Jump to Main Content
USA flagAn Official Website of the United States Government
Managing a Business

Blogs.Managing a Business

Register

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

Comment Count:
28

Comments welcome on this page. See Rules of Conduct.

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:

I agree, the tips in this article very inspiring. thank you
Hello Caron, thanks for this interesting article. From my point of view it contains a lot of good tips for new freelancers but I like to recommend an adjustment. Why are low-profit customers often the ones with the highest demands. Because they still think that you have started your business, are working at a low level and need the money. I would tell them that over the past years/months the business has been changed and you price has been increased. You can offer them a higher but still good price if they want to keep working with out. In my experience most customers accept higher prices and then there comes a second benefit. Because they have learned your new value they stop asking you to do this and that. So, if you do it right, in the end you will have more money for less work.
Great work and full of knowledgeable information for freelancers. And I really enjoy being a freelance programmer. I do all my work over the internet. I use freelancing platforms like  This post was edited to remove a link. Please review our Community Best Practices (http://www.sba.gov/community) for more information about how best to participate in our online discussions. Thank you. I must admit, when I first started, it was a little tough, but with sheer determination I’m now an independent programmer and web designer.
Thanks Andy, and congratulations on your business success. Never giving up, finding new ways to do things and learning as you go are critical when you are on your own!
Great post! I agree, so important to let clients go that aren't profitable.
Your writing style is fresh and fast. I enjoy reading your work.
Excellent tips. I knew after reading and got many information.
That is a tough one because working with them can often be leveraged to obtain higher paying clients. However, I find that it is a constant struggle to balance those with more profitable work as there are only so many hours in a day. The low profit clients are often much more interesting but they don't pay the bills.
Hi Caron, Thanks for the great tips! Another tip I found very beneficial was to become very mindful of what I call “purposeful activities” i.e. “doing stuff” that has a payback – not just “doing stuff” because it looked like I was being productive! Setting up numerous coffee and lunch meetings with lots of folks – usually at a place convenient for them - looks and feels like productive networking, but you could end up spending more time in the car then actual face-to-face networking time and more money than if you had invested in a targeted networking organization or professional association membership. Instead, consider using online tools such as LinkedIn – then connect via phone or email - reserving actual “face time” for those connections that you believe have the potential to have the most impact on your goals. Most importantly, make sure you are enjoying what you are doing!
Thanks for the insights in this post--They are very helpful. Re: Ditching low paying clients: That is a tough one because working with them can often be leveraged to obtain higher paying clients. However, I find that it is a constant struggle to balance those with more profitable work as there are only so many hours in a day. The low profit clients are often much more interesting but they don't pay the bills.

Pages

Leave a Comment

You must be logged in to leave comments. If you already have an SBA.gov account, Log In to leave your comment.

New users, Register for a new account and join the conversation today!