Why Freelancers Fail

Key Takeaways

along the years I've seen many of my friends try to go out on their own as freelancers or start agencies or studios as designers or developers and the fact is that most of them have given up after about a year or two years they were so frustrated from the work from the client from not being paid enough that they went back to working full-time job for it's somebody else and in this video I want to talk about why this happens in my perspective I've been freelancing full-time for over four years now and I've been freelancing part-time before that and for me it works really well and so I've been thinking a lot about why I find it so fun and rewarding and I enjoy it and I end up you know making a decent living out of this while other people have failed and the way I see it it comes down to two major reasons the first one is that they don't really understand that they're in the service business so if for example if you're a designer a lot of people think well I'm a designer and so I sell my design but actually what you're selling you are selling design services and that word service matters a lot because if you don't understand that what you're selling is the whole package not just the design but also the meeting up with the client the selling of the design to the client all the communication all the follow up the whole process if you don't understand that that's part of what you're selling and you in a way you enjoy doing this and you put effort into doing this well then you're gonna be very very frustrated because everything the client does were expect from you is gonna be very annoying to you and you're gonna hate your client for asking for revisions for calling you up for caring for trying to I don't know tell you what to do or but if you understand that you're in the service business and you understand that you here you're here to give a service that service might be designed development or whatnot but you're here to give a service that mental you know that that two different mental states really influence how you relate to your clients and your business and how they feel from you and so I think that some of my friends were wanting to sell design but didn't want to deal with anything that wasn't designed related and so they were ended up being very very frustrated with all of the client management second part which i think is super super crucial to get right is all the finance of running your own business and that that also I can split that into two things so the first one is kind of let's call it the cash flow management so being a freelancer it doesn't mean doesn't matter if you're just starting out or if you're doing this for years is always kind of a you know up and down business so there'll be a month where there is tons of work and you'll be making a lot of money and then there's a month where nothing happens nobody calls you and you might be you know not doing a lot of money this also happens to me still to this day if you've been following in the vlog then you know that at the beginning of the year kind of like January I was like nobody was calling me and I was kind of stressed out about this now I'm like fully booked and stressed out by doing so many projects so this happens to everybody and if you don't know how to plan for this you're gonna be stuck because if you don't save up money and put money on the side for the months which are low you're gonna be in big trouble from a cash flow position because you won't be able to pay the bills pay rent and everything and so the way that I do with this is I put kind of an emergency fund that usually lasts for three to six months and so I know that even if I'm ever kind of a downturn I have the money to pay myself a salary also I kind of split my bank account from my personal bank account into a business bank account and so the business bank account can always pay a salary to my personal bank account and that's a major kind of a major deal and the second thing saying about the finance is getting the pricing right I think a lot of people kind of price projects based on what they think their clients expect it to be or would they hurt other people charge or what they think is the market rates but they don't end up doing the conclusion or the calculation of what they really need to earn you know to understand what your rate should be you have to understand how much you know what are what is your burn rate how much you have to pay for rent for expenses for your office for your software how many vacation days do you want free or how many you know how much do you want to invest in your pension fund and all that kind of stuff and you have to do a calculation that's actually pretty complicated calculation I'll look for an article describing this and I'll put it in the description but you have to make this calculation to know what an hourly rate you have to to create like a break-even rate that if you charge below that you're actually losing money I think a lot of people just jump into the freelancing word they were like somebody asked them can you do this project for me sure how much they throw in a price and then they do it they don't end up knowing if the hourly rate that they made and even if you don't charge hourly you know if you charge $5,000 for a project but ended up working a hundred hours on that project that does have kind of an hourly rate value and if you don't know what's your hourly rate value you might be losing money and and and then I'm again broke in that that's again that's very very frustrating and so kind of my takeaways are first of all you have to understand that being running your own business as a freelancer or an agency is a people's business if you're not into that either don't go in that direction or find a partner who does like that and enjoy that and kind of partner up with them the second thing is you have to master your finances I'm I'm still getting the this right you know and I've shared this on the vlog that I got my taxes wrong the previous years because I was making more money and didn't pay more taxes so I'm still getting the grip on the finances as well anything you can always learn and improve but you should invest in this and and not ignore this as you know I did in a sense and my friends did and so you got to get a grip on that anyway if you're thinking about starting your freelance good luck with that I think it's really really fun and we but you just gotta get it right it's got any more question please feel free to put them in the comments below and I will catch you guys tomorrow every day [Music]