You, dear listeners, have been emailing me with great questions about freelancing. And if you have signed up for my mailing list (hint hint), you'll have received a personal reply.
To celebrate the Freelance Transformation Podcast officially turning a year old, I provide expanded answers to the questions that I see the most often.
I share my thoughts on overcoming fear, defining your niche, defining and improving your worth, getting paid upfront, and finding time for both client work and marketing and sales to get past the feast and famine cycle.
Question 1: Overcoming Fear
Thanks for taking the time to respond to us freelancing-wannabes! My biggest obstacle is making the difficult decision to actually start my business. I've been in the IT biz for two decades; I have a professional network; I know a lot about technology; I speak human as well as computer. I'm a smart guy, and I'm sure I could make something for myself. But, I have a mortgage, car payments, a family with mouths to feed, and all of the other obligations that go with being a responsible adult. I have a cushy, Dilbert-style cubicle job. It pays very well, but it sucks the life out of me. I want to strike out on my own, but I'm afraid: afraid of the unknown, afraid of The Client From Hell, afraid of interruptions to our household cash-flow. Afraid of a million other details I can't even foresee.
Are these legitimate fears? Are there other things I should be afraid of? Am I biting off more than I can chew? Is the reward greater than the risk?
It doesn't have to be all or nothing. It's like wearing a helmet when you go biking or a seatbelt when you drive. When things go wrong, you minimize the damage.
First, you don't need to start freelancing full time. Instead, you can moon light, or work on freelancing part time. You might have to work harder for a short period, but then you are in control and can ease into it. And a tip, make sure there aren't any intellectual property conflicts with you current company!
Second, it helps to plot out the worst case scenario. The worse case if you start freelancing is that you don't get clients or don't get the right clients, you blow threw your savings, and you are stressed out! Yikes! But if you think about it, it's a risk that's manageable. If everything does go bottom-up, you still have a marketable skill and can start over or go back to a full-time job.
And Third, do your homework. Plan it all out before you start buying the business cards. Who are your ideal clients going to be, and what is the expensive problem that you are going to solve for them?
For help on starting out, visit: http://www.freelancetransformation.com/start-here
For more advice on slaying your fears, go read “Slaying the fear of starting out on your own”.
Question 2: Defining Your Niche
How do I go about defining a niche? I really struggle with finding out who my customer/client is.
Let's take a step back, why do you even need a niche, or small target market? There are a lot of benifits of finding a niche. It is easier to market because you can focus on one group. You are also quickly recognized as an expert in the niche and because you specialize, clients will choose you over a generalist.
Now, how do you find your niche? My best advice is to take a look back at your own projects:
- What projects did you really enjoy?
- Were there projects when you solved a really big problem for a client?
- What types of projects get you paid well?
- Could you could get more projects of if you focus on that area?
And of couse, go talk to people. Go to events, meetups, or conferences and ask people in the area you are interested in what they are struggling with. You can do the same by connecting to people in your network. Find people in you network or who are friends of friends who are managers in the types of companies that you want to target. Then, set up a time to chat over coffee or beer to find out what types of challenges they face. It is so important to talk to them because the problems are often invisible from the outside. Look for problems that you can offer solutions to.
For more on positioning, listen to: FT012: How to Create Unique Positioning that Makes You the Obvious Choice with Kai Davis and
FT 031: Positioning Your Consulting Business with Philip Morgan
Question 3: Finding the Right Clients
My biggest struggle is Attracting The RIGHT clients. Clients that can pay me what I'm worth.
My biggest struggle is determining who my ideal clients are! Ones that can pay me what I deserve and that is equal to the value I bring, clients who are happy to pay, and don't bring stress and drama into my life.
So what are you worth? First off, worth has nothing to do with a fixed hourly rate. Instead, worth has everything to do with the value that you deliver to a client. If you make the client hundreds of thousands of dollars, and ask $50,000 for the services to get there, of course the client will pay you $50,000. That's how much you are worth, regardless on whether it took you 10 hours or 1,000 hours to complete the service.
But, you wouldn't pay someone $50,000 to cut your lawn, unless maybe that person is using some sort of fairy dust that keeps the lawn the same length, green, pest-free, and weed-free all year, as well as does anything else your heart desires.
You need to ask yourself, "What is the value that I am delivering to my clients?" Your work needs to generate a good return for your client to make it worth if for the client to take the risk of hiring you. Therefore, make sure you are applying your skills to something that will deliver a lot of value to your clients. And to sell it, focus your proposal on demonstrating the value that your solution will bring to the client.
For more on pricing, listen to: FT 042: Demystifying Pricing Based on Value with Jonathan Stark
Question 4: Getting Paid Before Starting Work
My struggle is prospects who can't pay an upfront deposit because of internal payment protocols and therefore, I either shoulder the risk of working before getting paid or I risk losing the business entirely.
Myth: If I don't do the work because I'm afraid I won't get paid, the company will choose someone else. Simply not true. If the client wants to work with you, there is always a way to work around the system. For example, you can start the project later, after the big company has done all the paper work required to pay you up front.
Do not accept only being paid after the project is finished. It is a huge business risk for you to do the work and not get paid up front, especially as a freelancer with only a few clients. You can also arrange a 1/3, 1/3, 1/3 split where you are paid 1/3 at the start, 1/3 at some predetermined milestone, and 1/3 once it is complete. However, we don't recommend the 50/50 split. If there is any delay, the project can get extended for a very long time and who knows when you will see 50% of the pay!
For more on payment schedules, listen to: FT046: Getting Paid on Time and Every Time with Julie Elster
Question 5: Building Recurring Revenue
My biggest struggle is predictable ongoing revenue to replace ad hoc work at an hourly rate.
This is all about breaking the feast and famine cycle. During the feast, you are busy with client work and not spending as much time marketing yourself and finding new clients. So once that current project ends, there is nothing in the pipeline because you didn't spend time looking for new work.
This is where the recurring revenue models come in. There are two models. First, you can charge a monthly fee for ongoing service such as a maintenance fee for a website or making recommendations based on website statistics.
Second, you can nurture your current client relationships and continue finding ways to develop services for that specific client. For example, you build a website for a client and their sales increase! High five! Wait, that's not the end. Now, you build a good relationship with the client and start to suggest ways to improve their results further. You will have to spend your own time, unpaid, finding these new services for your client, but it's worth it since you can sell the new services and will have a recurring client. And rememer, you are the expert. You have to tell the clients what you can do for them because they may not have known that these other options exist.
To find out more about recurring revenue, listen to:
FT054: How to Transition from One-Off Projects to Recurring Clients with Tommy Joiner
Question 6: Finding Time to Promote Yourself and Getting Client Work Done
My struggle is finding and taking the time to develop new clients while not hindering my production output. Especially while projects are flowing, I've thought about hiring help, but I need all the income I can get in times of abundance in order to not feel the financial stress as much when business is slower.
Red flag: You probably aren't charging enough for your work if you feel it is impossible to hire someone. Start charging more!
Assuming you are charging market rates, how can you manage the projects while marketing your services to potential clients? Basically: allocate time to marketing and sales every week!
I know it is tempting to spend all of your time on "billable" client work. But if you do, you are burrowing against the future. Future work will end up drying up because you haven't put in any time now to maintain or find new clients.
A few other tips:
- In times of abundance, do not take on too many projects
- Learn how to say “No”
- Learn how to qualify leads
- Learn how much work you can actually do and how much work you need to do to sustain you
Myth: The more you work, the more money you make.
Do you have a question?
Ask Matt at email@example.com