10 Mistakes to Avoid When Starting a Freelance Business
By Craig Cannings
Are you considering starting a freelance business? It’s an exciting venture that can bring many rewards, but it also comes with risks.
In this blog post, we’ll cover 10 common pitfalls to avoid when starting a freelance business—from having an unclear plan to failing to market yourself properly.
With our advice on hand, you’ll be well-equipped for success as a new freelancer. So, let’s discuss how to make your freelance journey as smooth as possible!
Table of Contents:
10 Mistakes to Avoid When Starting a Freelance Business
1. Unclear Business Plan
Having an unclear business plan can be the difference between success and failure for freelancers. Without a viable plan, it’s easy to get lost in the hustle of finding clients, setting prices, and staying organized. So, before launching your freelance career, create a comprehensive plan that will enable you to reach maximum success.
New freelancers often neglect to set achievable short-term and long-term objectives for themselves. It’s important to not only set ambitious goals but also create actionable steps toward achieving them so that progress can be tracked easily over time.
Consider writing down daily tasks or creating monthly objectives, like reaching out to five new prospective clients each month or launching one new service offering every quarter—whatever works best with your schedule. These strategies will help keep you motivated while ensuring steady growth throughout the year. They’ll also prevent you from feeling overwhelmed by unrealistic expectations from yourself or others.
Develop organizational health:
In our Self-Care for Freelancers course, we recommend planning your “organizational health” by creating strategies for business systems and processes, time and schedule management, work/home life management, personal productivity, and personal development.
All these strategies will contribute to the success of your overall plan when starting a freelance business.
2. Underpricing Your Services
Many freelancers, especially those just starting out, tend to underestimate the worth of their services and set prices too low. This mistake can lead to low-quality work and undervalued time, leaving you with little profit or even none at all. When starting a freelance business, recognize the worth of your offerings and set prices in a way that reflects your value.
Research the industry:
One way to determine an appropriate rate for your services is to research what other freelancers in similar industries are charging so you can see the current rate for each particular service. You should also consider any special skills or experience you have that could make you more valuable than others in the same field; this will help ensure that clients recognize the worth of what they’re paying for when working with you.
Factor in expenses:
Also remember to factor in expenses such as taxes, insurance, web hosting fees, and other overhead costs so that you have a reasonable profit margin after these expenses are paid.
Consider project pricing:
Additionally, it may be beneficial to charge on a project basis rather than hourly; this pricing structure allows clients greater flexibility while ensuring fair compensation for each job completed. It also prevents you from sacrificing quality due to limited time constraints or budget restrictions imposed by hourly rates.
Although you may charge hourly when starting a freelance business, consider transitioning to project or package pricing as you gain experience.
As you can see, grasping the value of your work is crucial when setting prices. In a previous blog post titled “How to Price Yourself as a Freelancer (When You’re Starting Out),” we encourage you to “remember you’re better than you think.” When starting a freelance business, underestimating the worth of your services can be detrimental, leading to financial instability and burnout.
3. Failing to Market Your Business
Failing to market your business is a major misstep. Not only should you be proficient in your craft, but also ensure that potential clients are aware of it. Without a proper marketing strategy, your services will remain largely unknown, and clients won’t be able to find you.
Identify your target audience:
Who are the ideal customers for your services? Once you’ve identified who they are, create content tailored specifically for them. This could include blog posts or social media posts that highlight how your services can benefit them and solve their problems.
Use Search Engine Optimization (SEO):
Additionally, using SEO techniques like keyword research can help boost organic search engine rankings, which will drive more traffic towards your website or online portfolio without having to pay for ads each time someone visits it.
Expand your network:
Making connections with other freelancers can help expand your network, providing access to potential new clients. It gives you access to their networks and opens up opportunities that may otherwise be unavailable if working alone; this includes referrals from current clients as well as potential new ones.
In our previous post, “Five Ways to Find Your Ideal Freelance Client,” we recommend tapping into five direct referral sources:
– Current and past clients who’ve worked with you and love what you do
– Family and friends who know, like, and trust you
– Past employers and colleagues who may refer you to other businesses
– Local connections with businesses in your neighborhood who could refer your services
– Other freelancers and virtual assistants in different specializations who could build a cross-referral network.
Failing to promote your services appropriately can be a costly misstep, so make sure you’re giving your business the visibility it needs.
4. Overcommitting or Undercommitting
Freelancing can be a challenge when it comes to setting the right workload, either taking on too much or not enough. You may find yourself in a bind when you take on too much, leading to missed deadlines and stress.
On the other hand, if you don’t take enough jobs, you’ll struggle with financial stability. Consequently, you must have a good understanding of your own capabilities in order to avoid either extreme when starting a freelance business.
Set realistic goals:
Don’t promise clients something that you know you won’t be able to deliver on time; this will only hurt your reputation as well as your bottom line. Be honest about what you can do within a given timeline so that both parties are happy with the outcome.
Manage your workload wisely:
Additionally, try not to commit yourself too heavily if you don’t have experience in an area yet. It might be best to wait until you feel more confident before taking on new projects in unfamiliar areas.
Also, make sure you’re managing your workload without overbooking yourself. For example, schedule projects ahead of time with room for unexpected tasks or emergencies so you can meet deadlines without sacrificing quality. Accurately estimate the duration of each task and adjust your schedule accordingly to maximize efficiency while avoiding burnout.
Finding a rhythm that suits you is essential when it comes to making too many or too few commitments.
5. Neglecting Self-Care
Maintaining good self-care habits is a crucial component of achieving success when starting a freelance business. Without it, your work will suffer and you won’t be able to perform at your best. Ignoring self-care can bring about major repercussions, including burnout, stress, depression, and physical fatigue.
Get adequate sleep:
One of the most important aspects of self-care for freelancers is getting enough restful sleep. Without adequate rest, you may suffer from decreased focus and productivity as well as heightened stress levels that can affect your physical and mental health. Ensure that you have a good night’s sleep of 7 to 8 hours uninterrupted so you can remain alert and productive.
Take regular breaks:
It’s also important to take regular breaks throughout the day to give yourself time away from work so that you don’t become overwhelmed or exhausted. Taking short walks outside or engaging in light stretching exercises are great ways to get some fresh air while still taking care of yourself mentally and physically.
Set aside time each week for activities that refresh you, such as reading a book or socializing with friends—this will enable you to approach work again with renewed focus. In our previous post, “How to Keep Going in Your Freelance Business (when you feel like giving up)“, we recommend making a list of activities that fit into different categories, like active, creative, relaxing, or social.
Eat nutritious food:
Consuming nourishing meals regularly is an integral part of looking after yourself as a freelancer. Eating nutritious food provides sustained energy throughout the day, while helping reduce stress levels naturally by supplying your body with necessary vitamins and minerals. Nixing unhealthy snacking habits such as sugar crashes from sugary snacks or caffeine overload from too much coffee consumption can help avoid fatigue later on and keep you sharp all day long.
Finally, don’t forget about exercise. Regular exercise is one of the most effective methods for reducing stress levels while increasing overall happiness; plus, it helps you maintain good physical health, which translates into better performance at work too.
Aim for 30 minutes minimum per session, but feel free to do more if possible. Even 10 minutes here and there adds up quickly when done consistently over days, weeks, months, or years.
Neglecting self-care can have serious consequences on any career, not only because we need our minds and bodies functioning optimally, but also because staying healthy means staying productive and profitable too.
6. Ignoring the Importance of Contracts
Contracts are an important part of any business, but many freelancers ignore their significance. Contracts help protect both parties from misunderstandings or miscommunication that could lead to disputes down the line.
Tailor each contract:
Contracts are not universal; they must be crafted to suit the particular project and client. You need to tailor each contract specifically for each project and client so that it meets their needs as well as yours. Make sure you include details such as payment terms, deadlines, scope of work, confidentiality agreements, indemnification clauses and termination policies so there’s no confusion about what is expected from either party.
As we discuss in our post titled “Five Ways to Legally Protect Your Freelance Business,” consult a lawyer for detailed advice on what to include in each contract. Some other elements to consider are copyrights and ownership of ideas.
Be aware of pitfalls:
It’s also important to be aware of potential pitfalls when drafting a contract with a client. For example, some clients may try to insert language into the agreement that limits your ability to seek payment through legal means if they fail to pay on time or breach other provisions in the agreement.
Be sure you read over any proposed changes carefully before signing off on them, and don’t hesitate to consult an attorney if needed for more complex matters like intellectual property rights or international law issues related to remote work arrangements.
Having clear expectations outlined in a written document can help prevent costly mistakes and disputes between freelancers and clients alike—so make sure you take the time necessary up front when negotiating contracts with new clients. Investing just a few extra minutes now can save hours (and headaches) later if something goes wrong with the project or client relationship.
7. Failing to Build Relationships with Clients
Establishing strong relationships with clients is essential when starting a freelance business to ensure repeat business and secure referrals. Unfortunately, many freelancers fail to invest time and effort into developing these crucial connections.
Here are some ways to cultivate healthy client relationships.
Establish clear communication channels:
Before beginning any project with a new client, make sure they understand how and when they can reach out if there are questions or concerns. Agree on a timeline for communication so you’re both aware of what can be expected during the project.
Clients want to feel appreciated for their work as much as anyone else does. Be sure to thank them at each milestone and show gratitude for their continued support of your business by sending small tokens such as gift cards or handwritten notes.
Be honest about challenges:
If something isn’t going according to plan (e.g. an unexpected delay), don’t try to hide it—communicate openly about any issues so that everyone involved can work together towards finding a solution quickly and efficiently without compromising quality standards or timelines.
Stay connected after projects end:
Don’t let those valuable relationships go cold once a project has been completed. Stay in touch with former clients via email newsletters or social media updates so they remember who you are when future opportunities arise.
Ask for feedback regularly:
Asking clients for honest feedback not only helps ensure that all current projects run smoothly but also gives insight into areas where improvements could be made to better serve future customers down the line—win-win!
Building meaningful relationships with clients is essential for the success of any career, so take steps today toward creating long-lasting partnerships built on trust and mutual respect.
8. No Back-up Plan
No back-up plan is a huge mistake for any freelancer. Without a contingency, you’re taking a chance with your freelance career and risk suffering financial consequences.
Diversify your income:
Don’t just focus on one type of project or client; try to have multiple sources of income so that if one falls through, you still have other options available. Consider offering services related to different areas such as graphic design, web development, copywriting, or even virtual assistant work.
We recommend starting with one stream of income first and then adding a second one once the first stream is secure. We also suggest finding more passive income streams, like affiliate marketing or digital products, that earn more money in less time.
Create an emergency fund:
Another important aspect of your back-up plan is having an emergency fund set aside for unexpected expenses or sudden dips in revenue. Try to save a reserve of cash you can draw on in case of unexpected costs or drops in income. These savings will reassure you that if something goes awry, you have funds accessible.
Keep up with the industry:
Staying aware of industry trends can help you act swiftly and judiciously when things take an unexpected turn, so you can capitalize on profitable opportunities. This could include taking advantage of new technologies or shifting gears from traditional services into digital products/services, etc.
Thinking ahead and anticipating potential issues before they arise can save time and money in the long run.
9. Not Setting Realistic Goals
When starting a freelance business, be honest with yourself about your strengths and weaknesses so you can set realistic goals that won’t leave you feeling exhausted or disheartened. Here are some strategies that can help.
Hone your skills:
Rather than attempting complex projects too soon, hone your skills in your particular niche through courses or other resources. Often, our FreeU students experience a burst of confidence when they’ve finished a course and upgraded existing skills or acquired new ones. They feel better equipped to face the challenge of new projects.
Set S.M.A.R.T. goals:
Not setting realistic goals can be a major setback for freelance businesses. Setting achievable objectives that will propel you forward in your professional journey is essential.
An article titled “The Ultimate Guide To S.M.A.R.T. Goals” recommends setting concrete goals that are “specific, measurable, achievable, relevant and time-bound.” Those five elements provide greater focus and an opportunity to reevaluate your goals if necessary.
Above all, as mentioned in the article above, take small steps every day to celebrate little wins and create forward momentum!
Now let’s discuss how investing time, money, and energy to acquire new skills and fresh techniques will give you an advantage over other freelance businesses.
10. Not Investing in Your Skills
Investing in yourself is one of the most important things you can do when starting a freelance business. Failing to invest in yourself can lead to lost opportunities for increased income, more desirable clients, and a flourishing business.
Keep your services current:
Invest in education and resources that will help you take advantage of new technologies and stay up to date with industry trends that could help propel your career forward. Failing to take action and improve can be detrimental in the long run, so don’t let complacency impede your progress.
Find courses, workshops, tutorials, blog posts, and other content that will teach you updated skills. For example, at FreeU we offer Technology Lab Courses in tools like Wix, Clickup, ConvertKit, Kajabi, and more.
Take control of your career:
Investing in yourself and gaining new knowledge can give you an advantage over other freelancers who may be using obsolete techniques or relying on outdated technology. By taking charge of your career growth and seeking out opportunities to sharpen your abilities, you’re better positioned when you start freelancing.
Plus, having knowledge about current industry trends makes conversations with potential clients easier since they know that their time won’t be wasted teaching someone how things work—instead, they’ll get an experienced freelancer who already knows what needs to be done.
Starting a freelance business can be an exciting and rewarding venture. However, it’s important to be aware of the potential pitfalls and ensure that you’re taking steps to avoid them. By taking the time to research these topics thoroughly before beginning your journey as a freelancer, you’ll increase your chances of success.
Start your freelance journey today and join our supportive community to learn the skills you need to build a successful business. Access our resources, courses, and expert advice to get started on the path towards financial freedom!