Financially Succeeding as a Freelancer

mother writes next to computerA part-time freelancer can usually get by on the motto of work your plan; plan your work. That doesn’t mean there won’t be mistakes in either the planning or execution of work. Rather, it means that since they’re only a part-time freelancer, missing a deadline or dropping the ball on a project isn’t going to be the end of the world for them. They can always start over.

A full-time freelancer is a different breed of entrepreneur.

In fact, a full-time freelancer is typically head and shoulders above anyone working part-time, no matter who they are, or what they’ve done in the past. This is because the step from part-time to full-time carries with it some very important requirements. Fail to meet these requirements, and it’s not possible to succeed as a full time freelance worker. That is why full-time independent workers are in a class all their own. They have made firm commitments to their chosen profession, and cut ties with the safety net of the regular work everyone else relies on for their bread and butter.

What does it take to make it as a full time freelancer?

Obviously you need to be able to do whatever it is you’re advertising as a service. However, there’s a key requirement that will determine whether you are able to get clients, and more importantly, whether you retain and grow business from those clients. The most important thing, which almost every new freelancer fails to devote enough attention to, is managing freelance finances. In fact, there are countless stories of talented freelancers who just fell to pieces because they weren’t also talented financial planners.

These are great and talented folks, who set out to pursue a dream, but also to make a difference. They get tired of regular work managers cutting corners, or stamping out creativity in the name of serving the greater corporate good. Most of the time these inspired freelancers are right too, because they can and do turn out better work than most salaried employees. If they didn’t, there wouldn’t be such massive demand for freelancers, or the skills and vision they bring to the table. The difference though, is that the real freelance professionals let someone else focus on the things that are outside of their areas of expertise, and finance is the elephant in the room when it comes to freelancers who fail.

Financial management will make or break you as a freelancer.

As we said in the beginning of this piece, you need to plan your work and work your plan. Working the plan is relatively easy. A little blood, sweat, and tears, and anyone with the right talents can sort that bit. The planning though, that is where things fall down. If you’re working from a bad plan, you’ve set yourself up to fail, and no amount of reasonable work is going to fix that. You’ll instead end up working 7 days a week, 16 hours a day, and still not succeed. That’s because a bad plan rests on poor financial management, which is like building a house on sand.

Everyone in the world knows about The Leaning Tower of Pisa. It was built on a poor foundation, and almost fell over. The process of righting it and keeping it from falling over cost the Italian government more than £20M. While one can certainly make the argument that it was a necessary step to right the tower, the same argument can be made that proper planning when the tower was built would have prevented this problem. The cost of fixing it doesn’t even account for lost revenue from tourism while it was righted.

Poor financial planning will have the same effects on your business.

Obviously you won’t have the same volume of loss, but adjusted in terms of your own revenues, the actual impact and loss of income to your work as a freelancer will have the same effect. That is why smart freelancers hire a financial advisor, and often one who is also a freelancer. These people understand the difference between managing freelance finances, versus corporate finances. Because of this, it’s imperative that you have someone help get your finances in order before you start freelancing. If you’re already a freelancer, then you should look into the services of a competent financial manager now, rather than later. That way you won’t lose what you built, or end up crawling back to the corporate world with your tail between your legs.

When your finances are in order, everything else will run like a clock. You’ll have your incoming and outgoing receipts, and an on call financial advisor who can help you over any bumps. With a professional to manage your taxes and gross receipts, you’ll be free to do more work in your field of expertise, rather than wasting time without income trying to manage your finances.

The end result is that you’ll be more profitable, and protected from the pitfalls and chasms that too many well-intentioned freelancers find themselves climbing out of.


Comments

Financially Succeeding as a Freelancer — 1 Comment

  1. Not charging properly and not keeping everything in check would clearly make it harder to succeed as a freelancer. Most people would be able to earn money from doing ‘something’, but few actually are successful.

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