The biggest mistakes new freelancers make
Like anyone who has transitioned into freelancing, I made my fair share of mistakes at the start.
A lot of these were working with bad clients (but I feel like that's the unofficial inauguration into freelancing, everybody works with crappy clients.) Some mistakes are a lot more harmful with new freelancers, though. And it's mostly to do with things they think they need to be doing when they start.
They need to take a crappy paid gig on Fiverr to “earn their stripes”. They need a fancy website. They need expensive business cards.
Here are some of the biggest mistakes new freelancers make - and why you shouldn’t make them.
Mistake #1. Not starting like, right now
If you’re reading this, please start freelancing… like, yesterday.
The biggest mistake new freelancers make is they don’t start anything. They have a pipedream of being a freelance writer or graphic designer, but they don’t prioritize time for it. Freelancing is hard, and it takes work. It means scouring job boards and thinking about what skills you have that you could make money online (or offline, if that's your thing).
If you want to start freelancing, starting is the hardest (but most important) part. Start looking around on ProBlogger, WeWorkRemotely and WorkingNomads to see what kind of gigs you could be doing to earn money.
Mistake #2. Procrastinating on unnecessary stuff
Like spending 50 hours making a new website (that nobody is going to visit yet) or starting social media channels/blogs.
You don’t need this stuff to start freelancing.
If anything, it works against you. Sure, you'll have a fancy website, a blog a Twitter/Facebook/Instagram account and a bunch of business cards, but that means you've also created overheads for yourself.
You can’t build an online presence and expect people to come to you. You have to go to them.
I've been freelancing for over a year now, and I've only just put this website up. If you think you need a website to use as an online portfolio, use a freebie like Journo Portfolio until you start bringing in some actual cash to pay for the website.
When you're starting, prioritize your time on things that will get you business, like pitching for jobs. Even if it means using your Gmail address. I still use my Gmail address to pitch clients, and not once has a pitch been knocked back because I didn't have a fancy @yourdomainname.com email address.
Mistake #3. Undervaluing themselves
According to The State of Freelance Writing 2017 report, the average freelance writer earns under $10k (USD) a year.
For those of you playing at home—yep, that’s well below the poverty line.
A big reason for this is freelancers grossly undervalue their services. They take whatever gigs they can find on Fiverr or UpWork (who ironically rejected me like five times when I started, but that's another story).
These sites, or as we call them "content mills", are the equivalent of an underpaid writing slaughterhouse. Writers go in, they work hard on a piece, and then they get paid… $10 (oh, and the content mill takes a cut, so it’s more like $8).
Do. Not. Do. This.
I've linked to a couple of sites in point 1, but here are some websites you can look for jobs that actually pay decent when you’re starting out (sign up for their alerts, too):
ProBlogger (I landed a lot of new clients here when I first started)
WorkingNotWorking (you have to apply here, it's members-only)
Indeed (I’ve also landed some great clients on Indeed)
Here is a list of sites from AND.CO that you can use as well. Just stay away from content mills like UpWork, Guru, and Fiverr. Nothing good ever comes from working on there (and if you do hear a success story, believe me, it’s super rare!)
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Mistake #4. Not having a business savings buffer
A lot of budding freelancers think that going solo means “taking a plunge”.
Well, it doesn’t have to, if you plan it right. Instead, build up a business savings buffer that you can use to do two things:
Replicate a normal salary
Tide you over on months where you don’t get as much work as you hoped for (believe me, it’ll happen)
If you do this, it'll take the stress away from your work, and stop you from taking on crappy jobs because you're freaking out about paying your bills. I built up a buffer while I had my "day job", and any money I earnt freelancing went into this so that I could go solo quicker.
How much? Well, it’s up to you.
I figured out how much I cost every month (bills, food, beer) and multiplied it by 6. That way, if I didn't get any clients for six months (which would've meant I sucked at what I was doing, and I shouldn't be freelancing in the first place), I wouldn't starve or get evicted. But it also meant I could replicate a regular salary, which is how I pay myself now - a set amount every month. I don't stress over monthly income fluctuations, as it all works out in the wash.
See, planning = minimizing risk when transitioning over.
Mistake #5. Not prioritizing your tax bill
When you're starting, and you've landed a couple of jobs, a beautiful thing happens…. You get paid!
Yay. Well, that's until you realise that you now have to take care of your taxes, pension, and salary.
Now, let me preface this by saying I’m in the UK, so you’ll have to research the tax rules for your own country. However, when I filed my first lot of freelance taxes (I mean, my accountant did them, which was lucky because it was making my brain hurt), I was caught out with a bigger tax bill than I expected.
Here is what I did wrong.
I was putting away between 20% - 22% of my earnings at the end of each month into a separate savings account, which was only for tax. (I still do this, but the percentage is now higher). But I only factored in Class 2 National Insurance contributions, and not Class 4.
Big mistake. I underestimated my tax bill by about £1k. Which turned out to be totally fine because of my savings buffer from step 5, but I can imagine this would make or break freelancers who haven’t got a plan.
The lesson here is no matter how well you plan for your tax bill, always plan for your estimations to be out. Otherwise, you’re screwed.
Using a decent invoicing program that automatically files income/expenses is also a gamechanger when it comes to tax time. Balancing out your books at the end of the month/year shouldn't be a massive task (we have to pay for like, a website and a computer… maybe). A lot of accounting programs can also link up to your bank account and reconcile all your transactions for you.
When tax time hits, all you have to do is export an income/expense folder and send it to your accountant (or do your taxes yourself). I use AND.CO and it’s the best. It has a freemium version, and it does invoices, expenses and watertight contracts under one roof.
The AND.CO dashboard where I control all my payments and contracts under one roof
Pro-tip: Speaking of tax, if you don’t have an accountant and you’re already freelancing, remember to keep up to date with tax breaks. Here’s a useful guide on what you can claim.
Final thoughts
Starting off as a freelancer doesn’t have to be scary or mean you’re “taking the plunge”.
In fact, with the right planning (and the right clients), making the move is painless. Staying away from content mills, having a game plan and spending time on getting clients (not building websites) can help you reach your freelancing goals a lot faster.