Avoiding Common Freelance Budgeting Mistakes With Common Sense

Written by Tom Bentley on January 9, 2017

Many years ago, I wrote user manuals for a gaming software company. Good work, good people, good money. But, after several years, I really wanted to get out on my own, so I could control my time and my work. I had no experience in how to avoid common freelance budgeting mistakes, but I was lucky — I lined up a six-month contract to write documentation for a graphics software company: great products, good people, and great money.

Though sad (and a touch anxious) that I was leaving a good job, I figured, “I’m on Easy Street now. It was easy to get this gig, and this assignment will look good on my resume to get other freelance posts.”

A week later, the product under development fell apart, my new team was disbanded and my contract was cut. Oops.

Starting out as a new freelancer always has some bumps. My particular bump was a sudden sinkhole, which required some creative crawling to get out of — and crawl, I did. I’ll describe that motion a bit later, but first, before you say to the boss, “I’m outta here,” reflect on a few fundamentals to dance right by common freelance budgeting mistakes:

Have Some Cash on Hand

I’ve freelanced for more than 20 years. Many months, I’ve made thrilling thousands, while some months, I’ve made, well, less. Have a seat belt (cash in reserve) in place for the roller coaster of your income. Lucky for me, the job I left paid well, so I had a cushion to sit on before I needed to stand up.

Know What Your Equipment Will Cost You

I’m a writer, so words are cheap, at least equipment-wise. But if you’re a nuclear scientist and you want to freelance out of your home lab, you’re going to run up some bills. Research what your material needs are going to be well in advance of quitting your job, and push that out another 20 percent to take care of surprises. There will always be surprises.

Dodge Frivolous Spending

You probably don’t need a $10,000 Louis XV desk when a decent one from the flea market will do. You can still dream of Paris, but have good fun taking those two- and three-hour staycation trips to all those places close to home where you’ve always wanted to go. Cheap fun is still fun.

Get a Contract

Any gig that pays more than a few hundred bucks should have a contract that spells out the scope of the work, milestones, deliverables and payment terms. You don’t need a lawyer to work up a 20-page encyclical; depending on the work you do, these conditions can often be spelled out in a short Statement of Work (SOW) or even a single-page email.

That SOW will protect you when your client begins to ask for the seventh revision on a project that was specified for two rounds. Scope creep is a killer, but you can head it off with a clear contract.

Communicate With Your Clients

As I said, I wrote software manuals when I first started freelancing. Back then, these were book-length documents, where I’d be playing with a program in development, trying to describe functions and features. From start to finish, it might take months.

Your clients need to hear from you on these projects, and this is true even on much shorter projects. Check in, give them progress reports and don’t be afraid to ask questions; working on blind assumptions with a client means bumping into invisible walls. And, of course: Be courteous, be upbeat and be professional. You’d be surprised how well common courtesy and a friendly tone go over.

Send the Invoice

This one’s easy: Send the invoice when the work is done. Easier still: Thank them and declare how much you enjoyed the work (if you did) when you send the invoice. Bridges are built that way and are often opened for you later to walk with your clients again and again.

Make Nice With Your Network

I told you I’d get back to you on that strangled contract that closed my throat when I first stepped into the freelancing world. After gasping for air for a bit, I realized I left my old job on great terms. I was able to get a quick contract to write a manual, which was followed by another and then another. Soon, I was getting gigs from various sources. Not checking close to home is one of the classic common freelance budgeting mistake.

Make good use of your existing network and expand it: Tell friends, family and business associates that you’re available and eager for work. Don’t discount old employers either, if you did right by them. You might be amazed at how wide those resources and their branches can stretch.

Persist and Persevere

This one is the simplest, but when it seems like nothing is working, it’s easy to forget: Persist. Keep marketing your services, keep reaching out and keep refining your skills. You can consider taking online classes, getting a business coach or branching out from your original discipline.

But, always keep moving forward. That’s where the future lies.

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