The hard truths about running a business and how to avoid them
Freelancing is one of the most rewarding things you can ever do. You can be your own boss, work when you want to and have more earning potential than working for someone else. But when you first start out, you'll be fresh faced and potentially naive of many things that could go wrong. Things that you could never imagine would happen to you.
What do I mean by this? Well, people might take advantage and double-cross you or you might make common mistakes like trusting others too much or allowing people to walk all over you. You could even land yourself in hot water if you make the wrong turn. So I've put together these hard truths about freelancing to help warn you about the downsides. And I've offered some helpful suggestions on how to avoid them in future.
Don't worry - these don't happen to everyone. But if you're a nice person and your moral compass is pointing in the right direction, you have to remember that not everyone else's will be. I'm pretty proud of the fact that I've run my business these past four years without resorting to any of the following hard truths you're about to read. I'd like to think I'm part of the majority rather than minority. Whether that's true or not, I'm not so sure. I just hope you'll learn something from this article and avoid any problems.
Hard Truth 1. Other freelancers or agencies will steal work if they think they can
It's a dog-eat-dog world out there. Make no mistake. If another freelancer or agency gets wind of a potential project up for grabs, they will try to win it for themselves. They won't care if you've spent months building up a nice relationship with said client, they'll just want the work and they'll do anything it takes to get it.
The Solution: Keep your cards very close to your chest while at networking events, meetings or even talking online via social media. If anyone asks 'how's business?' say that you're very busy and doing great. I'm not saying you can't trust anyone, I'm just saying you shouldn't. Other businesses will try to steal your work if they think they can, so be wary at all times.
Hard Truth 2. Clients will try to delay payment as much as possible
It's a sad fact but no one really pays within the standard 30 day terms, not unless you've come across one of those rare and fantastic clients who pay on time, without you having to chase. Many people will delay payment as much as possible and some will leave it for months unless you chase them.
The Solution: Set up an accounting system so you know when invoices are due for payment. Keep on top of your accounts and ensure you start chasing clients as soon as the 30 day standard payment period is up. FreeAgent is something we use and it's perfect for keeping things running smoothly. If clients are still slow to pay, consider hiring a debt collector or personal assistant to do your chasing for you. Nothing makes a client pay faster if you've got someone else calling up and chasing for those payments. Another solution is to ask for payment upfront because at the end of the day - you're the person who sets the terms. Just explain that is how you work. Or if your work is more project-based you should definitely request 50% payment upfront before any work begins.
Hard Truth 3. Some clients won't pay at all
It really saddens me that some clients won't pay at all. I have many friends who are chasing invoices dating back over 12 months and there's still no sign of the money that's rightly owed to them. Yes, you can go to Small Claims Court but really - you shouldn't have to deal with the stress involved with debt collecting.
The Solution: When you meet clients for the very first time, listen out for warning signs. If you hear any of the following statements like 'We will have the money coming in soon' or 'We'll be able to pay you once the revenue starts coming in' or 'We're in the process of securing funding for the project' or even 'Money is tight for us at the moment but...', I would seriously reconsider working with them. You want clients who are profitable, healthy and happy to pay you for the services you provide. If you're way past this stage and it's been over four months since you issued an invoice and you've still not been paid, then I'd advise hiring a debt collector or - as a last resort - go to Small Claims.
Hard Truth 4. Your competitors will approach your clients
If you've got a contract that's coming to an end and other freelancers or agencies know about it, don't be surprised if they approach your client and ask 'how things are going'. They'll be wanting to get under your client's nose to see if they're happy with the services you're providing and they'll want to steal the work away.
The Solution: If you want to ensure your client wants to renew that contract or not look elsewhere, just make sure you do an amazing job for them at all times. Keep them happy and well-served and you won't have to worry about the competition. Read this article on How to Keep Clients Happy and you'll be on the right track. And if you lose them? Don't take it personally. You tried your very best.
Hard Truth 5. If you're on to a good thing, people will try to take it from you
Got a great product that's making lots of money? Or a creative idea that's pulling in lots of web traffic and interest from afar? Be aware that people will try and take it from you. People can be very manipulative and conspiring and will stop at nothing to get what you have.
The Solution: If anyone approaches you and shows interest in your 'good thing', ask yourself this - why are they interested? And if they start asking lots of questions? Be very wary about their intentions. You really can't trust anyone in business and you have to question everyone's motives. As you get more experienced, you'll become wiser to people's body language and you'll be able to read between the lines of what people are saying or doing. In the meantime, just listen, watch and learn. And if anyone wants to get you to sign something or join forces, really consider whether it's the right thing to do. If it's beneficial to your business - go for it. Just make sure you consult a solicitor. And if something doesn't feel right? Go with your gut feeling and walk away.
Hard Truth 6. People will turn against you and take sides
When you freelance, you might find yourself in a small pool of creative individuals - either on your own doorstep or via something like Twitter. Be aware that people will backstab or turn against you over the pettiest of things. When competition is involved, you have to expect some negativity.
The Solution: Don't get involved in any bitching or gossiping in your work circles. Keep friendly with everyone and if someone starts to bitch about another freelancer or client? Change the subject. You don't want to burn any bridges or give anyone any reason to stab you in the back. So try and keep your enemies close and ensure that everyone likes you. How do you make people like you? Let them talk about themselves a lot... Make them think they're more intelligent than you are... and let them think their business is more successful than yours. Sounds daft but the best way to charm people is make them think they're better than you. It keeps you away from their radar and out of the firing line. And people might be more encouraged to be nice to you.
And those are just a few of the hard truths about running a business. I hope that helps and if you have any further suggestions, please just comment below.
