Though freelancing is spreading to a wide range of industries, U.S. freelancers are still heavily concentrated in creative fields. While a small percentage are savvy business people focusing significant energy on growing and managing their businesses, most of us are not. As a general rule, writers want to write and designers want to design and so on. Few of us want to market, keep the books, sort out our tax deductible expenses, track our effective hourly rates, cultivate client relationships, or assess the return on our investment of time, money, and effort.
We do, however, want to make money, get referrals and repeat business from past clients, and otherwise succeed in whatever field we’ve chosen.
Approaching freelance work like the business it offers many benefits, including:
- You’ll pay lower taxes. Most people want to pay lower taxes, but this can be especially important for freelancers, since self-employment taxes raise the rate we pay. Many freelancers say they don’t really have business expenses, but it often turns out that’s not true. Even if you don’t take advantage of the home office deduction, you’re likely buying office supplies, equipment, maintaining internet service, paying for web hosting and domain registration, and more. These small, ongoing expenses add up.
- You’ll have more control over payment. Far too many freelancers embark on projects without answering critical questions like, “How many revisions are included in the price?” or “What is the turnaround time for payment?” When you make a habit of clearly spelling out contract terms with each client, you can’t get roped into multiple unpaid revisions. The client will likely take payment due dates more seriously when he or she has contractually agreed to them, and you’ll have clear evidence if you have to fight to enforce your contract.
- You’ll be more likely to get paid for all of your time. Have you ever found yourself trying to recreate time after the fact, rounding down because you’re not sure and you don’t want to overbill? Ever realized after the fact that you never billed for a particular item? If so, you’re in good company. Using time tracking software or a manual system as an integrated part of your work process helps ensure that none of your valuable time slips through the cracks and goes uncompensated.
- You’ll learn which types of work are most and least profitable. Too often, freelancers price flat rate projects intuitively, without any real idea of the return on their time investment. Tracking time for even flat-rate projects allows you to determine exactly how profitable each project is, and to make adjustments moving forward. I run a stopwatch on every piece I write, even though most of my work is fixed price. Every few months, I calculate my effective hourly rate on fixed-price projects and align my hourly rates. Thus far, this calculation has led to an increase in my hourly rate every single time I’ve made the comparison. But, I’ve occasionally also learned that my flat rate for a certain type of project was too low.
- You’ll have happier clients who are more likely to return and make referrals. Of course, your clients choose you primarily for your talents. Nobody makes “prompt” the number one criteria for choosing an artist, writer, accountant, or attorney. But, clients do hire freelancers in part to save time, and that means that the more they have to communicate with you to provide information you forgot to ask for during planning, ask when you expect to have the project complete, or even work with internal teams to gather that information or adapt timelines, the less profitable it is for them to hire you. Becoming an effective manager of your own projects makes life easier and more lucrative for your clients.
- You’ll likely be able to work less. Many freelancers resist investing the business and administrative aspects of freelancing because they feel like they don’t have time. But, that’s a vicious circle. An organized freelancer who is getting repeat business and has an efficient system for entering into agreements, gathering information, tracking time and getting paid invests less time, not more. It’s well worth the initial set-up time to buy yourself more free time on an ongoing basis.
- You’ll be less stressed. One of the reasons many freelancers dislike the business aspects of their work is that scrambling to meet deadlines, trying to prioritize among demands on your time, and digging through emails or scribbled notes to recreate time for invoicing is stressful. The more up-front investment you make in scheduling realistically, setting clear expectations, and maintaining records as you go, the more peaceful the process will be.
- A clear plan keeps you on track. Of course, as you measure your return on various types of work and learn more about the type of clients who respond best to your work, you’ll make adjustments to your plan. But, being pulled in many different directions as you take on any work that’s offered can dilute your focus and reduce efficiency. Clearly articulating your priorities in advance and checking your progress against the plan helps you keep the larger goal in mind and keep working toward what you really want from your business.
- You’ll make more money. Professional systems help you earn more money in several ways, some of which I’ve already mentioned. You’re more likely to get paid for all of the time you work, and you’ll likely spend less time assembling invoices and chasing payment. You’ll also be in a better position to make informed decisions about the projects that are most lucrative for you and how to set appropriate rates.
Freelancers aren’t alone in resisting these steps. Many solo professionals and small business owners face the same obstacles. Though the business aspects of freelancing may be less interesting to you and feel like a waste of time when you could be engaging in your craft, thinking like a business owner will ultimately allow you more time to focus on the work, leave you with more free time, and put more money in your pocket.