3 Mistakes Freelancers Make When Trying to Build a Business
There is a difference between being a freelancer and running a business. Freelancing refers to a skillset like writing or designing. Running a business, on the other hand, requires an entirely different skillset. In fact,
In fact, most of the mistakes freelancers make come from not understanding that they aren’t just freelancers, they are business owners. Here are some of the most common mistakes I see freelancers make that keeps them from earning money and making a good living.
Thinking your freelance skill is all you need.
One of my colleagues recently said an awesome quote that left me chuckling. He said, “Freelancers need to understand that a skill does not a business make.”
I chuckled because I was a freelancer who made that mistake for years. I was like, “Oh, well I’m a good writer so the money is just going to show up. I don’t need to learn sales or business management or any of that stuff.”
The good news was I snapped out of it. I figured out pretty quickly after quitting my job that if I wanted to make a living I would have to learn new skills as it pertained to actually running a business.
Unfortunately, many freelancers don’t snap out of this and then wonder why they aren’t making any money. That’s why the idea that your freelance skill is all you need is one of the biggest mistakes freelancers can make.
Not protecting themselves and their businesses.
Another common mistake many freelancers make is forgetting to protect themselves and their businesses. This means they don’t incorporate, they don’t use contracts and they don’t separate the business from personal finances.
This can lead to a very hairy tax situation. It could also have legal implications down the road if they aren’t careful.
This is why freelancers who are looking into growing their businesses should speak with an accountant and an attorney. They can help you figure out how best to incorporate, what insurance you may need and how to plan for taxes throughout the year.
Not paying attention to financials.
I can’t tell you how many freelancers I’ve met who are always complaining about how broke they are. When I begin to ask questions as to why I quickly discover they’ve fallen prey to one of the most common mistakes freelancers make: not paying attention to the financials.
Here are some of the many ways to you need to pay attention to your money as a freelancer:
- Making sure you have enough cash flow to make a profit.
- Keeping your business finances and your personal finances separate.
- Making sure you are always saving money.
- Protecting your personal finances.
- Being mindful of the investments you are making in your business and how you are going to make a return on said investment.
- Getting comfortable and coasting instead of continuing to prospect new potential clients when a big client payment comes in.
All of the above financial mistakes can be summed up by the first point: freelancers need to realize that they need to learn new skills that will actually help them make money. Otherwise freelancers will make the same mistakes that cause so many of them to give up.