41 minutes | Oct 15th 2020

#76: Embrace These 7 Core Principles for a Successful Freelance Business

On today’s show, I want to talk about some core principles you’ll need to run a successful freelance business — these are ideas I have come to believe strongly in over the past seven years:

Core principle #1: You are a freelance business owner.

Changing your mindset and truly believing you are a business owner and the boss of you helps both the way you look at yourself and the way others perceive you.

Embracing that mindset creates a fundamental shift in how you think about being a freelancer. Tell yourself in everything that you do that you need to base your ideas, plans and actions on how a business owner or entrepreneur would think. That can mean creating a business plan, creating a marketing plan, setting financial and other goals, tracking your money, figuring out how to charge better, having the confidence to ask for more money and increase your rates, and setting boundaries, office hours and a work structure.

Core principle #2: Take charge of your finances.

You could be great at what you do. You may even be charging great rates and bringing in the cash. But if you aren’t handling and tracking your money well, you could be losing money and gaining stress.

Do you have a yearly financial goal? Do you have monthly or weekly financial goals? Basically, do you have any idea how much money you are earning and how much you are spending?

When you set your rates or a project fee, are you accounting for taxes or other expenses as part of the rate you set?

Are you tracking monthly income versus expenses? Do you have a separate business account, not co-mingling your money with a personal account? I finally got a separate business account and a business-only credit card last year.

I started using a 12-month cash flow projection spreadsheet in Excel. This was particularly helpful during the pandemic so I could see if I was earning enough to pay my bills. But that sheet also encouraged me because the numbers kept increasing over the summer as I kept striving to add more clients to those columns. By August, I could see that I had reached my pre-pandemic income level.

And perhaps the most important part of taking charge of your finances: Are you setting aside the right portion of your income for taxes? In the United States, that’s about 28–30%. You have to tell yourself and truly believe that that percentage is not your money. It was never your money. Don’t ever think of it as a safety net or part of your savings.

Once you believe that, set up a system to make that easier to follow. I have a separate online savings account that is only for taxes. I named it Pay My Taxes as a reminder not to touch it. At the end of each month, when I am paying my bills and invoicing my clients, I figure out my monthly income, minus expenses, and take 30% of that and transfer it to my tax account.

Core principle #3: Be stubborn. Be confident.

I know this is easier said than done for some people. This often comes down to personality, but I think we can continue to grow and learn and change and improve parts of ourselves that we struggle with.

For example, I know that I do not like conflict, and I see the most basic disagreements and conversations as “conflict.” I know this is a challenge I struggle with, but being aware of it can be helpful so that I can work around it. So, I have created systems to boost my confidence. One way I do that is by emailing first instead of picking up the phone — at least for that initial conversation — when there is a disagreement, communication or misunderstanding.

I have also come to understand that I suffer from impostor syndrome at times. I didn’t think I struggled with this until I had guest Kristen Hicks on episode #67 and she described the various aspects of impostor syndrome. I struggle sometimes with raising my rates or sticking to a project rate or scope creep. That falls under impostor syndrome too because deep down I’m really thinking, “Who am I to ask for this or to demand this?”

To me, being stubborn means sticking with your principles. Know what your goals and your non-negotiables are in your business. Know the kind of ethical work and philosophy you want to work from. Stick to your principles and be stubborn. Don’t lower your rates. Don’t work for free. Don’t agree to scope creep that makes you uncomfortable. Be stubborn.

Core principle #4: You have to embrace marketing.

This is where reframing comes in handy because many of us don’t like the idea of marketing or networking. You’ve likely heard me say this a few times, but I have reframed marketing and networking into “relationship building.”

You always have to market and network. That saved a lot of us in the pandemic when we lost clients. We reached out to our network and said we had availability. We increased marketing efforts that we had already tried. We weren’t starting from scratch.

Marketing doesn’t have to mean ads and being on every social media platform. But I would encourage you to get to know fellow freelancers, perhaps in your local community or through Twitter or Instagram, or a Facebook group. And then do some sort of marketing by at least having a presence on 1–2 social media channels and keeping your website and/or a portfolio up to date.

Core principle #5: You have to spend money to make money.

This can be challenging, especially if you are new to freelancing. And I don’t want you to buy all the things when you start out. But, you will come to a point where you have a little bit of money or you need to take that next step or you’re struggling in an area you need help with, and you need to spend money to make money.

I’ve often talked about the economic concept of “opportunity cost.” Opportunity cost is when you have a situation with more than one choice. You make a choice and go a particular route. The opportunity cost is the loss of what you did not gain by making the other choice.

I often think of opportunity cost in terms of time. Time is very valuable to me. Money is important and necessary, but time is critical. My goal is to create an efficient freelance business that maximizes the amount of money I can earn in the smallest amount of time.

You can consider this in both your business and personal life. So, for example, if you hire a virtual assistant (VA) to take care of some of your administrative work, you are gaining time to work on client projects. This earns you more money.

Core principle #6: Keep it simple.

This means both for the services and businesses you create, as well as the business systems and structure you set up for yourself. There is a temptation, especially early on in freelancing or at a moment when you are growing your business, to buy all the tools, download all the productivity apps, and use a bunch of fancy systems to do certain things for your business.

I have certainly fallen into that trap, especially downloading a variety of apps that I thought would be helpful to structure my business. But, I realized that it is much more efficient and productive and less stressful to streamline my systems and structure.

I use what works for me, not what every other freelancer says I have to have.

Keep it simple and use what works for you. A good way to test this out is if you are feeling overwhelmed or feel like things are too busy or chaotic. Ask if you need all those tools. What really makes your day better and your business more efficient? Invest in those and ignore the rest.

Core principle #7: You can’t work 24/7.

You need to set the hours and structure that is best for your business, your productivity and your mental and physical health.

The problem I see is freelancers who don’t know when to end their day and just keep on working until they suddenly realize it’s time to eat or their kids are home from school. It’s also not healthy to check email all night long. Even just a glance at work email can be stressful and put you back into work mode, instead of relaxing or spending time with your family.

Everyone needs downtime, and it is not healthy to be on the clock 24/7. This goes for weekends also. I know freelancers who like to work weekends because there are no distractions from clients and they can get a lot more done. That is fine, except I would argue that you need two days off a week, no matter what those days are. That means no emails, no client work and no check-ins. And if you can put down your phone, and unplug completely, that’s even better and healthier for you, especially in these pandemic times.

All of this means you have to set boundaries. This is easier to do once you truly embrace self-care and recognize that burnout is a real concern.

Biz Bite: Outsource on a whim

 

The Bookshelf: “Eight Perfect Murders” by Peter Swanson

 

Resources:

Episode #39 of Deliberate Freelancer: Raise Your Rates—Without Emotion

 

Episode #28 of Deliberate Freelancer: Take Charge of Your Finances, with Pamela Capalad

 

Episode #29 of Deliberate Freelancer: 3 Big Financial Changes I Made This Week

 

Episode #30 of Deliberate Freelancer: How a Virtual Assistant Can Help Your Business, with Cat DiStasio

 

Episode #67 of Deliberate Freelancer: How to Fight Imposter Syndrome, with Kristen Hicks

 

Episode #68 of Deliberate Freelancer: Yes, You Need to Build a Personal Brand, with Hilary Sutton

 

Episode #62 of Deliberate Freelancer: How to Prevent and Deal with Burnout, with Alan Heymann

 

Episode #45 of Deliberate Freelancer: You Need to Set Boundaries

 

Episode #19 of Deliberate Freelancer: Visualize Your Perfect Work Day—Then Create It

 

Episode #22 of Deliberate Freelancer: How to Create a Better Work-Life Balance, with Laura Poole