Screenshot: Freelance Entrepreneur
The daily life of the freelance entrepreneur can be really filled with lots of irregularities and uncertainties but most of us would rather be self employed than have a 9-5 job and work for someone else.
But just because we've decided to leave the corporate life doesn't mean we freelancers can't borrow best business practices from the corporate world. Because there are actually a lot we can personally learn.
As a freelancer, we are a staff of one and the bulk of our decisions rest with us. Being an entrepreneur means that you get the chance to make new rules as they apply to your business and discard the ones that are unnecessary.
This is where the little nuggets of wisdom from successful big businesses come into play. While not all practices from corporations are feasible for your business, some of them definitely are, and we will be looking at 6 of these business practices that you need to follow to make your freelancing business a proper business.
1. Build Effective cash reserves
Because of the uncertain nature of freelance jobs, there will be times when you will find yourself in a feast or famine period.
When things are going well, cash is plenty, but what happens when there's a dry spell?
Do you have cash reserves for those dry days so you can stay afloat when jobs become sparse? Build your reserves by removing a certain percentage from each paycheck into a special business savings account.
This will help you stay afloat when you're in a dry spell as a result of not having done much work consignments in a month.
2. Pay Yourself a Salary
Another awesome business practice to adopt as a freelancer is to pay yourself a salary. As freelance entrepreneur, we are often tempted to see our time as free and as such make uneconomical decisions.
For example, if it takes you 25 hours of work to win a $5,000 contract, and 25 hours of work to complete it, you're making $100 per hour, not $200.
If someone offers you a $125 per hour contract, you should take it. That contract may be below your nominal hourly rate of $200, but it's above your real hourly rate (counting the time spent on business development) of $100.
You don't actually have to write checks to yourself, just keep track of how your monthly earnings measure up to your monthly "salary." If your earnings exceed your salary, congratulations! If you're running a monthly deficit, you should either lower your salary expectations or consider finding another line of work.
3. Follow a business plan
A business plan doesn't have to be a 2-inch thick binder that requires mugs of coffee to read through and some aspirin to quell the headache that comes after reading it.
It can be a one page document that explains in detail what your plans are. For a freelancing business to have a concrete business plan, it needs to satisfy three criteria.
- It needs to be written down. A plan isn't a plan unless it's written. Having it all in your head doesn't count, as you can't properly analyze what's in your head.
- It needs to have clear and concise goals. How much do you want to land per month? How many new contacts do you aim to make? Let the goals be measurable.
- It needs to detail the necessary steps to be taken if the goals are to be met. Will you use social media more to advertise yourself? Or will you settle with local listings? Settle on your plan and write it down.
If you had a one line plan that said "My goal is to get $5,000 each month by targeting local veterinary clinics" it would be better than having nothing at all.
4. Learn to Sit Down and Account
A lot of freelancers dread this, but it's necessary you have a record of accounts for your business. You will not work forever, and at some point you will have to retire.
As you work, make investments for your retirement. Look into such plans like IRA and 401k and see which one suits the income potential of your business.
And if you can't properly get around the hurdles of accounting, then find an accountant and have him/her help you out with what needs to be done.
5. Find Time Out of Work to Rest
Restlessness is a word that is becoming synonymous with entrepreneurship. I believe rest is fundamental. It's what will help you stay sane when work is high and clients' constant nagging are extreme.
That's why it's necessary for every freelancer to have a unique way they rest. Find time - make out time, to rest. I watch films or play scientific games whenever I separate myself from work to rest.
It's important to note that resting helps you escape future nervous breakdowns. If you fall sick due to overworking yourself, your income will be affected.
The only way to avoid that is to make out time and rest. Go out. Explore the cities around you.
You don't have to plan it. Find a way to rest; it was hard for me in the beginning. But I knew it was a healthy check for my business.
So whenever I feel a slight fatigue, no matter how much clients are shouting out to me, I still rest. I know I won't be of any use to them if I fall sick.
Likewise, follow this principle of rest. The body needs to work and relax to build up another momentum to work again. Find time to develop a resting regime that will help put your health and businesses in good check.
6. Regularly and thoroughly review your business
It may seem unrealistic for a one-man business to hold performance reviews, but making regular reviews can drastically improve your business.
Establishing a performance review process, complete with a standard set of evaluation questions, helps take unproductive and negative emotions out of the process while focusing your attention on areas of potential improvement.
Freelancing may look like a solo activity but that doesn't entail that you can't get help to make you more successful.
Also, find ways to leverage technologies that will make your operation more seamless. The one advantage I believe you will enjoy over bigger businesses is that you can easily adopt new technology for your business.