Anybody worth their salt with freelancing or small business experience can tell you all about what not
to do. We’ve all made mistakes. But one thing we don’t often talk about is how to make more money. I don’t mean we should rob people, but we need to earn fair and competitive prices. Nobody wants to be a broke artist!
I started freelancing almost two years ago and made a business out of it just about a year ago, and even in that short period of time, I’ve learned a lot about the right and wrong way to do things. With that in mind, here are some ways you can earn smarter and better money with your business:
1. Get a business account at the bank.
Nobody talks about this, and I can’t tell you why. Business accounts are usually cheap, especially compared to the money coming in. They’re separated from your personal accounts, so you’re less tempted to spend any tax dollars you’ve got in there. And they add a serious legitimacy to your business when your clients can send you a cheque with your business’s name on it instead of your own.
This is something I waited too long to do, but it was mostly painless and I’m glad I did it. I keep all my income tax in the account, and while I know I can’t spend it, it feels great to watch that dollar figure climb - even if my personal account isn’t always so hot by comparison.
2. Always get a written agreement of work.
I’ve been shafted for good money. Most of us have. The biggest amount I ever lost was thanks to a contract I whipped up myself. It wasn’t specific enough, and my employer didn’t see eye to eye. You need a good contract, or a work order. Some lawyers I know say you really just need an email confirmation.
You also need a good head on your shoulders. If there are red flags, and a client is being difficult about the contract and attaching millions of “I won’t pay you if…" stipulations, guess what? Those are there to make it easier for them to avoid paying you. Don’t take that contract. Don’t take that client. Don’t sign anything. Walk away. You’ll save yourself a lot of pain down the road, and the experience won’t be worth it.
It’s more than about just getting a written agreement of work. It’s about avoiding the bad ones.
3. Be meticulously detailed about your income and expenses.
I’m not saying you need Quickbooks or other banking programs to help you manage things, but you need somewhere to put things. Consider investing in a filing cabinet, particularly if you’re dealing with a lot of paperwork. I store each month’s expenses and invoices in their own subfolders on Dropbox, which is backed up weekly to an external as well.
This sort of thing has obvious benefits, like helping you breathe more easily when the taxman comes around (and those are never easy days). But it also comes with the benefit of mindfulness. When you can look at all the details of your money, it becomes easier to see the big picture. I recommend being detailed about your money so you can sit back later and figure out where you’re not charging enough, and where you’re charging too much. Quoterobot is great for this.
When I wasn’t doing this, I was stagnating. When I started doing this, I doubled my annual business in a matter of months. Mindfulness pays.
4. Get an accountant. Become his/her best friend.
My accountant is a total nut case, but he’s also a good guy. We go out for lunch once a week to discuss our business and talk with other associates about how we can better refer each other. We’ve established a partnership. He’s a friend and an ally, one who gives me valuable business advice without my ever asking. He’s been running his own business longer than I have, and he has lots of advice to give. And when you’re eating lunch together, and his continued business with you depends on your success, then the advice is free.
Of course, an accountant isn’t the only option. I’d also recommend being friends with your lawyer (if you have one), your financial advisor, or even a bookkeeper. In fact, the larger your business gets, the more vital your business becomes. There’s a lot of people whose livelihoods can partially depend on your success. If I make more money, my accountant could make more money off me - as could my lawyer, or bookkeeper. So they want to see me grow.
In that sense, being friends with these people is a source of constant encouragement. In the same way that a pastor or monk is interested in the spiritual growth of their communities, these people want the money to keep flowing. And they’ll help you with whatever advice or referrals they can.
The key to these relationships is that these people are friends. Don’t abuse their knowledge, and don’t be anything but your wonderful self. Make them your friends, enjoy your time with them, and you’ll find you’ll get a lot out of that relationship.
5. Negotiate your way to better rates.
This is an essential skill. First of all, know this: you are good at what you do, and you should feel comfortable charging for it. Don’t shoot too low. If you shoot too high, clients rarely turn you down. The good clients will barter. The less wealthy clients will come back to you when they can afford you, well after their growing pains are gone.
If you overshoot your estimate, most clients will barter you down to your preferred rate anyway. That’s never failed me.
This isn’t about being unfair. This is about getting your justified rate of pay and earning a salary that allows you to actually live. And if you shoot too low, you’ll be kicking yourself.
When I first started getting larger clients, I billed them as if they were small-time. I told a multinational I would be fine getting paid $15 an hour, which I felt was fine for somebody who was just starting out. It only took an hour for me to realize that, based on their excited reaction to my price, I charged way too low.
About a month later, when I had the chance to revise things at our meeting to discuss a six-month contract, I told them I wanted a number that was several times what they were paying me before. They talked me down to a number that I’m quite pleased with, and I didn’t damage our relationship. In fact, they just extended the contract for a year with automatic renewals and renegotiable time/rate opportunities.
Be respectful about this with your clients. I’m not saying this isn’t ornery. I’m saying that your income potential is unlimited - that could be why you started working for yourself, after all - so act like you have nothing to lose, and everything to gain. They’re hiring you for your personality first, and your work second - so be polite and charge them properly for your time and efforts.