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6 Tips for a Fiscally Fit and Successful Freelance Business in 2013

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6 Tips for a Fiscally Fit and Successful Freelance Business in 2013

By Caron_Beesley, Contributor
Published: January 24, 2013 Updated: January 24, 2013

Thinking of becoming a freelancer or hoping to make this year’s freelancing more fiscally fruitful than last? Freelancing is a money game and cash flow is king. And while there may be times when your cup runs over, there will no doubt be other times when it looks ominously dry.

To be a successful freelancer—in addition to being good at what you do—you need to be agile, tenacious, a consummate planner and equipped to deal with fiscal downtimes.

Here are some money-saving and business growth strategies that you can use to ensure the fiscal fitness of your freelancing business this year.

Have a Financial Cushion

Every freelancer needs a financial cushion; in fact, you shouldn’t quit your day job unless you have one. It can take up to six months to build your client base and develop consistent income. Instead, start your freelancing activities “on the side” until you are ready to transition to full time business ownership.

How big should your cushion be? Start by factoring in your living expenses for the next six months and allow for any emergencies that may arise. Next, assess what percentage of your income you’ll need to put aside to make your estimated taxes, social security and Medicare payments. Consider setting up a separate bank account and allocate 30-35 percent of every check you receive for work done into that account. This will help you avoid any day-to-day temptation to dip into it while ensuring you have the money to pay your estimated tax requirements when the time comes.

Reduce Your Overheads

Most freelancers can work from home. If you really need social interaction or want to leverage the brainpower of fellow freelancers, consider a co-working space (now available for a low-cost in many cities) or even your local coffee shop. 

Likewise, buy as little as you need. If you’re not commuting anymore, do you really need an expensive 4-wheel-drive SUV or truck in the driveway? Do you really need the latest high-end smartphone or laptop or could a cut-price one do the job just as well? What about computer software—could you cut costs by using a free email service or a low-cost word processing app? What about buying surplus office furniture?

For more lean spending tips, read: 6 Tips to Rein in Spending and Be a Lean Start-Up.

Invest in Good Back-Up and Use it

If there’s one thing that any freelancer can be sure if in their business, it’s that one day your PC will succumb to the dreaded “blue screen of death,” be infected by a virus or taken over by malware. Without an IT department to turn to, you’ll end up throwing cash at an expensive fix and risk losing all your work and business records in the process. Regularly backing up your work, both to a standalone hard drive and to an online location (providers like DropBox, Symantec, and Carbonite offer free or low-cost services) will ensure your data is protected and always accessible. Get more tips here: Finding the Best Backup Option for Your Small Business Data.

Look for Ways to Expand Your Business on the Back of Existing Work

Growing a freelancing business is a challenge. Networking often takes you away from existing work, while developing and nurturing new relationships into profitable clients takes time. Instead, look for to expand your business and earn more money with existing clients, based on the work and track record that you already have. Check out some tips for doing just this in my earlier blog, 5 Ways to Become an Indispensable Freelancer and Earn More Money from Your Clients.

Collaborate with Others

Growing existing business is good, but it’s also important to have multiple streams of income. One option for growing your business this way is to team with complementary businesses. For freelancers, for example, work on building relationships with those who serve your target customers. Photographers could collaborate with wedding planners, or graphic designers could team with marketing consultants.

Don’t Be Afraid to Ditch Unprofitable Clients

Freelancers often price their services at different rates in order to secure business. But if a low-paying client is also your most demanding and tricky client—whether based on the work you are required to do or the nature of the relationship—it might be time to cut your losses, walk away from this type of low-margin work and concentrate on deepening other relationships.

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

Such a nice information you shared in this article, I really like it. Honda Mobilio Bandung Suzuki Ertiga Bandung Chevrolet Spin Bandung Daihatsu Xenia Bandung Pajero Sport Bandung Honda Mobilio Bandung
Excellent article and I unfortunately know the blue screen al to well. I have been contracting freelancers (1099s) for years and I believe your findings are 100% accurate. Great article and very informative. Thanks
I definitely agree here and I love the way you create your posts. Always reasonable and informative. Thanks for all your efforts!
Dear Caron, I always try to put my income in a growing investment fund for the long run... GBU.
Finally, an issue that I am passionate about. I have looked for information of this caliber for the last several hours. Your Article is greatly appreciated. Thank you
Freelancing has always sounded very complicated and risky one to me. I thought many a time to break into it but due to risks attached to it, I never took it seriously. Thanks for sharing the topic in detail. Now I feel more confident than before and think now I can take the decision.
I would like to add to this: I think any freelance business should invest in an Apple computer because it solves two of your points: 1) you can use Apple's time capsule program that's buit into the computer already, you just need a separate harddrive which are pretty cheap these days. 2) Apple computers don't experience viruses. You can always get a refurbished Mac if you cannot afford a new one, that's what I did. Finally, I do like the fact you say "ditch unprofitable clients" but in the beginning you really have to get your business going, so the smaller clients may be a pain and they may not pay much, but if you do a good job they will usually refer your work to their friends which will help build your network. It's always good to get as many referrals as possible starting up your freelance business. Thanks Caron, I am really enjoying your blogs..
I would just like to say you always have good informative information, Regardless of whether they pertain to my business or not I enjoy reading your articles. This is another interesting read!!
This is a great article thank you for the information! I agree that reducing overhead is one of the best ways to strive; One thing I think you forgot to mention however is customer service! It is perhaps one of the most imperative parts of a business to maintain a level of excellent customer service, repeat customers are the best kind of business!
Again wonderful article Caron, I enjoy reading your posts and look forward to the next.

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