Freelancing is trendy these days. You don’t have a boss looking over your shoulders all day, you can work at your own pace, and that gives you a lot of freedom to live the life you want. That’s awesome, right?
Right. In theory, at least.
Except that, in practice (and according to the questions we receive), being a freelancer is not always that easy.
You don’t have a boss, but clients don’t pay that fast, and you need to keep finding more of them. So you need to do your marketing and communication yourself. Plus, all the administrative fluff, the invoicing, the business planning, and all the things you have to do that don’t relate directly with your technical expertise. Long story short? Not that easy.
Rings a bell?
Yes. I know. Behind the scene, being a freelance professional can suck.
There’s some good news, though. Many of the obstacles you face flow from your freelancer’s mindset (as opposed to an entrepreneur’s mindset), which means you have some very significant margin of maneuver to act and make a big difference for yourself. Not in six months. Now!
In this article, I am going to share some business coach secrets that are easily actionable (always a good start, uh?). Pinky promise, they’ll help you stop screwing your earning potential as a freelancer. Better than that, though, they’ll also make you switch from being a freelancer with a job to being a business owner or entrepreneur with a business that generates value for you.
Does that sound good?
Awesome. So, without further due, let’s dig into the topic.
Ten mindset traps: let’s clarify.
Before I get into the detail of the ten tips you can use to stop screwing your earning potential as a freelancer, let me clarify something important: mindset.
Why am I talking about mindset development here? Because mindset is a critical element that conditions the way you see things AND the way you behave. Hence, it also conditions the way you work on a daily basis, the way you create value for your clients, and the way you create value for yourself as a business owner.
Did you notice how I just called you a business owner and not a freelancer? That’s a mindset thing too.
Seeing yourself as a freelancer implies that you see yourself as a working force for hire and that you have time and skills to sell to whoever is willing to pay for your time and skills. Period.
Being an entrepreneur or a business owner, however, implies that you are aware of the notion of value creation. For your clients, but also for yourself. Why? Because instead of selling their time and skills, entrepreneurs create value for a price that’s totally decorrelated from the time they spend on it.
Ultimately, entrepreneurs build systems that create value for themselves down the road, and they realize that systems become assets that can be sold now, and later, with a lot more money in the pocket down the road than if they just sold a few hours of their time in a job format.
I’m trying to provoke you here because the point is critical. Can you see the difference?
Great. Now that we speak the same language, we can get into the traps and related business coaching tips I promised!
Shameless plug, though, this article is part of a series of articles on entrepreneurship and income boosting for freelancers, and it works alongside the various video (and tool!) self-coaching modules we’ve designed to get business owners just like you to their next level. So please give them a look and see for yourself!
Trap #1: Selling your time is a bad idea
The first mindset trap I absolutely want to mention in this article relates to what you sell to your clients. Spoiler alert: it shouldn’t be a question of hours. Or days.
That’s a typical mistake because, well, knowing what an hour of work costs and applying a thirty percent markup is an easy way to assess how much you could legitimately expect for that amount of time. Except that charging your clients with an hourly or daily rate sends an awful message.
Yes, it shows that you are flexible.
But no, it does not suggest that you are valuable.
What’s flexible can be adjusted and replaced. Do you want to be adjusted or replaced? No, you don’t.
The alternative is to sell value, which clearly has nothing to do with the amount of time you spend on whatever you do.
Let’s say that your job is to enter data in a spreadsheet and you have found a way to automate data entry in a few minutes. Should you be paid in minutes? Or should you charge a recurring monthly fee because you have found a way to get the thing done routinely?
Here is another example (borrowed from a client of mine). Let’s say you are a developer, and your job is to code whatever the client sends you. Would you rather be paid for three days of work at whatever daily rate? Or would you rather be paid on a retainer basis, every month, because on top of coding you are also capable of analyzing the coding requirements in the first place and making pre-dev suggestions to optimize costs and improve user experience simply through anticipation?
With the second situation, your value is not the time you can spend on coding. It’s the difference your time (whatever the time) makes on your client and their clients. And that’s worth a lot more than your hourly or daily rate.
Another factor to take into account is the fact that you only have so many hours in a day. Therefore, charging based on time means you are capping your own earning potential by yourself!
Time is more important to you than to your client. Hence, while you need to control how much time you spend on things, time is not a good charging measure. Value is the measure. Leverage it.
Repeat after me: I know my value, I know my value, I know my value.
Perfect. Let’s move on.
Trap #2: Lowering your prices does not create more value (for you)
Related to the first trap is the idea that lowering your prices to create more value for the client is rarely a good idea. Why? Because reducing your pricing means that you directly impact your margin, which cuts your profits and affects your investment capacity.
Now, you can reduce your prices if you find a way to reduce your costs through automation or better sourcing, of course. But just reducing your fee without any counter-benefits for you is a business killer. Period.
The previous point (charging based on value rather than time) is relevant again, by the way. If your price reflects the value you provide, then you can always negotiate, giving the client a lower value for a lower price.
Trap #3: Forgetting to play the upsell card costs you money
Third typical trap: selling once vs. selling again (and again, and again).
We see a lot of freelancers and consultants – some of whom try to sell us stuff, by the way. And guess what their end game is?
Well, just what I said: they want to sell us stuff. And then, they move on.
Now, if you think about it, what’s the most challenging part of your business? Finding clients or producing what you sell?
Finding new clients, of course. So, once you have a client, why not try to sell them again? And then again? Why limit yourself to selling them an article, or some training, when you could sell them articles every month (on a retainer basis), or a few training workshops every year?
These guys are already your clients, so they already know you and don’t need to be convinced again – why not nurture that relationship?
Also worth noting, thinking in terms of upsells is a good way to create more value for the client and to be more affordable whilst selling more.
For instance, selling your services for $1.500 per month could make you $18.000 per year, right?
Now, imagine selling a somewhat similar presentation for $1.250 monthly (with fewer benefits, because we don’t just do discounts) topped with an annual team workshop worth around $6.000 (that’s your upsell) to compensate for the work you won’t be doing yourself as part of the retainer. I’ll do the maths for you: you’d be making $21.000 a year.
That’s more money, but that’s also easier money because the business model reduces the friction for the client who wonders whether to sign or not because of the price. The lower barrier to entry creates a no-brainer for the client without impacting the client’s value perception. Still, the workshop later in the year creates even more value for the client, and it largely compensates for what you don’t charge monthly.
So. Selling based on value rather than hourly rates. Then, avoiding to cut your prices for nothing. And, finally, selling more to your existing clients instead of starting over. Can you see the difference so far?
Trap #4: Not taking the time to know your ideal client
Let’s continue with the next trap: freelancers never know their clients enough. And they don’t have a clear idea of who their ideal client is either.
There are two points to keep in mind here.
One – knowing your client means you can adapt your offering progressively and offer upsells whenever something shows up. Again, keeping the client around is more manageable than finding new ones.
Two, your typical client is not the same as your ideal client, and that makes a big difference in terms of earning potential.
Your typical client is the client who pays your bills at the moment, but they are not necessarily your ideal client.
For example, your typical client may pay your invoices project by project and as they deem fit. In contrast, your ideal client could work on a retainer basis charged automatically on their credit card.
Your typical client might have a limited budget (frustrating!), and they are checking every hour your spend on things. However, your ideal client could be a larger company with at least fifty percent more budget for their projects because they understand what value you create for them.
Again, the difference is huge because having no ideal client means you can’t build anything. Freelancing is a job that pays as it pays, but business development is reactive rather than proactive. However, your ideal client gives you a way to build a very targeted offer. And a targeted commercial strategy that gives you some investment potential and some return on that investment down the road.
Conclusion? Know your ideal client and sharpen the value you provide. You’ll love the results. Just saying 😉
Trap #5: Thinking that only ‘you’ can do the job.
Next! The freelancer’s mindset typically makes freelancers work as if only they could do the job. But guess what?
First, you have competition, so someone else can do the job for a cheaper price. The only question is, why aren’t they doing it cheaper for you, instead of stealing your clients?
Second, if you think that your role is to do everything yourself, then you are telling me that freelancing for you is merely a job, but it’s not a business.
And that tells me you are totally missing the big picture.
Your role is not to do everything. It is to create value for your clients and to organize your capacity to do and deliver. Which includes delegating and making sure that you are in the business of delivering, not doing sh*t.
Let me say that again.
Your role is to develop your business, not as a job for yourself, but as a delivery system that can create value for more clients while you focus on organizing. And playing golf with the clients while the managers and the team are busy delivering.
Trap #6: Underestimating the power of process development
This point flows from the previous ones: freelancers are usually so busy getting the work done that they don’t think in terms of process. And that’s a mistake because processes are very (very) useful if you are looking for ways to boost your earning potential.
One, processes can be a matter of automating routine tasks, which helps produce value with less time, energy, and capital. Yes, building an automation process takes time in the first place, but then you don’t have to do anything. Emails get sorted, invoices get downloaded automatically. Reminders are sent, and appointments are booked automatically in your calendar. Blocks of code are available in a database, so you don’t have to write them again. Your imagination is the limit here.
Two, processes are also a matter of standardizing how you do things so that someone else can get things done by following the guidelines you have put into place. There, processes reduce the risks created by team autonomy, and it creates a sense of security for those who have to do the work for you. That’s a win-win.
The point is more important than you think, and we’ve seen a few clients lose a lot simply because they’d never thought in terms of process development.
Trap #7: Thinking that freelancing is a job
The next point is very close to the previous ones, I know, but I wanted to make sure things were crystal clear.
Freelancing should be a business, and that business should be paying for you and creating value for you.
Remember the point I made at the beginning on the difference in mindsets between freelancers and entrepreneurs? There you go. That’s exactly what I’m saying here. Freelancers focus on getting stuff done, while entrepreneurs turn stuff that needs to be done into a business that rolls.
A couple of clients who went through SWOT assessment workshops with us realized that, despite making a 2,5 million dollars turnover annually, their income had reached a glass ceiling. And there were two reasons for that.
One, they were mostly working on their own and considered that only they could do the work. So, in the end, they had no replicable process and couldn’t rely on anyone to complement or replace them if needed.
Two, well, I’m sure you can guess what I’m about to say. They always worked with a job mindset and that never pushed them to think bigger. They never thought in terms of team development, and they never worked on building an offering (and organization) they could scale. So, they never scaled.
Conclusion: don’t try to do everything. Focus on turning your business into an asset that works for you. Period.
Trap #8: Work INTO their business (rather than ON their business)
Being a freelancer is usually seen as a question of getting things done for the clients, as I just said, and that means something very simple. Freelancers focus on working into the tiny details of their job, but they don’t take the time to work on their business.
Look, it’s simple.
Doing your typical freelancing work is working INTO the thing. But it’s just time and energy-consuming, and it doesn’t turn your work into an asset that works for you.
However, spending some time ON building a better offer, ON building a precise picture of your ideal client, ON defining a targetted commercial strategy, or ON learning new entrepreneurial skills is all about working ON making your business stronger and ON turning it into an asset.
It goes without saying – booking an online business coach to get yourself challenged and think outside your own box is also a very efficient way to start working ON your business.
Makes sense, right? I know! Still, freelancers rarely do that, and that’s killing their earning potential. If you’re wondering how to start working ON your business, start right there!
>>Read also: 30 reasons to start working ON your business.
Trap #9: Having no idea of what your ‘business’ could be worth
Still with me? Great.
And the next trap that typically screws your earning potential as a freelancer is… having no idea what your business could be worth.
Okay, let me elaborate on that. It’s important.
Note that I wrote “what your business could be worth”, with the word ‘business’ in italics, not “what your job could be worth”.
I’m back to the idea that freelancing should be a matter of creating a business asset that works for you, not a job that burns your time and energy.
Why is it important? Because turning your freelancing activity into a business with processes and a delivery capacity that’s independent of your own personal time means that your business could be sold to a bigger fish who would be looking for a system worth investing in to make money.
Can you see why that’s relevant here?
Long story short:
Exactly. Golden buzzer.
The question is, can you imagine doing the same with a freelancing ‘job’? No way. So, well, avoid that trap. Think about what your business could be worth if you started working ON it a little more?
Trap #10: Having no plan for your business
Last trap in line? Freelancers usually have no plan for their business.
That makes sense because, as we’ve said before, the priority for freelance experts is typically to focus on either delivering projects or looking for clients. Still, the question is essential to ask: what’s the plan?
Where do you plan on being three years from now? How about five years?
What kind of investment will you need if, let’s say, you need to do some marketing or online advertising at some point? Do you plan on hiring someone to help with routines, or do you plan on doing everything yourself forever?
As dull as it sounds, having a plan for your business can also be a matter of working on a business plan. Which by the way is a great way to tell a story about what you do and to elaborate a business model that rocks.
I’m not going to elaborate on how to build a business plan in this article however we’ve created some free resources on the matter, so please follow the link if you are interested.
Regardless, my point is this one: freelancers rarely have a plan for their business, let alone a business plan, and that also screws their earning potential. The rest is up to you!
Takeaway: Never forget that, ultimately, you only get what you tolerate!
To wrap up, the takeaway of this article is clearly that your mindset is critical. Deciding to think like a business owner will boost your earning potential. However, keeping a freelancer’s mindset will keep you in a job loop that’s clearly a handicap from an income perspective.
Again, freelancing should not be a job, it should be a way for you to create value for yourself, and turn business into an asset that works for you. Not the other way around.
You only get what you tolerate, though, so the decision to act is definitely yours! If you are interested in sharpening your entrepreneurial skills, we’ll be happy to support you – coach yourself and thrive!
