You’re ready to wave goodbye to the corporate rat race, and start your dream freelancing business.
But not without first learning from the costly freelancing mistakes of others.
Armed with the latest SBA’s statistics about small business failures, you dust off the winning business plan you wrote in college, ready to pursue your freelance entrepreneurial career.
With business cards and letterhead in hand, you scream at the top of your lungs, just like Leonardo DiCaprio’s Titanic character, ” I’m the queen of the business world.” Well, not yet.
Read my top 3 freelancing mistakes every entrepreneur should avoid and learn how to turn a profit faster and banish bad juju out of your business.
Freelancing Mistake # 1 – Charging too little
Nothing kills your freelancing career faster than under-pricing. When the NY Times reported in early July, that discount clothing store Steve and Barry’s was filing for bankruptcy, I wasn’t surprised.
I suspect that the clothiers were victims of a faulty under-pricing strategy and rapid expansion.
As an entrepreneur I often wondered how Steve and Barry's could manufacture Sarah Jessica Parker’s dresses; sell them for $19.99, and expect to turn a quick and sizable profit. I calculated all of their costs and marveled at their attempt to squeeze celebrity spokesmodel fees, manufacturing costs, marketing and advertising, taxes, staff salaries and retail markup into 20 bucks.
How does this example relate to freelancing?
Freelancers have to perfect the art of determining a fair price, without giving away their services for peanuts. A freelance business owner must itemize every cost into their hourly rate or project fee adequately, to turn a profit.
If you charge too little for freelance work you will ultimately resent the client, dread doing the gig, or even worse develop the reputation as the cheapest girl at the dance. Whenever I want to give a client a break on my consulting fees, I say over and over to myself, “Mechele, remember Steve and Barry’s.”
Freelancing Mistake #2: Choosing the wrong clients or business partners
Collaborating with unscrupulous, non-talented, no-skill-having, self-absorbed pseudo-entrepreneurs is a common freelancing mistake newbie entrepreneurs make.
A freelance business is not a spa party, sorority function or a general gathering of girlfriends who are wishing, hoping and praying to make a profit. It’s a serious enterprise, with the goal of making money with the least amount of people, in the shortest amount of time.
That’s why a freelancer must hire the best, serve the best and collaborate with the best.
* Find the smartest, hungriest, most ambitious, results-oriented and driven work-a-holic-sale-closers you can find and partner with them.
* Seek out the best clients that have similar mission statements, values and goals.
* Patronize vendors who won’t gouge you on their prices and are interested in developing long term relationships with you.
Joining forces with simpletons, lottery-playing, non-hustling, wish-upon-a-star people who have dreams of business ownership but no tangible skills, will destroy your freelancing reputation and kill your business faster than you can spell F-R-E-E-L-A-N-C-E.
If you partner with phenomenal people, and seek to develop long term win-win relationships you’ll worry less about:
· Bad contracts
- Chasing invoices for money owed.
- Puckering up to kiss people's hind parts because of your fear of going out of business.
- Lowering your rates.
- Attracting the world's worst employees.
Freelancing Mistake #3 – Not planning ahead for economic downturns
More than following up with your clients, managing cash flow, delegating responsibilities or networking – which are all equally and vitally important to the long term growth of your freelance business – I am fearful of any freelancer not factoring the loss of business or the need to constantly innovate into their successful business equation. Why?
Because you won't always be the hot new freelance professional on the block.
Everyday new business owners with better marketing, more connections and faster service are waiting to knock you off of your freelance perch. In the event of a recession or an economic downturn, freelancers are often the first resources to feel the sting of a budget crunch.
So what's a freelancer to do to prepare for a recession? Or respond to a change in the marketplace?
* Plan for money shortages before you launch your business. Don't overspend on depreciable items like new technology, furniture, fixtures, vehicles and equipment.
* Barter and trade with professionals to keep your cash flow high.
* Don't decrease your advertising when you lose a client. Find low-cost methods offline and online to reach new customers and assure your current client base, that you're still open for business.
* Don't let your credit rating or loans go into default. Make arrangement with your creditors.
* Innovate and respond to changes in the marketplace where demand for services and products are high, and budgets are plentiful.
* Check in with your current clients, and assess any new services and products that may help them achieve their goals.
If you’re ready to take the plunge into freelancing, don’t wait until you’re knee deep into your dream to make costly errors.
Avoid these top freelancing mistakes and ride the entrepreneurial tidal wave to riches, like a pro.