Freelancing in IT is scary and good (maybe scary good. But anyway). Yes- both at the same time. The money you can make is ridiculous, and the time flexibility is unreal. (In fact, I know I’ll freelance again, because- well- I’ve seen too much.)
Still, especially when you’re new, it’s easy to make mistakes- mistakes that can cost you. Learn from my ignorance and if or when you take the plunge, you’ll be a little ahead of the curve. Here are my top 7:
Before you sign the client:
Charging too little
You would think the money one was the easiest, but you would probably be stunned to know that the majority of IT contractors and consultants charge far less that than they could.
I think I know why I and others have done this: fear. Fear that we would not be able to sign the business, or maybe fear that our skills weren’t up to par. But don’t be discouraged.
First, you are worth it! Find out what market rate is for your area (in the US, it’s usually $75 to $150 for a typical IT consultant). Next, prepare for your client meeting and give them that high number, and don’t skip a beat. It’s kind of weird- the bargain customers want to complain about everything, but the ones you are charging a fortune to actually seem to complain less.
I think this has to do with the value you place on yourself. If you value yourself high, then they will perceive you as a valuable worker and trust you more. Strange. You’re spending your time and energy- away from your loved ones- make it worth it. I think you are.
It’s kind of weird- the bargain customers want to complain about everything, but the ones you are charging a fortune to actually seem to complain less.
Improperly setting client expectations
I used to have a customer that was an awesome person- she was kind and giving, great all around. The problem was, at the time, I was doing occasional work after-hours for her, but she would call me when I was at my 9-to-5.
It was always something crazy like the network was down and the business was at a standstill. Of course, this put me in a position because while I wanted to help her, I also had a responsibility to my employer to be 100% engaged when I was on duty. This created a lot of stress for me and tension between us, because I wanted to give her great service, but I also wanted to honor my commitment at work.
In the end, I just stopped answering during business hours, but that’s not a great solution. You and your client need to be on the same page. Before you ever put your hands on a keyboard, it’s critically important that you establish things like
- When you will be available
- What type of work will you do or not do
- How quickly you will respond to requests
- How rapidly you expect to be paid
Let the customer know what they can expect, and it will save a bunch of friction down the road.
Not getting it in writing
Hey, guess what? When you have clients, they call that having a business. I’m no attorney, but before you sign on with a client, you need to put all those neat things above in writing. This makes it clear to everyone involved what will happen.
Hear me: I’m not suggesting that getting contracts will force your customer to behave- because it won’t. Most people make good on their commitments because it’s their word. I am saying that if you engage in business without getting the details on paper, you are asking for trouble. If you do work without some basic agreements, you are exposing yourself and your business to risk.
To avoid this, consult a qualified local business attorney in your area. You might also find forms you can buy online- but I leave that up to you. Do get it in writing, though.
When they’re already a customer:
Failing to maximize the use of your time
Part of the beauty of freelance work is that you can control your own time. Now, you may find that you work more hours as a consultant, but that’s another question. I loved consulting because if I got everything done, I could either go and 1) prospect more clients or organize things or 2) go home and play Xbox with people in London in the middle of the day.
It’s so critical that you plan your work, then execute on that plan. You don’t want to just “wing it” with your time. If you do, you may end up like me- not prospecting, relying on residual business, or even flat wasting valuable working hours. My business eventually slid until I didn’t have enough work to stay open, and I chose to take a job with someone else.
A nice planning system is the 4 Quadrants Time Planning System, by Stephen Covey- author of The Seven Habits of Highly Effective People (a life changing book).
Sitting on invoices instead of sending them
I am so guilty of this one I can’t believe it.
Newflash! If you don’t send in bills to your clients, they won’t pay them! I know, I know- hard to believe. But it’s so easy to get tied up doing the work that you put off billing. Don’t.
The struggle is real, and if you have any freelance experience, you know what I’m talking about. My main reason for delaying was that “I just went out there and put some time in.” I knew I’d have to go back and change the current invoice. I’d delay, go in more, and before I knew it, a month or 2 has gone by and now this small business owes me a sizable chunk of money.
If you want some tools to make it easier, you can do like me and try Paymo or Zoho (I personally use Paymo and love it). It’s easy to add time to these, and they have some nice customized invoices and automation to make sure you get your bills out and get that money!
(Side note- I always tried to get customers to agree to payment upon receipt. I didn’t like giving 30-60 days because I didn’t have a lot of cash flow, and it didn’t hurt to ask. All of my small clients were ok with this, and my big ones did a good job and I almost never had to wait more than a month to get paid. It’s worth a shot).
Forgetting to save money
It’s easy when the cash is rolling in to forget that 1) it took hard work to get here and 2) this may not last forever. When I was freelancing, I got some of the biggest checks of my life (so far). It’s an awesome feeling, but you can sometimes start to believe your own press- that you really are an IT big shot.
For goodness sake- SAVE! You should save at least 10% of your personal income for rainy days. Saving money in your business is called retained earnings. 10% is a good place to start, but you should be saving more like 10-25%. Retained earnings helps you invest back in your business for technology, marketing, hiring help, as well as keeping it running when you hit a slow period and paying your taxes.
Rain will come, and you will need to have your savings when a client misses their payment, or you have a slow period. You must save if you want a sustainable business.
Not knowing when to release a client
Not every client is a fit for every freelancer. Let’s face it- not every client is good enough to be in business in the first place!
Sometimes you just get a bad one. That client who is literally never happy with your work. The one who wants all the work for free. The one who refuses to pay for needed technology or even listen to your counsel, for that matter. The client who pays you in 60 to eventually days. The client with unrealistic time expectations, or even the one that is verbally abusive to everyone in their office, including you.
You don’t need that in your life. If you pick up a client who is not the right fit, don’t be afraid to release them. Now before you do that, you should have a calm and relaxed discussion about what the expectations are on both sides, and how you can both either work to meet them or adjust them.
If after the chat you still can’t work together, let them know on paper and in person that it’s not working out. This is where it’s really good to have it in writing. Make sure you still treat them with dignity and respect.
Not every client is a fit for every consultant. Let’s face it- not every client is good enough to be in business in the first place!
Neglecting sales and marketing
Many people get into IT because they like the technical work. Some get into this business because they *hate* selling. I know, I was there. The big secret? All of us have to sell.
I don’t just mean people in business- I mean in every aspect of our life, our effectiveness is tied to how good we are at convincing others. Without being in the sales profession, we have to sell our spouses on where to get dinner, what movie to watch, or to marry us in the first place. We have to sell our kids on behaving in public and being responsible. We have to sell our coworkers on our ideas to improve our daily work.
Get used to it- we are all selling. In fact, your overall success in life is based on how well you convince others. I didn’t say manipulate- I mean to convince people of the value of doing some things our way.
Get used to it- we are all selling. In fact, your overall success in life is based on how well you convince others.
If you want a viable business, you just be prepared to spend 80% of your time selling the work, and 20% of your time doing it. You need to be able to sell your existing customers more services. Don’t worry, however, there are a number of great sales trainers (Zig Ziglar and Brian Tracy come to mind) and tons on info you can get for free on the internet.
So that’s it! IT freelancing is a tough business, but when you get it under control, the rewards in money, time, and personal growth are immense. Remember to watch our for these 7 pitfalls. If you want to know more about getting into IT- there’s a post for that!
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