13 unlucky things that could go wrong when you want to start your career as a freelancer, and how to tackle them
Itâs Saturday the 04th Apr, 2015, so we thought it would only be appropriate to look at those things that could and can go wrong for unlucky freelancers, and offer some solutions on how to deal with them â or even prevent them from happening in the first place.
Everything from tackling money issues to dealing with difficult clients, from illness and stress to working too hard, weâve compiled a list of anything that could turn sour while running your own business. If youâve got any of your own bits of advice you can share, please feel free to comment below.
1. You have cashflow issues
If thereâs one golden nugget of advice I can give you, itâs this â save up a reserve of money before you even think about going freelance. You wonât have a reliable salary anymore, so ensure youâve got some cash in the bank to anticipate those times when clients are overdue on their invoices or unexpected costs arise.
How do you maintain a healthy cashflow? One key tip is to ask for deposits upfront before any work begins and even ask for staged payments throughout larger projects. That way, youâll be able to cover yourself adequately, as you go along.
Another important tip is to make sure you send your invoices promptly, as soon as the work is complete. Get into a healthy, regular routine of sending and then chasing invoices.
You might even consider running background checks on new clients, just to ensure youâre working with a legitimate company. The Gov.UK website offers a very helpful tool on getting information about a company.
Or why not do what I do, and insist on payment upfront for the initial three months of your new client relationship, explaining that itâs simply a cautionary procedure that you use with all new customers.
2. Youâre not getting paid on time
If a client is taking too long to pay an invoice, then most freelancers will initially try to resolve things amicably. But if this isnât possible, the first step is to send a solicitorâs letter requiring payment.
Itâs then pretty straightforward to file a court claim for unpaid fees. However, if your client disputes the claim, the costs of legal action could be high. Also, itâs worth noting that many claims to the small claims court end up going unpaid.
Perhaps a better solution to chase up debts is to join the Federation of Small Businesses, who offer 'no collection/no fee' services.
To prevent late payments in the first place, you could insist on being paid upfront for work, or at least request a deposit plus staged payments on larger projects. It wonât do any harm. Youâre within your rights to set your own payment terms.
For further reading, check out our article on how to tackle overdue invoices and ensure you get paid. Or you could read how to make sure you get paid by clients for some extra tips.
3. Your client goes bust, before youâve been paid in full
Sometimes, thereâs no real warning and a client can go out of business, before youâve even been paid for the work youâve done. So where do you stand as a freelancer? What are your rights for ensuring you get your money?
When your client has gone into liquidation or bankruptcy, you should lodge a claim with the insolvency practitioner or trustee in bankruptcy. This official will sell the clientâs property and use the proceeds to pay creditors. You are entitled to payment from the proceeds, but if these are not sufficient to cover all creditors, your claim will be low in the pecking order.
In the meantime, anticipate the worst case scenario by having a great relationship with your clientâs accountant or accounts department, keeping in regular contact to ensure your invoices get paid on time. If youâve not been paid for more than three months, and three invoices are overdue, consider not doing any further work until those have been paid. Itâs just a simple measure to protect yourself.
Itâs one of your biggest fears as a freelancer, what will happen if the work stops coming in? Prevent this from even happening by having a daily focus on your own marketing.
Make sure you get out there and network to meet other freelancers and agency owners. Tweet and be active on social networks. Send out a regular newsletter to your existing clients to remind them of your services. Try and get your work regularly published on popular industry blogs and online magazines.
Read this article on 100 inspiring ideas to market your business for further inspiration. Or check out this advice on how to generate new leads.
5. You become ill and canât work
When you become self-employed, youâll need to think about what will happen if you canât work because of illness or injury. Because youâre working for yourself you wonât get sick pay, though you may qualify for state benefits.
Apart from having savings in place, youâve got various options available to you, in terms of personal insurance. Thereâs âIncome Protectionâ, a long-term insurance policy designed to support you if you canât work because youâre sick or injured. It aims to replace part or all of your previous after-tax income, and will normally pay out monthly payments up to your normal retirement age.
Thereâs also âCritical Illnessâ cover, an insurance policy thatâs usually paid as a lump sum, where youâll get a tax-free chunk if youâre diagnosed with one of the serious illnesses covered by your policy, such as cancers, heart attack and stroke. Itâs worth noting that common illnesses, such as back problems and stress, are not covered in these types of policies.
Then you should even consider âLife Insuranceâ, which will pay your dependents a lump sum, or regular payments, should the worst happen and you die. Read more about whatâs available if youâre self-employed.
6. You end up with a nightmare client
They seemed nice when you first met them, but clients can sometimes turn into over-demanding, stressful monsters that make your working life miserable. So how do you tackle those nightmare customers?
Well, you should first learn to spot those difficult clients before itâs too late. Then, if you want to get rid of them gracefully and not burn any bridges, then youâll need to read our tips on how to turn business away professionally.
However, if youâre already too far down the line and canât escape, then there are ways you can tackle those difficult characters. Read our tips on how to deal with difficult clients.
7. You forget to save for your tax bill
You know how it goes. Everything seems like itâs going well, thereâs money in the bank and clients are happy. When suddenly, youâre hit with a larger-than-expected tax bill.
As you (should) know, freelancers will be paid gross â before tax â and itâs up to them to make sure the taxman gets the correct amount of both income tax and classes 2 and 4 National Insurance contributions (NI). Class 2 NI is a fixed amount each month while class 4 is a percentage of your profits each year.
Therefore, the golden rule of successful freelancing is to make sure you save enough money to pay your tax and NI when itâs due, and stash it away in a separate, preferably high interest, savings account every time you get paid.
For further help, the HMRC website has a handy Ready Reckoner tool which shows you, depending on your profit, roughly how much money you need to save each month, or year, to pay the taxman. Sorted.
8. You get sued by a client or things go wrong
We all make mistakes. As a sole trader you could be held personally liable for anything that goes wrong on a project. So if you have no adequate insurance in place, you could be in for a nasty shock and risk your entire livelihood.
I canât stress this enough, protect yourself and your business by taking out relevant insurance, such as Professional Indemnity. This will cover you if a client sues you because they are unhappy with the work you have done or advice you have given.
With the above in mind, you should also double check whether you are in fact required by law to have certain insurance policies in place. Because the cover you need to take out depends on the type of business you are, and the industry youâre in. You might also want to have the reassurance of other optional insurance cover.
Whatâs more, if you employ another person, you are legally required to take out employers' liability insurance. You will need cover of at least £5 million and you must display your certificate of insurance where employees can easily read it. You can expect a very heavy fine for failing to have a policy in place.
Most small businesses also take out public liability insurance. Youâll need this too, especially if your customers visit you on your premises or if you do work on theirs. It will protect you if a third party injures themselves, or damage is caused to property because of your business activities.
9. Your key contact leaves his or her position
When you work for a large company, that might have its own marketing department, youâll often have one key contact who hired you in the first place and youâve got a great relationship with. So what happens if they leave and go elsewhere?
Definitely congratulate your contact on their new position and ensure you stay in touch. Offer to help and emphasise how much youâve enjoyed working for them and how youâd love the opportunity to continue doing so. If youâre feeling really brave, ask for an introduction to the replacement. Yes, new people often bring their own freelance stables with them. But it never hurts to ask, especially if youâve got a solid reputation with the company in question.
10. Youâre working long hours and overdoing it
Ok, so it might not seem like such a bad thing to happen to a freelancer, in that youâve got too much work and youâre therefore working all hours. But when youâve got to deal with all the other stuff as well â accounts, admin, business management, marketing, phone calls, emails â it can all become overwhelming and take over your life.
Our advice is to consider reviewing various aspects of your business. First up, are you charging enough? It might be that youâre too cheap and therefore having to unecessarily work long hours just to make ends meet. In which case, review your day/hourly rate and consider charging more to new customers who enquire. Read our tips on how much to charge for freelance work. You should also review your existing clients and look at perhaps raising your rates with them. A scary step, I know. But this article, on how to increase your rates without losing clients, should point you in the right direction.
Next, consider your existing clients in general. Are some holding you back or demanding too much of your time? Could you perhaps let some go to free up time to support more profitable clients? Read our article on how to weed out unwanted clients and grow your business. Or check out our ultimate tips on how to move away from poor quality clients, work less and earn more money.
11. You get burnout and canât cope
âBurnoutâ is a word we often hear in the creative industries, particularly amongst freelancers. Itâs a state of emotional, physical and mental exhaustion caused by excessive and prolonged stress.
Burnout leaves you feeling overwhelmed and unable to cope with simple tasks. It can make you lose all interest or motivation in your work and you might also become helpless, cynical or even resentful. Eventually, you might want to hide under your duvet and never emerge from your bedroom again.
This is not a situation you want to find yourself in when freelancing. Itâs therefore hugely important to recognise the warning signs before itâs too late, and take proactive steps to ensure it doesnât happen to you.
These steps can be as simple as taking regular breaks, learning to switch off and enjoying plenty of tech-breaks. Basically, you have to understand that youâre not a superhero and you need to be kind to yourself to stay healthy. Read our tips on how to recognise, prevent and deal with burnout. And keep your workspace healthy with these clever tips and tricks.
12. Your client isnât happy with your work
When things go wrong and a client isnât happy with what you produce, it can be soul-destroying. If youâve just got bad feedback from your client, then donât be disheartened. There are ways to turn things around and resolve the situation.
Firstly, you need to keep calm and identify the problem. Ask your client lots of questions and listen to what theyâre saying. Re-establish the entire brief and get their requirements in writing, so you can refer back to them in future. Once youâre fully confident that you know what theyâre after, go away and try again. Make sure you keep the communication channels open during the process, and go above and beyond your clientâs expectations to deliver what they want. Read these further tips on how to deal with an unhappy client.
13. You fall out of love with freelancing
You've been freelancing for a long time and you've had plenty of ups and downs. Sometimes, it feels as though there's more bad times than good and just lately, you're feeling a bit fed up with it all.
No one ever said freelancing was easy. It's one of the hardest things you can do. You've got to keep constantly pushing to find more work, keep existing clients happy and ensure you can pay your bills every month. Itâs stressful, thatâs for sure.
It's easy to see why so many people fall out of love with freelancing. But before you give up and start looking for a full-time job, you should reconsider all the reasons why you went freelance in the first place: the chance to be your own boss; have higher earning potential; take more time off (in some cases) and have the ability to say no and choose what work you do⊠Freelancing really can be a wonderful thing.
Read our tips on how to fall back in love with freelancing or perhaps even read how to get the most out of your freelancing life.
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