Being your own boss, traveling, and being able to manage your time are just some of the many advantages of freelancing. However, having a stable income is often a challenge for many freelancers, we’ve come up with tips to help you better manage that challenge.
Construct a cash flow projection.
Having a visual representation of your expected income, projected income, as well as operating expenses, is the first step to stabilizing your income as a freelancer. A 3-month, 6-month, or a 12-month cash flow projection will give you a quick view into your potential future. It will allow you to analyze your financial habits and make necessary adjustments.
A cash flow projection might sound somewhat restrictive, however, this step will not only increase your security but also show you what you need to make to live the lifestyle you want.
Actively seek new opportunities.
Active job search is quite obvious advice for freelancers. And yet, it’s often disregarded. Why? The time spent working on assigned projects can be very time-consuming, plus communication with clients, invoicing possible revisions, and other administrative activities. However, it is important to continue to seek new leads and clients as you are working on projects. It is advised to spend 10% - 20% of your time on new client outreach. Sure, you may have regular customers whom you can count on for referrals, but that can vary from month to month.
Incorporate recurring income into your pricing structure.
Building a network of contacts as well as acquiring large projects and ongoing work can take some time. Setting up a recurring revenue model as your stream of income can be one of the best things you can do for your freelance business. This will not only help you create a built-in salary but also help your clients budget your services into their own expenses.
Here are some steps you can take to help you set up a recurring income stream:
- Establish project milestones and have clients pay you in increments during different stages of project completion. For instance, instead of getting half up front and the rest after, break payments up into chunks (based on project duration) so you get paid more regularly.
- Prevent inconsistencies with retainer agreements. If you have clients who reach out to you for small projects regularly, consider putting them on a monthly retainer. This way they can budget your services into their business expenses and you won’t have to remember to bill them for every little thing. This step will reduce the pressure to win new projects all the time, allow you to build genuine relationships with your clients, and customize your services to meet the specific needs of the client.
Self-employment requires lots of experimenting and searching for the best solutions, but, as a result, this is what eventually will help us get closer to financial stability.