For now, the general economy is riding high, but that won’t necessarily always be the case. And the feast and famine cycle is a common feature of the freelancer’s life, especially when starting out. These financial uncertainties mean that every freelancer needs to find ways to keep the cash coming in, to keep freelance finances top-of-mind — even when times are tough, if they are to stay afloat financially.
6 tips to keep freelance finances flowing
The first three tips in this article look at what you can do when the economy is in a slowdown, while the next three focus on avoiding the feast-and-famine cycle to keep your business thriving.
Broaden your horizons.
Think in terms of value.
Create a financial buffer zone.
Go beyond the internet.
Create passive income as a backup.
Ready to get your freelance finances flowing? Read on to learn more.
1. Differentiate yourself
Standing out from the crowd might sound like a cliché but every business owner needs to know how to differentiate themselves — especially when company budgets are limited due to an economic slowdown.
Some describe this as finding your unique selling proposition, which again might sound like a tired cliché, but you need to make it easy for potential clients to see why they should pick you above everyone else.
Likewise, identifying what is unique about your product/service is a vital ingredient of your marketing and branding.
Not sure where to start? There’s plenty of advice online that will take you through it step by step or take some questionnaires to help you hone in on what makes your business different.
2. Broaden your horizons
Even during the worst economic slowdowns, the economy is always doing well somewhere. If you’re finding it difficult to find new opportunities it could be time for you to reach outside of your comfort zone and try broadening your client base.
It’s now much easier to research and reach out to new markets. So, instead of just looking locally, or in the United States or wherever it is your business is based, broadening your horizons could open a whole new world of opportunities.
For instance, developing economies like India could provide fresh markets to pitch and sell your products/services to. And governments around the world are keen to explore new ways of promoting growth, with many creating startup programs to encourage entrepreneurs.
3. Think in terms of value
Far too many freelancers think their proposal or their product must be the lowest priced to be successful, but this isn’t the case.
Regardless of the economic circumstances, any serious business owner won’t just be looking at the price you charge, they’ll consider the long-term value you can give to their business.
By explaining how you can add value to their business, a company will understand why it makes financial sense to accept your bid above others, even if it isn’t the lowest.
Similarly, when you’re selling products or services to everyday consumers, you can take the same approach. Pitch your product as a sound investment that is cost-effective over the long term, and you’ll be presenting them with a proposition that makes good sense.
4. Create a financial buffer zone
One of the most common pieces of advice is to put aside at least six months’ worth of money to cover essentials like the mortgage, etc. before starting a business. However, six months’ of money can soon be swallowed up, especially if you are faced with unexpected costs or when work is slow.
But even then, watching your savings slowly dwindling while you find your first few clients, or work is on the downturn, can be a nerve-wracking experience. And seeing your savings diminish can lead to your making bad decisions, like accepting any job at any price just to bring some money in.
To limit the chances of this, create what I call a “financial buffer zone.” This could consist of three to four months’ of money to cover your major outgoings before you hit your savings. Having this money put aside gives you a bit of breathing space while you begin to establish a business, or until the work starts coming in again.
Alternatively, a part-time job will keep cash flowing when freelance finances are tough. And if you’re just starting out in business, the saying, “don’t give up the day job,” is solid advice.
5. Go beyond the internet
The internet is the life blood for most businesses these days. Without a website a business has little chance of being discovered. However, getting consistent traffic can be the biggest dilemma for the freelancer. So, you need an alternative method of driving steady traffic to your site.
An effective means of doing this is to get offline. Go to trade shows, sales fairs, pop-up shops or other local events. Engage with customers/potential customers and take business cards that direct them to your site, and then start building awareness and visibility for your enterprise. This technique also works well during the summer months when people are more likely to be outdoors and less likely to be in front of their computers.
6. Create passive income as a backup
Every business should have a plan B: an alternative means of income to keep the cash coming in. And whether you’re a website designer, writer or fashion entrepreneur, you have valuable skills to the share. Fortunately, with so many methods of earning money online it has never been easier to start developing a passive income.
For example, joining an affiliate network can be a useful way of establishing your expertise while creating an extra income. You might also consider teaching online courses, which has proven to be a popular source of additional income in the last few years with sites like Teachable and Udemy allowing you to sell your expertise.
Use these strategies to keep the money coming in
Working as a freelancer can be a highly satisfying venture — but dealing with freelance finances, especially during an economic downturn or when you’re just starting out, can be challenging. To recap, use these six strategies to keep the money flowing in:
- Differentiate yourself. Define your unique selling proposition and market around it.
- Broaden your horizons. Explore new markets.
- Think in terms of the long-term value you can provide.
- Create a financial buffer zone. Aim for at least 12 months’ worth of savings.
- Go beyond the internet. While having a strong online presence is critical, it’s also important to network and develop local connections.
- Create passive income as a backup. Look into options like affiliate marketing and teaching online courses.
Happy and profitable freelancing!