Starting your own business can seem like a daunting process, but it’s actually relatively easy to do. In fact, some people start businesses almost by accident. The hard part isn’t starting a business; the hard part is running it successfully.
Freelance life is unpredictable, and quite often, your business can take a completely different route to the one you expected. However, that doesn’t mean you should enter freelance life without any plan at all.
In this article, we’re going to discuss the top 10 mistakes freelancers make when starting out. These will cover:
Not every freelancer will make these mistakes and being aware of these pitfalls can help you avoid them.
Not having a marketing plan
Most freelancers start with an idea of what they want to offer regarding their skills, how to package their services and what type of client they want. The thing that often gets overlooked is how to actually find business.
Even if you have a handful of clients when you start out, chances are you’ll need to win more at some point. Winning clients can be a huge challenge for freelancers who don’t have any kind of sales and marketing strategy.
Take some time to think about the clients you want and how you can reach them. Will you use online marketing, face-to-face networking or cold-calling. Once you find your target audience, how will you ensure they buy from you?
Pricing incorrectly is one of the biggest mistakes that freelancers make. Price too high and you won’t win enough business. Price too low and you might find yourself working round the clock for minimum pay.
It’s important to set goals to work to. If you don’t have targets in mind, how will you know if your business is working? You need to understand what you want to earn, and what needs to happen to achieve this. How many clients do you need to win? How many billable hours do you need to work?
Take time to think about what you want to earn and what your costs are likely to be. Use this information to set targets and budgets.
Keep a record of how long you spend on projects and how many projects you win each month, so you know whether you need to win more business or increase your pricing.
Our ultimate guide to pricing work as a freelancer gives in-depth advice about setting your prices.
Not saying ‘no’ enough
It can be tough saying no, especially when you start out, but sometimes it’s for the best. Nobody becomes a freelancer to take on projects they don’t enjoy for prices they aren’t happy with. Learn how to say no to clients early in your freelance career if you want to build the business you dreamed of.
Don’t devalue your service; say no to low pricing
There will be times when it’s completely appropriate to negotiate your price. Maybe you want to discount for a charity; maybe there’s a project you really want to win; maybe a reduction on one project will lead to longer-term contracts. If you are happy to reduce your price and it’s in your interests, then you should absolutely go for it.
The problems come when you aren’t comfortable with the pricing but agree to it anyway. If you’ve taken time to work out a pricing structure based on your targets and overheads, then you could be compromising yourself by discounting. If you say no and the client walks away, then will it really be a loss to you? If they don’t like your pricing, then they probably don’t see the value in what you are offering.
Say no to projects outside your skillset
It can be very easy to agree to help with tasks outside your skillset, worrying that you might lose the client to a competitor if you don’t. However, if you aren’t skilled in these areas, it’s in both yours and the client’s interests to say no.
As a copywriter, I often get asked if I can do design work to go with content. Design is not my area of expertise. If I agreed, I would probably spend hours doing something a professional designer could do in minutes. I could maybe put together something that was half decent, but it would be nowhere near the quality that a designer could produce. I would be doing my clients a disservice.
Don’t agree to take on tasks outside your skillset unless they are building on your existing skills and you are confident you will be able to deliver. Instead, focus on what you do well.
If you build a network of trusted contacts, you will have people you can work with to deliver more complex projects.
Say no to projects you don’t want to do or can’t deliver
If you have a bad feeling about a client or a project, trust your instincts; they are often right. You don’t have to agree to every project that comes your way. If someone offers you work you don’t want, say no. Explain politely that it isn’t the type of work you specialise in or that you can’t accommodate their timescales.
Equally, there will be times you want a project, but you know that taking it on would be a mistake. For example, a project that is too big for you to complete alone or that you will struggle to complete on time. If you can’t deliver, you will damage your reputation and your confidence.
If a project comes your way and you can’t offer what is required, explain to the client what you can offer instead. They might be happy to extend a deadline, refine their brief or bring in additional people you can collaborate with.
Not saying ‘yes’ enough
While some freelancers make the mistake of not saying no enough, others make the mistake of not saying yes.
There will be times when you need to put yourself out of your comfort zone. If you never say yes to new opportunities, you will restrict your development.
The first time I was invited to a networking group, I was petrified. I had no idea what to expect and was worried about being less experienced than everyone else. As it turned out, I met one of my biggest clients at that networking event, and he became a mentor during my first couple of years in business. I often think of how valuable attending that event was, and how different things would be if I hadn’t said yes.
That doesn’t mean you have to say yes to everything, just don’t be too quick to say no. You never know what an opportunity could lead to.
Be open to suggestions and ideas from others and don’t be scared to take on projects that stretch your capabilities. Learn new things and have confidence in yourself.
Not learning how to run a business
You can’t go into freelance life thinking that every day will be spent doing the thing you love. Who will do the sales and marketing, send proposals, reply to emails and calls, attend client meetings, send invoices, chase payments, place orders and take care of running your business?
Unless you are going to outsource or hire someone to manage your business while you do the project work, you’ll have to do all these things yourself.
Many freelancers underestimate the time needed to do all the administration work. This means they price incorrectly, take on too much work or let their operations and accounting get into a complete mess.
You need to learn how to allocate your time effectively. How many hours will you spend on admin, how many on marketing and how many on project work? If you don’t know how to do something, then either learn or find someone to do it for you.
Not asking for help
Being a freelancer means you need to run a business, so you might have to do things you aren’t skilled at. Perhaps you struggle with bookkeeping or admin. Maybe you find it hard to generate leads or keep on top of enquiries.
It can be stressful when you are good at delivering a service but find everything else a chore.
Ask for help; hire someone, outsource tasks or call in favours from friends. You might be concerned about the cost of outsourcing or hiring but think of all the extra time you would free up to spend on the work that makes you money (and that you enjoy).
As well as asking for help with your workload, you need to ask for support when you feel emotional strain. Working for yourself can be tough. The unpredictable income, lack of colleague support and the constant need to self-motivate can take its toll. Our article about freelancer anxiety goes into more detail about dealing with the emotional pressures of self-employment.
Spending money on the wrong things
It can be easy to get carried away in the first few months of freelancing. The internet and business community are full of people telling freelancers they need to spend money on branding, websites, SEO, PPC, content marketing, networking, promotional merchandise, virtual assistants, accounting software, IT software, state-of-the-art technology, business stationery, office space and an array of other things. Everyone that has something to sell will tell you that you need it.
While all those things can be beneficial, you need to spend wisely. Unless you have access to unlimited funds, you need to be careful about where you allocate your money.
There are some things that most businesses will view as essential, such as a mobile phone and a laptop or PC. You might even need specific software packages or tools to carry out your work. There may even be industry regulations on what insurance, accreditations or memberships are required in order for you to trade.
Spend time finding out exactly what you need and find the suppliers that can offer the right amount of flexibility. For example, Dinghy specialises in freelancer insurance that can be turned on and off as needed. This means you don’t pay for insurance you don’t need.
After the essentials, you need to be realistic about what is a good use of money. Do you really need to spend £10,000 on a website before you’ve even won your first client, or can you start with a basic site and upgrade later? Are branded mugs the best use of your money or will something else bring a better return on investment.
Put money into the things that will bring the best return and then invest in other things as you grow your business.
Not using time effectively
Time management is one of the most vital aspects of freelancing and yet can be one of the hardest things to master.
It’s so easy to get caught up on a client call or a meeting that overruns. Quickly checking your social media for news updates can turn into four hours spent reading articles and watching videos about procrastination. If you work from home, going to make a cup of tea can turn into emptying the dishwasher and cleaning the kitchen. Friends and family may call you in to do errands because you don’t have to “go to work”.
You must be extremely self-motivated and focused to manage your time effectively. If you don’t learn how to do this, you can end up missing deadlines, working 90-hour weeks or going out of business because you aren’t doing any work.
There are endless articles and videos about time management, but one of the most useful tools is a to-do list.
Whether you use a diary, a notepad, a mobile app, an excel spreadsheet or special software. Note down everything you need to do and then prioritise the most important and urgent tasks.
Work out how much time you need to spend each week on marketing, admin, project work and other tasks. Spread sales meetings and proposals out rather than trying to do them all in one week. If you book all your sales meetings for the same week, it’s likely you’ll get a load of projects accepted at the same time. You’ll then be too busy to line up new clients, and the cycle will repeat itself.
Value your time. If you’re asked for a favour, and you don’t want to do it, or you’re too busy, say no. If you give away your time too freely, people will start to take advantage.
It’s also important to schedule time for yourself. Plan time to go for a walk, go to the gym, visit friends or spend time with your family. Don’t feel guilty taking time out of your business. You can relax and have fun every now and then; nobody will judge you for it.
Being dependent on one client
If you start freelance life with a big client or you are lucky enough to win one early on, it can be tempting to neglect your marketing efforts. If the income from one client sustains the lifestyle you want, that’s great, but what happens if they decide they no longer need your services? What if they go out of business, decide to employ someone or simply change supplier?
Putting all your eggs into one basket is risky. If you do go down this route, get signed contracts with adequate notice periods, so you have time to line up new business if your client pulls the plug.
It’s good to have a plan when you start out, but you need to be flexible. Not every idea will work, opportunities could open up that you weren’t expecting, or something you thought was a sure thing could go horribly wrong. There are also external factors that can impact your business; political, economic, environmental or personal.
It’s important to review your services and your pricing regularly. Are there some packages that don’t sell? Do you offer some services that people don’t need? Is your pricing right for your target market?
If you aren’t winning any business, this could be down to one or more of several things. Is your pricing too high? Are you advertising in the right places? Is your approach to selling wrong? Is there even a market for your product or service? If you are converting all your enquiries, then your pricing could be too low.
Don’t let your ego get in the way of making good business decisions. Sometimes you have to admit that you got it wrong. Always be prepared to refine your ideas.
Every freelance goes through a period of trial and error. You need to find what works for you. What’s right for one person isn’t right for another. The best thing to do is try a few things, ask for advice, learn from others and be open to making mistakes.
Write down your goals and all the reasons you wanted to be a freelancer. Refer to this every time you feel as though you are getting off track to remind yourself of what you are working towards.
- • Have a strategy
- • Spend time getting your prices right
- • Say no to projects you can’t deliver
- • Embrace new opportunities
- • Learn how to run a business
- • Ask for help when you need it
- • Don’t spend money on things you don’t need
- • Learn how to manage your time more effectively
- • Don’t depend on just one client
- • Be prepared to adapt
What’s your freelancer fear?
At Dinghy, we are passionate about helping more people succeed in the freelance world. That’s why we’ve developed insurance products specifically for freelancers and put together a knowledgebase full of advice.
Have we missed anything? What do you wish you’d known when you started out? What are your biggest struggles or challenges as a freelancer? What’s preventing you from taking the leap into full-time self-employment? Let us know in the comments below or via Twitter, Facebook or email.