Becoming a self-employed freelancer? Watch out for these common pitfalls when you start your own freelancing business.
Whether a great freelance opportunity has opened, or a shift has taken place in the market, starting your own business can create both excitement and anxiety.
You’ve probably done some homework, asked a few friends and former colleagues for their advice and opinions, and heard a lot of things that you “definitely should do.” But what are some of the things you can learn from others who have ventured down a similar path?
1. Don’t set out to only make money
Many entrepreneurs start by focusing only on financial gain. But if money is the only reason for setting up your own business, you most likely won’t be successful.
Yes, making an income is important. Very important. You’re a professional, not a charity. You want to support yourself and your family, maintain a certain standard of living, and hopefully put something away for retirement.
Stop and think about the self-employed icons that define the definition of success globally – people like Oprah Winfrey, Steve Jobs, and Bill Gates. They all started with a passion to make an impact, a difference and a change in their industry – and, ultimately, the world.
Yes, they made money along the way. A lot of money. But focusing on building great wealth didn’t fuel their success – a drive to do what they loved and be the best at what they were doing made them the icons they eventually became.
2. Don’t just do what you love – do what you’re good at
“Do what you love.” It’s one of the most popular sayings of our time. It’s on coffee mugs, tee-shirts, bumper stickers —And it’s true in many ways; passion brings joy and work ethic to any job.
However, if the thing you love isn’t necessarily the area in which you excel, or if the thing you love isn’t marketable as a service or business, doing only what you love might be a mistake in the world of self-employment. Be sure to research the market and gauge demand.
Consider whether to want to move your skill from a project to full-time work. The person who enjoys painting their family room or regularly changes the oil in their car may not have the patience or be efficient enough to do it on a full-time basis. The person who recently enjoyed a class in making custom greeting cards might not find an ample market for paper goods in an increasingly digital world. Someone who likes to throw clay on the pottery wheel might not enjoy the monotonous process of large-scale pottery production that often comes with opening a ceramics business.
While following your goal to do what you love, make sure you’ve given yourself enough practice and time to reach a skill level where people will be clamoring – and paying a handsome price – to purchase from you.
3. Don’t aim for perfection
You have dedication, drive, and commitment. But you may not be prepared for making mistakes. Still, you will make them. We all do.
Never be afraid of mistakes or failures. That’s how most of us learn. The critical key with a young business is to be self-aware. Identify errors you may be making without explaining them away or judging yourself. Simply hold yourself accountable and constantly work to make smart, well-informed decisions with improvement in mind.
Also, be willing to make sacrifices – most of which aren’t planned. Extra time, unexpected start-up expenses, and other challenges may give you the feeling that your perfect business model is now flawed or threatened. Don’t be discouraged by bumps in the road. Be open to adjusting your expectations and approach – in small or large ways. And give yourself a healthy amount of grace, knowing you’ve never done this before.
Some of the most successful companies are run by people who had numerous things go wrong or at least not exactly as planned. If you face unexpected issues head-on, focus on being resilient. It will pay off.
4. Don’t overlook your marketing plan
Unless you’re starting a marketing firm, you may not be experienced or skilled at promoting yourself or your business. But that doesn’t mean it should be put off.
Even with all the passion, skill, and aptitude, a successful self-employed business won’t fall in your lap. Having a solid marketing plan is essential – even before your first day in business. Knowing who your target customer is and how best to reach them. That may sound easy but discovering the methods that will turn your business goals into reality takes a significant amount of research and learning.
One of the most common mistakes when marketing a new business is confusing your understanding of the industry you’re in with marketing your product or service. Yes, you may have spent years on the assembling room floor or in the back office and now you’re ready to be your own boss. But unless you’ve generated new clients entirely on your own, you need to learn how to market your young business.
Today, marketing can take many forms. Everything from traditional advertising and promotion to digital marketing. Social media engagement to referral programs. All marketing requires an investment of either time or money.
Keep in mind that most marketing plans and tactics aren’t full proof. Regardless of the amount of research you conduct in the beginning, as you go you will always learn more about what resonates (and what doesn’t) with your potential customers.
Some channels, such as effectively using social media, have little to no monetary cost – if you’re willing to dedicate time and effort into content creation and peer-to-peer engagement, and willing to dedicate the time to know how to use it. Other methods of advertising, such as a spoken ad achieved by sponsoring a local podcast, may have a one-time advertising fee to but require much less effort from you.
Lastly, developing an online presence is critical — which is why a website or robust feed should always be at the core of your marketing plan. Depending on your business and the time you must dedicate to it, you may forgo a traditional website for a strong presence on LinkedIn, Facebook, Twitter, Etsy, Instagram or another social channel.
The important thing is to pick an anchoring channel or page on which to build your presence and go all in. If your business isn’t online in any fashion, you’ll be virtually invisible to customers.
5. Don’t waste time
One of the most valuable commodities you’ll need to manage and safeguard as you start your business is your time. You’ve heard the old saying, time is money. Well, once you’re self-employed, it’s true — so, don’t waste it.
One of the toughest challenges that people face is the transition from a structured working environment with set hours to determining when and how long they work. Starting a business may mean putting in additional hours and working on the weekends. Your time is valuable, so make sure that the hours you spend working are dedicated to activities that will improve your skillset or bottom line.
Another mistake is to waste valuable time by not making decisions quickly enough. For example, realizing that a process or supplier is not working out – and acting on it now – may prevent a greater amount of lost time and expense down the road. Don’t be afraid to make calls rather than struggling over every decision. It’s your time, and you’re the boss.
6. Don’t undervalue yourself
When you strike out on your own, you will initially be chasing work. You’ll likely spend a lot of time reaching out to new contacts and getting the word out to your network.
This process can truly test your confidence. You may be tempted to undervalue your product or service in your hunger to attract new clients and make money. Don’t let this hunger persuade you to sell your services for less than you know they are worth.
Remember, there is only one you, what you bring to the table is unique, and you spent a lot of time and energy getting where you are today. If you start a client relationship by charging less than what you’re worth, this can incredibly detrimental down the road. The best thing you can do to avoid undervaluing yourself is to do your homework before your first day of business — and this means thoroughly exploring the market.
Who are your biggest competitors?
Are they local or states away?
How much are they charging?
Why do they attract customers?
Do you have a unique selling proposition that makes your product or service stand out?
Dropping your price should never be your immediate response to that last question – especially before you open your doors. Rather, attract customers by highlighting your many unique benefits, e.g., free shipping, uniquely handcrafted items, personalized service, etc. This will serve you better in the long run.
Also, don’t be tempted to give away your products or services for free. Yes, samples are okay in some cases – if you can absorb the financial investment. But keep in mind that as soon as you start your business, some closest to you might ask for a freebie. And while you never want to jeopardize any relationship, remember that time is money.
Rather than trying to attract a new client by letting them “sample” your hard-earned talents for free, it’s best to invest more energy into finding clients who understand the value of paying you for your work.
Too many eager professionals have realized too late that they unknowingly gave away some of their best intellectual property just by talking too much during the process of winning a new client. Keep these conversations to just the questions and answers that are on the table. By being disciplined in this fashion, you will win your potential client’s respect as well as their business.
7. Don’t try to do everything on your own
Just because you are venturing out on your own doesn’t mean that you must do it alone. Even if you are already set with a healthy list of clients, supplies and a solid business plan, you probably cannot complete every task yourself. Or, more specifically, you cannot do everything yourself and do it well.
The ability to recognize your strengths and limitations is one of the best skills you can take into starting a new business. Once you have a grasp of what you do and don’t do well, you can learn to delegate certain tasks while keeping your focus on what you do best.
For starters, you should probably have an accountant, a banker, and an attorney with whom you’re on a first-name basis. These three consultants are the start to building a strong foundation for your business and can help avoid mistakes that may cost you more to fix down the road.
If delegating creates some valuable free time, use it to improve your strengths even further. Get out of your comfort zone. Learn a new skill. Keep pushing yourself. Remember, YOU are one of the best business investments you can ever make.
8. Don’t be a hermit
If you lean on the side of being an introvert, then working from home may be GREAT — until it’s time to network. For introverts, reaching out to new contacts may seem unfamiliar and intimidating, but it’s a skill you must cultivate to benefit your business.
You’re already stepping out on your own by starting your own business, so use some of that adventuring energy and throw yourself into building a network to support it. Remind yourself that the unfamiliar doesn’t have to be uncomfortable.
Start small by reaching out to one or two individuals that you already know – mentors, former colleagues, partners, and professional friends. Ask if they are part of larger networking groups and, if so, ask if you can join them at their next meeting.
A great way to engage new people is to ask questions about their company, industry and business objectives. Then, carefully listen to what they tell you. The benefits of meeting someone in person (or at least over a Zoom conference while social distancing still applies) can go farther than most people realize.
Engaging with people through your keyboard isn’t quite as personal as scheduling a meeting or attending an event, yet it’s still an effective cornerstone for broadening your network. Without leaving your desk, you can interact with several people through emails and instant messages – all within an hour.
9. Don’t pick the wrong business partner
A business partnership is as binding as a marriage. The dynamic of your relationship with your business partner significantly changes that moment you both make the big leap. You’re working closer than before, relying on the same financial success and sharing the same anxieties and concerns. If the dynamic between the two of you isn’t one in which you can both operate smoothly and effectively, your business has a far smaller chance of success in the long term.
Not realizing the enormity and potential complications of taking on a business partner and assuming all will go smoothly is a huge mistake many make. Instead of jumping in full steam ahead, test your business relationship out before starting your business. Perhaps work on a small project or two together. Then, openly evaluate things later.
Did you work well together on your initial project?
What areas could have been better?
Do you feel that you share the same vision – and values?
Does this potential new partner take your business as seriously as you do – meaning, are they committed?
Even with encouraging answers to all the above questions, you should enlist help to draft a legally binding contract that establishes responsibilities, goals, and compensation before officially founding your business together.
Similar to this is the mistake of hiring employees too quickly or hiring the wrong employees. While it may fill you with pride and confidence that you can afford to bring someone new on to help, as a new business you should always ask yourself, “Can this be done with a subcontractor or part-time employee?” Or, could you farm this job out to another freelancer or small business – at least for a certain period? These questions are especially important to ask if your new business’s workload ebbs and flows seasonally.
10. Don’t overspend or underspend – both are equally important
Spending a lot on equipment or supplies at the outset will never guarantee business success. It’s always best to stick to the basics – like having the right equipment, software, supplies, and furniture. If you decide to rent a workspace, realize that this too may only be temporary as you might move to a larger area as your business grows.
Conversely, some small business owners are too frugal and fear spending anything. To them, this is simply being practical and disciplined. Make sure you’re spending money where it truly matters — comfy, ergonomic chairs you want to work 8-9-hour days in, enough computer memory to sustain you, a computer desk with room for everything you need. Also, keep in mind that there will be times in the future to make investments such as upgraded equipment or more office space. And remember to invest in your employees – pizza parties make great memories and boost morale. Sharing success with employees through a bonus or gift certificate is a smart investment.
Becoming self-employed can feel overwhelming at times, but regardless of how each day goes, turn your thoughts to the positive and focus on what an exciting opportunity full of possibilities this is for you! As a self-employed freelancer or small-business owner, there is so much to embrace and discover. The sky’s truly the limit to how far your business can grow.
Good luck! And as always, we’re here for you! Look for more articles, tools, and resources on self-employment written by the experts and provided to you by Invoice2go.