Jumping into a freelance career is one of the toughest things to do, especially if you’ve spent your entire professional life counting on a regular paycheck from your employer. Building up your career will take time and a significant amount of effort, and it’s not recommended to quit your day job until you’ve built up a decent client list.
Consider the following four tips before you start freelancing:
Know Your Worth
One of the biggest mistakes freelancers make is that they charge too little right from the beginning. Not only will this force you to spend more time looking for more clients, but you’ll burn out and give up quickly once you realize you’re making much less than what you need to survive.
Set an hourly or per project rate that’s acceptable to you right from the beginning. When you set your rates, don’t just judge for the work that you’re doing or how long it takes to complete. Your clients aren’t paying for how long a project takes you, they’re paying for your expertise as well. Don’t be afraid to charge more for a client who wants a job done quickly. If necessary, take on no more than three clients at a reduced rate to help build your portfolio.
Start an LLC
`Many freelancers work without any type of legal protection from potential lawsuits, and it’s a mistake. Working as a sole proprietor leaves you open to financial ruin if a client decides to take you to court, regardless for their reason. Form an LLC for your freelancing business. LLC stands for “Limited Liability Company,” and allows those who invest to protect their personal assets in case something goes wrong. This type of corporation is the easiest to start, and the tax laws are pretty simple to understand. Best of all, if someone tries to come after you, your personal assets and family are safe from a lawsuit.
Contracts are Important
Even though you aren’t operating like a big business, contracts are extremely important. Always negotiate contracts with each one of your clients, whether they are for ongoing projects or for one-off payments. If necessary, be prepared to send clients with payments in arrears a demand letter for payment. Depending on the situation, you may want to use a form or draft your own. Collecting past due payments from clients is a necessary for the success of your freelancing business, even if it may seem uncomfortable at times.
Grab a Virtual Office
While you may still want to work from home to save money, virtual office spaces allow freelancers and small businesses to maintain a professional address without the high cost of renting a space. Virtual offices with mail service are normally much less than $100 per month depending on where you live. You’ll even have the opportunity to book a conference room if a client wants to meet in person. For many people working from home, it is worth the investment to have that extra space between their work life and home life.
Above all else, freelancers must be prepared to face the hardships of starting a new business. Rejection is common, so much of your time in the beginning will be focused on networking with clients, sending emails and making phone calls.