Why do freelancers go back to full time work? And how NOT to do that!
There are a number of reasons why freelancers decide to throw in the towel and go back to full time work - and some of them are not bad, even! But let's look at the data and explore these ideas in more detail. Because once you have done the hardest part - getting into freelance or self-employment - it would certainly be awful to have to go back to The Man.
You've gone to the effort of working out an hourly rate and you’ve done all your registrations - but there is more than just having things in order that keeps a business running.
Now that we have just mentioned figuring out an hourly rate, we want to kick off with one quick point - one we will not discuss in too much depth but just to remind you - freelancers are known for not ever really charging enough. It’s very easy to fall into the trap of cutting your prices to win work, especially if you’re new to freelancing. But this is an expensive mistake.
Same with offering discounts for customers you want to win over or have repeat business with, when there is no contract backing it up, of course. Much better to establish a fair rate and confidently quote this rate to clients. If they value quality work then they will pay. If they just want a cheap job, then maybe they aren’t the type of clients you want to attract anyway.
The Big Fear of Failure
An important prerequisite for self-employment is that you can stand on the ground reasonably well with both legs and be brave, and courageous. If you are too insecure or hesitant from the start, it will be harder to work efficiently and sell yourself. This includes being realistic and pursuing a clear goal that you can not be dissuaded of so quickly.
Because in self-employment one is usually a lone fighter. You should be aware of that from the outset. That is not to say that any business relationships that are cooperative and considerate and that you can build on. At some point, a client or a client of a client will exist who will exploit you or not behave respectfully. You should be prepared for such behaviour in case of doubt. So you can quickly put the whole thing under the category 'do not work with them again' and concentrate on other things. If you do not grow a thick skin, self-employment becomes suddenly an anxious subject.
If you do not tackle such through and challenges head on, it can be natural that one thing leads to the other. Because fear leads in the long run unfortunately to demotivation and ultimately a downward spiral that leaves you feeling like self-employment is not for you and this is especially true within the first year. Most of the time, fears arise only when one has the feeling that one does not understand something or loses control. To prevent this, you should ask yourself at the beginning how well you are prepared and how many knowledge gaps there are.
It's best to talk to as many people as possible and read a lot on the subject - actually, good job you are here! Nobody says that you need to know and know everything directly. But the experience of others helps one at least not to repeat stupid mistakes and best possible to hedge your bets and move forward.
Bad Organization (which, also ruins companies too…)
For self-employment, more than in any salaried job, one thing is especially important: stay organized. Unfortunately, you can not rest assured that a team member thinks about important dates and appointments, or you have regular stand-offs for the organization in the team. However, so that you do not lose your head and stay focused, it is important to stay with concrete projects.
That is not too many projects at once, or at least only as many as you can do really well at. When multiple projects run side-by-side, it's very important to set clear deadlines for everyone and plan daily slots for each project. When working in a team, you have to remember to monitor the team to complete projects on time.
A second matter is the organization of your own finances. Badly regulated, this is definitely something that will ruin your mental stability and impact your natural anxiety levels. Part of a good organization is that one project is underway, and that you are already pursuing acquisition for the next if nothing else is yet to come and you can not sit on dry land for too long.
Even if some have already started their freelance activities while still at school or during their studies to earn a little bit of money: freelance as a real activity is something else again. It is a big undertaking and your biggest resource is actually your time - you will forever be the most expensive centrepoint for your business. At the same time, it's not like you have to become a workaholic exactly but a good portion of your time should be calculated for freelance projects. You should also consider that you may underestimate your time calculations most especially in the first year of business.
The Market Is Too Competitive
There are now more and more people who decide to be self-employed. Logically, this also means that there is more and more competition between freelancers in general. For the first-time freelancer, it is not advisable to work in a competitive field. It is best to try to create an individual profile/portfolio, which clearly sets you apart from others.
One should ask oneself what makes your own abilities special. But even if you are very determined and talented - let's be honest - it is still hard to beat the experience of some long-term freelancers. When in doubt, this means starting with hard work to convince customers that they can count on you. A good job usually leads to further commissions and contacts, one has once convinced.
Hard work is the one prerequisite to establish yourself as a freelancer in the beginning. In order to be seen at all, you have to market yourself well. Otherwise one waits for business, like a kid on the Tooth Fairy: forever. Of course, acquisition and marketing can come about through networks, but now it is essential to be digitally well positioned.
Consider posting well-designed profiles and portfolios on all major job portals and professional networks. Create business cards and a good website that are worthy of reminder and clearly state what you offer. Once these basic requirements have been created, you should also think about and write down a long-term marketing strategy. Create a good and reliable brand that consistently shows up where you want to be seen.
Just another reminder you cannot charge too little...
Price and rates are one of the most important elements of success in freelancing. Getting them right can be extremely difficult, especially if you're just starting your own business.
Here are some example factors that can determine the price you can ask for:
- The budget of the customers: you can not always ask the same price when working with small and large companies. If you work for small or non-profit organizations, you should keep the price rate lower than when working with big brands.
- Experience: When you're a freshman, you're expected to demand less, no matter how talented you are. With time and experience, you are able to demand more.
- Customer Expected Profit: When working on a project that leads to a high profit for the customer, you should expect more.
It is important that you negotiate the price with the customer in advance; this will ensure the satisfaction of both parties. Oh, and do not get us started on the importance of a contract…
Conditions were not properly negotiated
Actually, do! The same applies to conditions of cooperation, all of which should be recorded in writing in a freelance contract .The contract specifies exactly what kind of service is required to fulfil the contract and how much compensation you will receive.
You can set the length of an engagement and the responsibility of paying travel expenses and other details. If these are not clearly established, it can happen that the project can not be completed properly, because one does not agree. This is bad news!
Spending is not… dealt with properly!
In order to set the correct price, you also have to worry about the expenses that such a project eats in case of doubt. This is best directly added to the actual hour or product price! Otherwise you will realise too late, that you might not get any profit from a project.
Of course, expenses also include private expenses, insurance or taxes. Therefore, you also include these costs directly in all projects. It is best to always list how much you have in the month in total expenditure and then configure that to what you have to settle every hour.
No liquid budget!
We have spoken a lot about budgeting and sales forecasting on the blog but we can not stress enough how important it is that a liquidity budget is made. While a performance budget shows whether the business is making a profit or a loss, the liquidity budget shows if the money will be enough to cover the month's expenses. To avoid unpleasant surprises, you always have to make a liquidity budget in parallel with the performance budget. Otherwise, in the worst case, money shortages can steal the entire company.
And then it does not matter how profitable the company is. The performance budget is sometimes made annually, but it is not enough when you make the liquidity budget. There is no consolation that you will have enough money in a year if you fall due to lack of money after four months. Therefore, you need to make the liquidity budget month by month. It can be tempting when there is no one asking for a business plan or forecast to not bother - but ultimately, it will help you in some way. We hope we have given you refreshed reasons and tools to be able to ensure this is happening for you in your freelancer or self-employed life!