Shifting your money mindset

• 19 Jun 2019
• Merlie Calvert

Today, more people than ever before are turning to the freedom and flexibility of self-employment. In fact, there are over two million highly skilled freelancers in the UK today. But that doesn’t mean freelancing is easy.   

At Farillio, we encourage you to think as not only an individual but as a small business too – after all, knowing this is your business to build, invest in and lead is important for shifting your money mindset as a freelancer. And a strong money mindset is essential.

Here’s how to do it…

1. Create a business plan

It’s the difference between drifting in and out of the feast or famine cycle to building a profitable business. And it’s not something you just do at the beginning; you should regularly revisit a documented plan outlining:

• Your business – describing what you offer, the real problem you’re solving for your target customers, and how big that problem is
• An overview of your market – identify who your paying customers are as well as your competitors
• Your business objectives – your goals and how you’ll stay on track
• A marketing strategy – how will people get to know about you and why will they want to pay for what you’re offering?
• Financial forecast – this bit’s critical. It’s vital that all this actually converts to meaningful figures to keep you in money

2. Manage your finances

Let’s face it, most of us don’t choose to work for ourselves to take on more financial admin. I certainly didn’t! But effective systems mean you can focus on the income-producing work you love.

Digital accounting software like Albert, Quickbooks and Xero make this a lot simpler and quicker.

Block out regular finance management time to issue invoices and check on payments: late payment is a real challenge for many freelancers. If a client repeatedly misses a payment, think about how you can take control of the relationship.

We also recommend freelancers set aside a ‘reserve’ for tax, operating expenses and, ideally, income for two–three months. Look at income-smoothing solutions like Trezeo and insurance cover to help with leaner times.

You may also want to consider registering for VAT. A lot of people get put off by the admin because they look into registering for VAT too soon. However, if your business depends on you acquiring lots of goods and services on which VAT is charged, you’re missing out on the chance to recover that VAT from HMRC. That extra money could be very helpful for your cash-flow.

3. Have the right contracts in place

You need to be legally protected in your work – just as you would be as an employee.  Contracts should include, at the very least, details of:

• The scope of work and timeframe for deliverables
• Your specific requirements for the projects – especially if these will have an impact on your costs and/or delivery timing
• The cost and your payment terms (many choose payment on completion if it’s up to 30 days, but set out a payment schedule if it’s longer than that)
• Intellectual property ownership – vital where copyrights or design rights need to be considered. Be crystal clear about what you own, what you’ll retain ownership of and what you’re creating for the client to own.

Make sure you understand IR35 too. These are the government rules that closely monitor whether freelancers are independent of their clients and not in fact employees in disguise. You need to be aware of the tax implications, and a good contract will help.

4. Build your community

Networking is the part of the job many freelancers avoid. Effective networking, however, is essential for building meaningful relationships, nurturing new opportunities and learning too.

Stay in touch with past clients, attend well-chosen networking events, follow up. Ensure you’re consistent too; don’t just network when things are drying up – you need to be out there at busy times as well.

If you feel like you’re in a rut or stuck, reach out to your network for their experience or ideas. It’s a well-established fact that your network is likely to be the most powerful and knowledgeable support you can find – and it usually comes for free!

5. Invest in yourself

Investing in yourself keeps you relevant and growing. Whether it’s developing new skills in a specialist marketing area, a language or even a business coach. Investing in yourself and spending time on your business rather than constantly in it sets a clear intention: you’re here to get great results for your clients, evolve your service offering and be the best in your field.

If you can, set aside a training budget each year to allocate to self-improvement, and you’ll rapidly see the return.

For more information on resources to build your freelance business and other solutions and ideas, visit https://www.farill.io/