And Don’t Get Stiffed If You Can Help It

Posted: May 18th, 2009

Photo From ElPayasoCobrador.com

Photo From ElPayasoCobrador.com

The Fear of Freelancers

One of the most frequent worries of freelancers, especially the noobs, is how to avoid the hassle of the delinquent client. After all, not every client out there is honest. Plus, given the fact that a lot of work is done over the internet, a rogue client has ample opportunity to go into hiding after receiving your invoice along with your completed work.

The truth, though, is that if you take a few simple steps in dealing with your clients this will almost never happen to you. In fact, the extra time you take with these before you even start a project can eliminate your need to worry about collections entirely.

Step 1: Screen Clients in Advance

It’s quite tempting to apply to each and every offer that might suit you. Inside any project offer, however, offers many clues about the type of client you may be dealing with. Here are a few things you want to keep an eye out for:

  • Bad grammar or misspelled words
  • Vague project details
  • Offers of profit sharing
  • Any mention of wanting the lowest cost possible

Usually these indicate employers that can be shady and/or try to take advantage of freelancers. While not always the case, they are best left alone.

Another simple but effective method of screening clients is to make a phone call or chat over instant messaging before starting any project. Employers that ask a lot of questions about you, your experience and pricing, then go on to explain the project in detail are typically great potential clients. Sometimes they tell you of horror stories working with other freelancers which is another good sign and leaves the door wide open for you.

On the other hand, if an employer focuses solely on how fast you can do a project and doesn’t mention pricing or attempts to lowball you into working for less, you may have potential trouble on your hands. Best to decline the project. Equally, if they decline a request for you to call or instant message, then this can indicate future trouble too.

Step 2: Get Everything in Writing

It is essential that a project agreement be drawn up for every project that outlines:

  • The exact service you will provide in detail
  • Your date of delivery or milestone delivery dates for larger projects
  • Your payment terms or payment schedule for larger projects

It’s pretty obvious that having an agreement between you and your client, you hold the client to pay by the rules you set. Of course, you have to hold up your end of the bargain as well. If you are unfamiliar with the project agreement, you can check out a sample from the Elance website.

Step 3: Deliver What You Promise

All a client wants is to have a job done the way they want it done and when you say it will be done. Plain and simple. Do this and they will reciprocate the effort by paying you on time or even right away. This means that:

  • Always keep a client in the know on the project status. Never keep them guessing.
  • Sometimes mistakes are made. Be prompt to fix them.
  • Many times omissions are made. Take care of these right away and politely inform if an extra charge applies.

Keep in mind that if a client feels in any way they aren’t getting what they will be paying for, then they will put up a fight and could all of a sudden cease all communication with you leaving you high and dry. Always be on their side when disputes arise and calmly diffuse them. You may even be in the right, but in the end, arguing can leave you without a paycheck.

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Hopefully the above steps can ease your fears on client collections. If you have a good tip that you rely on or any questions though, please drop a note below.

The Common Denominator of Success

Posted: May 5th, 2009

Just recently I combed through a box containing photos, numerous phone number on scraps of paper, souvenirs and a dusty yellow pamphlet I stole from my late uncle Ed titled “The Common Denominator of Success” by Albert E.N. Gray, a successful insurance salesman. At the time, I was working in sales and figured it may come in handy as a bit of motivation whenever I needed it (you can read the full text here).

I read it only twice, but always kept it around like a bible. I thought now was a good a time as any to dust it off and see how it related to me as a freelancer. To no surprise, it had everything to do with it:

The common denominator of success — the secret of success of every man who has ever been successful – lies in the fact that he formed the habit of doing things that failures don’t like to do.

It’s just as true as it sounds and it’s just as simple as it seems. You can hold it up to the light, you can put it to the acid test, and you can kick it around until it’s worn out, but when you are all through with it, it will still be the common denominator of success, whether you like it or not.

So what are the things that successful freelancers do that those who do not succeed do not like to do? The list can go on without an end but I can quickly sum it up here to three basics:

Work Hard

Yes, freelancers have all the freedom in the world when it comes to scheduling their hours. Working two hours a day, though, won’t get you anywhere (unless you already are rolling in the dough). Even those who are a success story had to start from zero and work their tail off to achieve it. If anything, it is important to get into the habit of working hard and burning the candle on both ends if you have to.

Some wise man said you only get out what you put in. The getting, though, usually comes way after the putting.

Work Smart

Common tasks that many freelancers fail to do, including me at one point, is that they do not take the time to organize, analyze and attempt to improve their business. Usually the reason is that it either takes up too much time or creates an additional unwanted expense. The hard truth is that it may cost you income and run you out of business if they are not done. Here are some of the essentials:

  1. Manage your income and expenses or hire an accountant. The expense will pay you back in dividends.
  2. Always be marketing your services, even when work is a plenty.
  3. Find ways to be more efficient. More work done in less time, more often, equals more money in the bank.

I also happened to have posted a series last week which touches on the above.

Network

This is another perceived time waster but the biggest growth as a freelancer can come from taking the time to network and see what others are doing in your field. This offers huge advantages in your career and business:

  • You can seek the advice of experts
  • You can keep up with trends in your industry
  • You can can potentially drum up business and form partnerships with those you meet
  • Your networking friends can be a great influence in your work

If you haven’t jumped on the Twitter boat yet, you are missing what is arguably the best and fastest way to meet others in your field (feel free to even add me).

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Now these are by no means the only three magic beans for successful freelancing, yet it is important to utilize them in your career path to riches. If you feel, however, I omitted an important task for success, please leave a comment below and tell me what should be added to the list.

Maybe It’s Time For The Company Retreat

Posted: April 9th, 2009

I don’t know if you had a job in the past where maybe once or twice a year, your employer would take you to a remote location for a little R & R over a weekend. What usually happens is that it creates a nice relaxing setting for bonding and to hold a meeting or two on ways to improve company performance.

I’ll admit, I never worked for a company like this and probably most of you never have either. Usually these companies are small enough where they can send everyone on their own dime. The concept of the company retreat, though, is important even to freelancers who work the solo gig.

I recently had a little down time in between projects and decided it was a good time  to relax and regroup, but more importantly, really give some thought into my freelancing business. It is important to grow your own business as a freelancer but, too often, we are so caught up with our work that we really don’t give this too much thought. Here are some of the things I went over with my own business and recommend that you do with your own:

Write down the things you want to change

Do you want to earn more money? Maybe you would like to find ways to save time on certain tasks such as accounting. Write down a list of these and note the top five you want to change the most.

Write down a plan of action on implementing these changes

For the top five changes you listed above, write down a specific plan of action on how you will act on each change. For instance, dedicate more time to searching job boards or making cold calls to clients if you want to earn more money. Maybe search for services that can ease the workload for other administrative tasks to free up time for your normal work.

Note that keeping the list of changes down to five or less keeps it at a manageable level. Any more and you risk overwhelming yourself to the point where they are not worth tackling at all… and nothing changes.

The key here is to be very specific on what you will do. Create a schedule and pencil in the times you will set aside for these, if you have to. This is very important since we always make lists of what we want to do, but acting on them is becomes another story.

Act on those changes

Now that you have a plan of action, the most important thing is to commit and act on them. Don’t treat these like the annual New Year’s resolutions (unless you always triumph through these). As humans we are naturally resistant to change, but as freelancers, we need change to grow in our careers so keep this in mind.

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While I didn’t quite get away to that remote location. I found at least taking a timeout for a day or two from your work is extremely productive in helping your freelance business grow and prosper. I’d recommend taking a cue from the small companies and do this on some beach or in the middle of the woods though.

The $100/Hour Freelancer, Revisted

Posted: March 3rd, 2009

Last week I wrote a post commenting on an article by Peter Bowman, What Makes a $125-an-Hour Writer?

He kindly replied back the same day with the following:

Thanks for the pingback on the piece I wrote for The Wealthy Freelancer. Good piece here, but you’re overlooking one crucial thing. You’re talking about raising your rates, but why does a client even need to KNOW your rates. These days, if someone asks me my rate, I say, “Well, I could tell you my hourly rate, but it wouldn’t mean much to you without the context of a particular job. It’d be far better for both of us if I gave you a quote on a particular job.”

If I told prospects I charged $125 an hour (my current rate), many would head for the hills (though most wouldn’t because I come referred to them and they know roughly what to expect). But if they ask, How much for Project X with these parameters?” and I say $1000 because that’s a fair price for such a project and that’s about what they were thinking, we’re in business. If I said $125, they might be thinking – “Geez, times WHAT? 15-20, 25?” But if I can get that project done in 8 hours when it might take another writer 12-15, I’m doing OK.

It gets even more fun when you’re doing repeat projects of the same kind for a client, You may have charged say $1000 before b.c it took you 8 hours, but maybe now, since you’ve done so many, it only takes you 5. Your true hourly rate just jumped to $200.

And none of that is possible if you tell your prospect/client your hourly rate. You want to start crafting your professional persona as that of someone who charges for their expertise, not by the hour. One sounds infinitely more professional than the other, no? And then you effectively sidestep the “price game” that too many freelancers get into and which can only ever end badly. Why? Because there will always be someone willing to do it for less.

And guess what? Another light bulb went off in my head. I realize that for some of my clients, I follow this principle (without really realizing it) while for others, I stick to a strict dollars-per-hour charge. The problem with having your client know your rate is that they expect you’ve worked the hours you say you did.

In order to increase your income as your experience increases, you either have to pad your hours, which is unethical, or increase your rate which clients could view as a rip-off and cause you to lose them. The solution is therefore to charge by the job and keep your rate in the dark as Peter says.

Sticking to the dollars-per-hour method can also limit your business growth as described in Wendy Piersall’s article in Sparkpluggin.com. Here’s a bit of it that should hit home for you:

… until you can get out of the “Dollars for Hours” mindset, your business is not scalable, is completely vulnerable to the economy and outside forces, and cannot grow beyond the 2,080 units you have to sell. [2,080 refers to the number of working hours per year or 40 hours a week X 52 weeks]

Well, lesson learned, as a typical freelancer’s life should be about.

Many thanks to Peter Bowman for his insight and contribution.

Hands Up If You Charge More Than $100/Hour

Posted: February 26th, 2009

When setting your freelance rates, it is hard to overlook the fact that there are others in your field charging $100+ an hour while you ponder setting yours at a fraction of that. So what gives? How do they manage to get away with charging so much and probably earning an income well into 6 figures while you are still figuring this all out?

Personally, I’m not one of these lucky bastards but that light bulb went off in my head after reading Peter Bowerman’s article on What Makes a $125-an-hour Writer. He mentions talent and marketing are key components, which goes without saying. After all, you do need to be the best at what you do to be earning these rates. You also have to actively search out those clients and convince them you are worth the high cost. This takes some skill in selling yourself as well.

Another of his points is that you need to be highly specialized in what you do. The specialist can do a few things quickly and very well as opposed to the jack-of-all-trades who has talent in many things but is not an expert in any one of them.

What drew my attention the most, however, was his last attribute mentioned: speed. It is a no-brainer that freelance experts work faster, but when you combine faster work with higher rates, then you have the secret of the $100/hour freelancer AND you have your marketing tool for attracting new clients.

Say, for example, if you work twice as fast as a freelancer charging half your rate, then to a potential client, there is no difference in the price of the work. You become the more attractive option, however, due to your speed and perceived expertise. I say perceived here because you still have to convince the client you are the expert you say you are.

Here is where we go back to marketing yourself. Peter says:

Developing that marketing sense – which just isn’t that difficult – simply requires the ability to think strategically about a business. Translation? Being able to intelligently discuss with clients issues like strategic objectives; audience and that audience’s hot buttons; features and benefits; and USP (Unique Selling Proposition) [see my post on the USP] – what sets your product/service apart in the marketplace.

The important thing to note, though, is that as we become more knowledgeable and work faster in our profession, our rates need to increase as well, It is very likely we are still working at the same rate as in the past when we were much slower in our work (I was guilty here). The irony in this case is that we are losing money as we become faster in our work, quoting fewer hours as a result but keeping our same rate.

Let’s take for example a project you may have once charged $25/hour for 4 hours netted you $100 in the past. If it now only takes you two hours and you charge the same rate, it nets you only $50 thereby losing $50 in the process. Now, we can’t just set our rates at $100+ an hour and start looking for clients, but rather evaluate our skill level and the speed at which we work THEN raise our rates accordingly.

One simple method is to find a project in the past, calculate the time it took to complete it then divide this result by the time it would take you to complete it today. Take this result and multiply it by your hourly rate to find the increased rate you should be charging. To illustrate:

Time to complete project in past  – 20 hours
(Divided by)
Time to complete same project today – 10 hours
Result: 2
If your current rate is $25/hour, multiply by result which equals $50/hour

Set your rates in accordance to your expertise and focus on that expertise and speed when marketing yourself to clients and you have your winning formula for achieving the goal of being a $100/hour freelancer. You may not be quite there yet, but at each stage you quicken your work pace, your rate can increase accordingly.

I know I’m practicing this as we speak.

What’s Your USP?

Posted: February 24th, 2009

The attraction to freelancing as a career is pretty obvious. You are the boss and you play by your own rules. For those of us that are freelancers, though, we know that this is indeed true but there is a lot of added responsibility to go along with it. First of all there is the stress of managing our own business and income which can overwhelm us at times. Despite this, what keeps us moving on?

The answer is simple. Its our purpose, or in a term related to our careers, the USP, or unique selling position.

USP is common knowledge among the sales and advertising community. It is a sentence or phrase which summarizes your business. Sometimes it includes a mission statement and other times it includes a catchy slogan. The main point of it though defines your business and purpose for the services you provide.

For freelancers, it works the same. It defines your purpose for the services you provide. I can almost guarantee that any freelancer who does not have a USP has either quit or is on their way to quitting in the near future. The reason is that if you do not have “that” reason to keep you going as a freelancer then there is no reason to continue on, especially when times get rough such as a slow workflow.

It is not uncommon to have the “office” mentality when freelancing. We work during the day, sometimes without thinking about it, and collect a check periodically. Our purpose therefore doesn’t lie in the actual work we do, but instead, the anticipation of getting that check.  The work may or may not be great. We don’t care though. We just want to get paid.

The problem with the office mentality is that it diminishes the quality of our work and murders a freelancer’s  business and career in the process. That is where the USP comes in. When the pupose of your USP becomes more than working for a check, then you will see your career grow and those checks will come automatically anyway.

My personal USP as a web programmer is “Honest, Professional Service With Fast Turnaround or Your Money Back.” It may not sound like anything out of the ordinary and may even be a little cliché. I do, however, pride myself on being upfront, giving my clients my best service and have all work done when I say it will get done. You might be surprised on how many previous freelancers some of my clients have had that didn’t have these values that I do. I am also a successful freelancer because of them, too.

With this in mind, what is your USP? Don’t forget this is the reason why you are freelancing in the first place.

Three Simple Steps To Earning What You Think You Should

Posted: February 4th, 2009

One of the trickiest parts of freelancing is getting the project pricing right and earning an income that is expected for what you do. This is quite often a mystery, though. Many freelancers simply feel that if they make ends meet at the end of the month then why worry?

If this sounds familiar, you may actually be suprised by how much you could be leaving on the table. With a few steps, though, you just may see where your income stands and finally put a dollar figure to your work.

Step 1: Know your hourly rate

It’s easy to take a look at a project and say to yourself it’s worth X dollars. Then another project is worth Y dollars. In other words, freelancers have a tendecy to guess. More often than not, too, it ends up being worth more than we thought and we short-change ourselves in the process.

Since freelancers are essentially their own businesses, it’s important to target your income. Once you determine your target income, then you can break it down further into the hours you will have to work and, finally, your hourly rate. Your hourly rate will be the key for estimating a price for any project and reaching your target income.

Resources to help calculate your hourly rate (Freelance Switch):

Hourly rate calculator

Factors to consider when determining your price

Step 2: Always track your time on projects

Tracking time your time serves two primary purposes. First it is done to see if you are spending too much time on a project. The second is using that data for determining estimates in the future. The day will eventually come where you get requests for project estimates that are similar to previous projects you have completed.

Time tracking is simply using software, an excel spreadsheet or even pen and paper and recording EVERY DAY:

1. The project(s) worked on and the exact time spent on each project

2. Other non-income task(s) and exact time spent on those (includes invoicing, searching for clients, etc)

2.5 (It also helps to total the hours upon project completion)

Using time records from old projects can greatly simplify and save the guesswork from determining a fair price for your work since you now have accurate measures to go by. You can simply multiply the time by your hourly rate calculated above to get a project price.

Here are some free online time tracking services as well:

Paymo Timetracker

Slim Timer

Step 3: Always use project agreements

This is the most important part of any project. A project agreement outlines exactly what you will do in a project and exactly what you will be paid. The key to it’s effectiveness, though, is to note EVERYTHING that you will do to complete the project with specific details and no vague statements. This is done so there are no surprises or sudden additions to the work and time required for completion.

Clients have a tendency to add on more work as ideas come to them. Without a project agreement, however, they often think they are to be included as a part of the project, adding to your time. That’s why its important to draft the agreement and sign it along with your client. To handle those changes or additions, another document called a change order is used to outline those changes plus any incremental costs to the client.

Here is a sample  project agreement template and change order template from Elance.