How To Get (And Keep) A Business Mindset
Many people start a freelancing career, but few succeed. Do you ever wonder why?
If you ask a freelancer to list the biggest obstacles that they face, then you’ll get a lot of different answers. Some will say “lack of confidence”, others will list “ stiff competition for jobs”, or “gaps between projects” as their biggest challenges.
While there’s some merit to all of those answers, I’m convinced that the biggest obstacle that most freelancers face is the lack of a business mindset. As a freelancer you might not realize it, but you are running a business. This is true even if you freelance part-time. It’s important to understand what running a business really means.
Here are six tips to help you get (and keep) a business mindset towards your freelancing career:
Tip # 1: Your Time Is Your Real Product
Most freelancers are selling a service, which roughly translates to selling your time.
(This is true even if you don’t accept work on an hourly basis. After all, even lump sum projects require that you use your time to complete them.) It doesn’t matter what service you actually provide, if you freelance, then you are in the business of selling your time.
The trouble with selling time is that everyone has a finite amount of time. Yes, you may be able to squeeze a little more productivity from your day through better time management (that’s why the Internet is filled with posts about how to manage your time), but in the end everyone is limited to the same twenty-four hours a day.
Because your time is limited, how you spend it is vitally important to your success. Once you understand that your time is your product, then you can begin to understand that how you use your time determines whether or not you will succeed or fail.
Tip 2: You Must Plan Your Time To Get The Highest Return From It
Freelancers like to be free.
At least that’s what many of them will tell you. “I’m freelancing because I didn’t like the structure of corporate environment.” Maybe that’s so, but as a freelancer you will need to learn to create your own structure if you want your business is to succeed.
There’s a direct correlation between wasted time and loss of income. As you engage in any business activity you should be asking yourself, “What are the benefits to this activity? Does the amount of time that I will spend on this activity outweigh the returns to my business?”
If an activity is time-consuming and provides very little return to the business, then you should either drop it, or realize that you are doing it for personal and not professional reasons.
Tip 3: You Must Plan For Your Freelance Business To Succeed
While accidental success is not completely unheard of, accidental success is so rare that you should operate on the assumption that it will not happen to you.
That means that you’ll need to devise a plan for your freelance business success. No, it doesn’t necessarily need to be a formal document. However, you should have some idea of your business’s goals and direction. You should have a strategy to get there. You should have a plan for your business finances.
It helps to have it all in writing. It still amazes me how few freelancers actually engage in business planning. Do you?
Tip 4: Getting The Message Out
Your freelance business has a message. Your message is what distinguishes your business from all of the other freelancers out there who offer the same services.
The problem is: if you don’t get the message out, then no one else will.
Many freelancers stop short of promoting their business and it costs them. Most of us were taught not to boast as children, but there’s a difference between boasting and marketing. Boasting is often full of empty promises. With good marketing you are just throwing the spotlight onto the truth about what you already know that you do well.
A freelancer with a business mindset won’t be afraid to market their services.
Tip 5: Managing Your Money
The failure to manage money well is the causes many businesses to fail, and the problem is not just limited to freelancers.
Here are a few money management tips for freelancers:
Have savings. A freelancer’s income varies from month to month. You don’t want the first business slowdown to throw you into a tailspin, so you should keep and maintain a healthy a savings account to see you through the lean times.
Track transactions. Keep accurate accounting records. Not only should you accurately record all income that you receive, you should also record any money that you spend on your business.
Remember the taxes. If you’ve come from a corporate environment where taxes were automatically withheld from your paycheck, then you may have a shock coming at tax time. Freelancers who live in the United States will owe not only their regular tax payment, but will also be liable for an additional percentage of self-employment tax.
Tip 6: Get Help
If you need help with any aspect of running your business, don’t hesitate to ask for it. One of the biggest mistakes that a freelancer can make is to try to do too much on their own. There are professionals available to help you with every aspect of your freelance business if you will let them.
- Do you have questions about marketing your business? Ask a marketing professional.
- Do you have questions about bookkeeping? Ask an accountant.
- Do you have questions about . . . Well, you get the picture.
Yes, sometimes getting help will cost you money initially, but often the cost of not getting help when you really need it is even greater.
When it comes to your freelancing, do you have a business mindset?
Laura
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About the author: Laura Spencer is a freelance writer from North Central Texas with over 18 years of professional business writing experience. If you liked this post, then you may also enjoy Laura’s blog about her freelance writing experiences, WritingThoughts.
16 Rockin' Comments
April 11th, 2008 at 3:50 pm
We’ve treated our business like… well, a business since day one. That’s one of our strengths. We have a good background in administration, customer service, accounting, marketing… if we didn’t know how to market, manage our books, promote our business, deal with the customers and handle the paperwork, we wouldn’t have survived. Period.
Laura, this article was a pleasure to read - because it’s extremely well formatted for screen reading. My eyes thank you :)
April 11th, 2008 at 5:56 pm
Thanks James!
I’m glad you liked the way the article looks. (Your eyes should thank Jon too, he enhanced the article’s original formatting.)
I hope that you found this to be more than just another pretty article, though. ;)
April 11th, 2008 at 10:46 pm
A great article!
Another tip might be to remember that while there is an opportunity cost of forgone revenue by chosing to work on your own projects over paying clients in the short-term, those projects can have a direct impact on how succesful you are in the long term.
When I first read your article it made me want to stop blogging altogether, to rededicate my focus onto my freelancing to grow it into the business I want it to be. Yet, writing a comment to respond has given me several ideas to explore explore as future blog posts. I’m not sure whether to thank you or curse you - I’ll let you know in a week :)
April 12th, 2008 at 12:44 pm
Great article! One of the smartest things I’ve done so far is track every single minute I spend on my freelance writing business. I have months worth of data where I can definitely see a correlation between hours worked in month 1 and income in month 2. I am also starting to see a correlation between job search OUTPUT in month 1 and new clients in month 2 BUT ALSO month 3. It really helps me to plan a more accurate budget/income projection.
I am blessed to have my “silent” business partner…husband, who is an accountant. I have a marketing background, too, so we get some things covered. I outsource TONS of graphics and tech stuff though :(
April 12th, 2008 at 2:45 pm
Hi JamieO and Allena!
Thanks for your comments. JamieO, I didn’t want to discourage you from blogging, just to help people put things in perspective. Many people spend hours and hours on tasks that have little or no business relevance.
Hi Allena! Great minds think alike. I also track the time I spend on my business. In fact, I track it by project so that I can see which projects are profitable and which are not.
April 12th, 2008 at 3:29 pm
@Laura - Your post was a frank ‘give it to me straight doc’ dose of reality which everyone needs to hear occasionally. If something doesn’t help your business or have the potential to, why are you still doing it?
For me, that triggered an evaluation of the positive impacts blogging provides to my business (improved writing skills, search engine ranking, networking potential, etc) compared with what it costs - time.
April 12th, 2008 at 6:38 pm
While I agree with 2-5 for the most part, number 1 is way off the mark. Time is never the product. Thinking that way is why most freelancers fail. I also think charging by the hour is unethical. Even accountants and lawyers are starting to understand this.
The real product is value. If I have an idea that makes/saves my client $200,000 a year. I’m charging him $25,000, even if it only took me 5 minutes of listening to have the light bulb go on.
April 12th, 2008 at 8:59 pm
Hi Jeffrey!
Thanks for your comments.
However, I think you’re misunderstanding the point.
I never charge by the hour, but rather by the job. However, I always track the amount of time it takes me to do a job so that I can tell if it is profitable. And yes, I do make sure that I provide value with the work that I do - that’s a core business principle.
However, if I receive a lump sum of $400 for a project that takes me 40 hours, but has high value to the customer - it’s not actually worth my time to do. I can’t stay in business at that rate - even though the work may have had high value to the customer.
By the way, congrats on being able to charge $25,000 for five minutes of work.
April 12th, 2008 at 9:02 pm
Hi JamieO!
It’s always a good idea to re-evaluate our priorities. I’m not against doing things that one enjoys, but I don’t think that we should fool ourselves that something has business value when it really doesn’t.
April 12th, 2008 at 9:43 pm
A. I understand the point. The question now is why would you have charged only $400 for such a value laden project? It’s also not hard to understand the value of the project to the client. You simply ask. Plus, if you are the subject matter expert, you should already have an idea of the value of the project before you submit your fee proposal.
B. I like it too. My clients like it also.
April 12th, 2008 at 10:15 pm
Actually, Jeffrey, I think we’re trying to make a similar point - but from two different perspectives.
From a marketing perspective - value is how you distinguish your business to the customer (but not necessarily the product).
From an accounting perspective however, the asset that you use to create that value is your time.
Of course, there are all different business models, and I really have no idea what yours is. This particular article is geared more towards a freelancer who works alone as an independent contractor - a model that fits many freelancers.
The equation changes somewhat if you decide to hire people, of course.
Thanks for the thought-provoking discussion.
April 12th, 2008 at 10:51 pm
Time is not what you use to create value. Ideas and experiences are - intellectual content. Time is a tool and also irrelevant to the value proposition.
It’s also not a matter of business model. The question here is what to charge for. Time or value. Way too much focus is placed on time as a factor or either fees or value.
If a project takes a long time to complete, and has little value to the client, then the question is why do the work?
If a project has tremendous value to the client, I charge accordingly - irrespctive of the time it takes to complete it. The fee placed on the value is always greater than any fee set based on the time it takes to complete a project.
The last point is measurement. Value has to be defined in terms of dollars and sense. If you can’t measure the value in dollar terms, then there is no value present.
April 13th, 2008 at 5:44 am
@ Jeffrey - Hecklers are never cool.
Laura threw out some figurative numbers, by the way, as did you. Don’t badger her for it.
She’s also been very respectful of your opinion. I suggest you do the same with her. You’ve made your point (strongly) so let it go.
When Laura said she charged a flat fee (which is actually no one’s business to know, so we should thank her for sharing), she clearly put focus on her time and what she does as being valuable.
She’s deciding how many hours go into a project, what goes into a project, who the product is for, etc. etc. That’s smart business.
Charging a ton of money just because seems, to me, to be the unethical route. If a client is going to make $200,000 of 10 words I write (and how do I know that? Can I see the future? Can you?), I don’t think I’d charge him more than the next guy who may only make $200.
To me, I prefer being fair to all without bias and feeling good about the decisions I make, not screwing people for the most money possible.
But that’s me.
Oh, and if value has to be defined in terms of dollars? Wow. I never realized that James, Laura, Jon, Jeffrey and all the people in the world have price tags stuck to their heads or else we’re worth nothing.
Forgive me if I decide not to join in on that theory with you.
April 13th, 2008 at 1:52 pm
Let’s pretend for a second that we are in business to make money James. If the CEO of a multi-million dollar company asks you to write copy for their website(100,000 hits a day), which will be seen and used by millions to educate and make purchases (millions of dollars a year), you’re only going to charge him what?
$200?
And no, I don’t define my self-worth by a dollar sign, only my work.
Consider yourself forgiven.
April 13th, 2008 at 1:59 pm
@ Jeffrey - I had to laugh - I think only peers can fight and have fun doing it. (At least, I have fun with it…)
To be honest, I would charge a similar rate as the guy who wants 500 words to drive traffic. I truly don’t feel right charging more for my work based on the circumstances you suggested. I have corporate clients, and they pay the same as the guy next door (or maybe a little more, yeah), because I need to sleep well at night knowing I did the right thing, not the lucrative thing.
Maybe I’ll get over it one day - there’s hope!
April 13th, 2008 at 2:15 pm
@Jeffrey: Who you are working for should be irrelevant from the calculation of what price you charge for your services. However one arrives at what they believe to be fair market rates (hourly rate, project quote, pulled out of a starfish shaped oriface) for the services they provide, they should apply those rates in a consistent manner. To do anything else is profiteering and an unethical practice.
While you can try to make the case that pricing is not a black and white area of discussion (i.e. pitching a low offer to get a big contract or offering a repeat customer a discount), any way I look at it, gouging customers is wrong. Then again, maybe that mattress full of dirty money makes it easier for you to sleep at night. From what I’ve read of the comments, you’re in the minority on this one for good reason.
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