Creating a Steady Income as a Freelancer
There’s no denying that one of the trickiest aspects when taking the leap from full-time to freelance is the variable workload. Which of course means unpredictable paychecks. This month, we’re diving into a few ways we can help create stability amidst the unpredictable but wonderful nature of being self-employed.
Keep an Eye on Your Client Cal
When you have a full client roster for a few months it’s easy to become complacent, then the majority of your projects end and you’re left scrambling to find new clients. To prevent this, we suggest setting aside time each week to market your services, network or even pitch if your projects are near completion. Market your services across multiple channels such as LinkedIn, Instagram, TikTok and a regular newsletter. Here you can provide case studies and showcase the great work you’re doing to prospective clients. In those few hours each week, make sure you’re networking with potential new clients. We like to send LinkedIn connections to companies who have recently had mass layoffs, start-ups/scale-ups and businesses we see often advertising for freelancers. Then when your projects are nearing completion, you can begin your outreach and discovery calls to fill up your roster again. Doing this will allow you to maintain a steady stream of clients and create steady income.
Create Stability with Regular Payments
Usually, lots of freelancers will charge an hourly rate, while there is nothing wrong with that it can leave you vulnerable with the inevitable ebbs and flows of work. Billing by the hour means that one month you’ll get paid X and the other 30% less even though you delivered as usual. We suggest switching to a monthly retainer for some clients. Choose your most punctual paying clients and propose a monthly fee for X deliverables. This will help create stability in your business and ensure a steady cash flow for living expenses.
Diversify Your Income Sources
While it can be exciting to take on just one client full-time, this could leave you in a sticky situation if they were to end the project. If you can, try to have a retainer client and a few other projects going on or multiple retainer clients. That way if one falls off you aren’t left with no income. You could also consider offering a variety of services or products so you can access a diverse client base. For example, if you’re a graphic designer you might sell templates or a social media manager might sell courses or ebooks. This diversity can help stabilize your income.
Pay Yourself a Fixed Salary
Although it can be tempting to #treatyourslef as your income arrives, it’s crucial to pay yourself a fixed salary each month to combat variable workloads. Doing this allows you to cover your expenses each month and allows you to keep a keen eye on how well your business is doing so you can make adjustments. Any extra money from bonuses or extra projects we like to put to work through investments, so we know we have money saved for the future. When you’re paying yourself a salary it is important to have a separate business account and consistently invoice to maintain a steady cash flow. We love tools like Honeybook to help automate our client flows.
Understanding Your Cash Flow
The first step in managing variable income streams is understanding your cash flow. Track your income and expenses diligently. This will give you a clear picture of your financial situation and help you anticipate lean periods so you can prepare. Take advantage of accounting software or apps to automate this process, we love Lettuce for this. Remember to set aside a portion of your income for taxes, savings, and emergencies.
Diversify Your Client Base
Relying on a single client or industry can make your income streams more vulnerable. Diversifying your client base can help stabilize your income and workload. We suggest reaching out to clients in different industries, offering a variety of services to appeal to a broader audience and networking regularly to expand your client base.
Create a Buffer
This will make you feel a lot less panic during the inevitable slow periods and will help you not take on projects that aren’t worth it. Aim to save enough to cover at least three to six months’ worth of expenses. This buffer can help you maintain your lifestyle and business operations during lean periods.
We suggest setting a monthly savings goal to work towards. To achieve this take note of what you’re spending and cull any unnecessary expenses, it’s also crucial to check when the last time you raised your rates was. If you haven’t raised them in a while then be sure to do so, we have a template here for you to use and you can see what other freelancers are charging in our Rate Sheet.
Budget Wisely
You can’t create a safety net or know how well your business is doing without taking a deep dive into your finances. Budgeting is crucial when dealing with variable income streams. Create a realistic budget based on your average monthly income and expenses. Allocate funds for essentials like rent, utilities, and groceries, as well as discretionary spending and savings. Remember to review and adjust your budget regularly and think about making your savings work for you by investing. We love using budgeting apps like You Need a Budget to track our spending.
Embrace Flexibility
Flexibility is one of the perks of freelancing. Embrace it by being adaptable and open to new opportunities. If a client suddenly increases or decreases their workload, be prepared to adjust your schedule and priorities accordingly. We like to keep an open line of communication with our clients so we can stay ahead of any changes and maintain great customer service so they continue to use our services. If the project does come to an end, be proactive before completion by seeking out new opportunities and continuously updating your skills.
Variable workloads can be a tricky aspect of freelancing, but managed correctly they can be opportunities to propel your business forward and open doors to better clients and bigger things.