Going Freelance: 21 Things to Know (Part 4)

Ryan RahlfJanuary 1st, 2017

This is Part 4 of my series on going freelance. Here is Part 1, Part 2, and Part 3

There's four areas where you can make a serious impact on your business right away: your website, getting leads, happiness, and the money. This post tackles The Money.

The Money

Record Every Purchase

If you're lucky, someone in your family is an accountant. If you're like most of us, you're on your own when it comes to the financials of your business. After freelancing for many years the very best advice I can give you is to record every single business purchase you make. Software, computers, business lunches, gasoline for traveling to networking events or seminars, classes or tickets to conferences, downloads, stock photography, every little thing that you purchase for your business should be recorded. There are a lot of great choices for business financial software, but even if you're using a spreadsheet or a pen and paper, write everything down. You'll need that information when it's time to check how your business is performing and pay your taxes.

Hire an Accountant

There’s a lot of things you need to know in order to run your business, but chances are you’re only skilled at a few of them. Some of the things you’ll learn as you go, some you can take training on, and the rest you want to hire an expert to do for you. One of these things is accounting. Don’t try to learn how to navigate tax laws by yourself; find a local accountant with a great reputation and engage their services for your business.

Don't Discount or Work for Free

If you don't have a lot of experience, it’s common to think that you need to discount your prices in order to land work. Never do this. (In fact, you're probably not charging enough to begin with but that’s a different conversation.) Once you tell a customer a rate for your work, stick to it. That doesn’t mean you can’t be flexible.

Don’t lower your rates, but do negotiate costs.

If the customer wants to lower the cost of the project in order to fit their budget, let them know they can do so by requesting fewer features. For example, if you're offering to build them a picture gallery that they can edit themselves let them know that they can reduce the cost of the project by eliminating that gallery feature. Removing features makes the project shorter for you, so you can move on to other work that clients are also paying full price for. Besides, chances are they'll either pay what you’re asking or return to you after the project is finished to have that gallery added.

Remember too that sometimes a client might not be opposed to the overall price, they’re just unable to pay your price right now. As long as you’re able to pay your bills you may agree to let them pay in installments. All of these are negotiation options to land you the work at the right price and make the client happy with the way you do business.

Don’t lower your rates, but do negotiate costs. Negotiation is good, fair business. Lowering your rates is a quick way to end up back as an employee for someone else.

Raise Your Prices

You shouldn’t discount your rate once you reveal it to the client, but when you bring on a new client don't be afraid to change your prices upward from time to time. If this new client was a referral from a previous client, they may know what your previous rates were. If that's the case it's alright to tell them that your rates have changed. If you’re networking with other people in your industry and your local area it's, okay to discuss pricing with them to see what your competition charges and where your rates lie.

Take a Deposit

Regardless of whether you're doing hourly, fixed-bid, or value pricing it's important to take a deposit before you start any work. Not only does this ensure that your customer is serious about working with you, it’s also an indication that they have the funds to pay you. Whether the deposit is 25%, 50%, or a fixed dollar amount make sure that you take a deposit before you do anything for their project. If they won't agree to a deposit, walk away. That’s not a customer that you want to work with.

Bonus Tip

Bit of a shameless pitch here, but join newsletters like mine (below). There are a lot of great people out there willing to give help and advice away for free, or for just your email address. It doesn't matter if they're marketing a product or not. If the advice is high quality and makes you consider a way to improve your business that you hadn't thought of then it's worth your email address and a few minutes of reading every day.

Besides, you might actually love the product they're selling after all.

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