When doing a freelance job you love, you’ll eventually need to develop a few skills beyond the services you sell to be a success. Mastering the latest and greatest software code or web design skills is only half the equation.
The other half requires business acumen. It’s the half of the equation that helps you find clients, negotiate contracts and build your freelance business on solid financial ground.
If you want freelance success, you need to get savvy and smart about how you plan to handle the business behind your freelancing projects.
Here are three business skills that freelancers often overlook.
1. Negotiation
This business skill is by far the most overlooked with freelancers than any other. The art of negotiation can be invaluable. It’s not just for sales people. Entrepreneurs gain from it. Parents use negotiation skills at bed times. And if you were smart you negotiated a higher salary at your last position. So, doesn’t it make sense that you should be open to negotiating the terms of a contract or project with a client?
Before adding negotiations to your arsenal of skills, know the lowest equivalent hourly rate you can accept. Because there will be times when you’ll have to pass. This is unbelievably difficult for many people. But when a client begins offering heaven on Earth, such as a lower rate now with promises of higher rates or more work in the future, then that’s your cue to walk away.
To perfect this must-have skill takes practice. Negotiating is not a skill you’ll learn overnight or even from the first 20 clients. Client negotiation is like the prize inside a box of Cracker Jacks, you’ll never know what you might find. Here are some resources to polishing your negotiation skills:
- Getting to Yes: Negotiating Agreement without Giving in by Roger Fisher and William Ury Published nearly thirty years ago, it’s still helping millions of people get what they want. This straight-forward, step-by-step strategy can help with disputes both professional and personal.
- Learn effective methods of negotiation with Roger Dawson. Now in its 15th edition, Secrets of Power Negotiating covers all the aspects of negotiation you could ever ask for including how to recognize unethical maneuvers.
If an online class is more your style, check out Lynda.com for many online business courses, including negotiation fundamentals. Lynda.com does require a membership fee, but at $25 a month you’ll have access to a vast library of online resources to review at your own pace.
2. Financial Record-keeping
For many freelancers, bookkeeping is not their favorite aspect of going solo. But if you want to budget properly, and manage the growth of your business, you need to take control. And gaining knowledge about finance is the best place to start.
Unless you’re a freelance accountant, you’ll obviously need to hire a professional at tax time. But any freelancer needs the basics about tracking income and recording expenses. You should also have an understanding of cash versus accrual accounting, and which method is best for your business.
Record Income. All freelancing income should be recorded for tax purposes. If you didn’t receive a 1099 from a client, the income still needs to be reported. From the beginning, you’ve probably been recording income as you receive it. This is called cash-basis accounting.
Another method to tracking income is accrual basis. Once a project is complete, you essentially bill the client with an invoice. This yet-to-be-received money is considered accounts receivable until the client pays their bill. If you have a large client base, you may prefer the invoice method.
Record Expenses. Of course, you’ll need to track any expenses related to your freelance business. Those expenses may include fees to professional organizations, advertising costs, mileage and gas for business-related travel, cell phone, computer, professional software, and courses or books that keep your skills updated. Also another big expense to consider is health insurance. If you have an in-home office, you may be able to take a home office deduction. Obviously, tracking expenses gives you an understanding of how much profit your freelance business has made for that year.
Taxes. You may be comfortable with your employer withholding taxes from your paycheck to cover your income tax liability. As a freelancer, you’re now paying the taxes. So you’re tax liability now includes your self-employment tax. If you’re unprepared, a freelancer can pay thousands of dollars in taxes the first year alone.
If possible make arrangements to pay the estimated federal and local taxes in quarterly payments. It can help avoid a huge lump sum payment at the end of the year.
Looking to learn a little more about financial record-keeping? Try these free online accounting courses:
3. Sales & Marketing
As you’re beginning to realize, you’re now the CEO and CFO of Joe Freelance, Inc. And don’t forget that it also includes selling your services. Hiring an expert marketing agency isn’t in your budget, so it’s up to you to learn what you need to do to keep those pipelines flowing. While sales and marketing conjures up images of aggressive sales tactics, there’s more to sales than pushy stunts to win client projects.
Some of the things you’ll find yourself doing as chief marketing officer of your own freelance business includes writing your own copy for your website, social media profiles, blogs, pitch letters, or proposals. You may also have a turn at public speaking for professional organizations or conduct market research.
You’re also responsible for developing a marketing plan and creating a portfolio. And eventually, you’ll also need to ask for referrals from your clients.
You can learn the basics of marketing with any of the free online business classes previously mentioned. Also, local community colleges and universities have classes on a regular basis.
There are also thousands of books about the basics of marketing on Amazon. To step up your sales game, try one of the best books out there Secrets of Closing the Sale by Zig Ziglar.
Of course, this list merely scratches the surface of the business skills needed to run a successful and efficient freelance business. What other business skills have you found to be important? What skills are the most difficult?
