brand to associate with your services. You should have a website with the services your offer, a portfolio and contact information, so new clients interested in hiring you can find your page and contact you directly.

You should also utilize social media to your professional advantage. Consider creating a Facebook page, Instagram business profile, and Twitter account if you haven't already. If you get a knack for viral content on social media, you could easily recruit more, potentially higher-paying clients.

What would happen if any company stopped seeking out new sales leads and only relied on its existing customer base? Business would drop significantly, and the same principle applies to your freelancing career.

You have a working relationship with your current clients, which can sometimes mean people rather than businesses that change jobs. Although your clients switch jobs, you still have the freedom to follow them as a freelancer. They can also speak on behalf of your best work if you need a referral or recommendation for a new gig.

Plus, your current clients will understand the worth of your services. They're familiar with your work, and likely want to compensate you fairly. Rather than chasing down new clients, it's best to focus on the ones you already have. You might even be able to increase your rates with these clients in the long run as well.

For more advice on how to operate a freelance business, visit Business News Daily's guide.

Additional reporting by Nicole Taylor. Some source interviews were conducted for a previous version of this article.

Danielle Corcione

Danielle Corcione is a freelance writer. To learn more about their work, visit their website. They also run a blog called the Millennial Freelancer and a newsletter Rejected Pitches.