Taking the leap from comfortably employed to independent freelancer is no mean feat.
There are many unknowns that stall even the most confident entrepreneur — including uncertainty about your financial future, confusion over the multi-faceted realities of a solo business, and apprehension over potential hurdles. Battling the recurring fear that ‘this might not work out’ can surely take its toll.
If it’s any comfort, it’s not unusual to feel this way. In fact, 49% of freelancers report work-related stress, with the top two causes of concern being finances.
If you’ve made a move to freelance work this year and you’re in the early stages of your business, there are a few ways to alleviate anxieties related to finance in your new role. Follow these tips to focus your energy where it matters — on wowing and delighting your clients.
Create an Emergency Fund
An emergency fund is advised for everyone, but especially for freelancers who cannot guarantee their income — especially in the first years of operations. By setting aside a dedicated amount weekly or biweekly, you’re protecting yourself in case of unforeseen circumstances — both personal and professional. This is sure to provide an element of financial comfort in case you have to navigate some choppy waters.
Have a Back-Up Plan in Place
While an emergency fund is always beneficial, it can fall short in the face of an unexpected expense. Having a Plan B can give you peace of mind. Research in advance and earmark a lender that prizes transparency and convenience. Also, look for one that can make an online line of credit work for you by offering credit options at various competitive rates.
Navigating an emergency situation is stressful at the best of times; this is especially true in the early days of freelancing when incomings and outgoings are difficult to predict.
If you do need extra funds to see you through a challenging time, a line of credit offered by an online lender can be an attainable way to get access to some much-needed cash flow. It can take the financial pressure off you for the short term, allowing you to get back on track.
Take on Diverse Client Structures
Don’t put all your eggs in one basket. If you lure in a big client, it might be tempting to sit back and rely on that one comfortable paycheck.
While you don’t want to spread yourself too thin — it’s important to foster that all-important work-life balance, after all — it’s imperative that you have other income sources for financial stability and, in turn, reduced financial stress.
A combination of permanent, contract-based clients and one-off projects is an excellent way to shoulder the possibility of major client ghosting, taking their work elsewhere, or even ceasing operations themselves. Keep up the business development side of your operation while you work on projects and continue advertising your services even during times of prosperity.
Keep on Top of Invoicing and Billing
Crafting a robust system for your finances is a great way to limit fiscal anxiety. Having a comfortable handle on your finances empowers you with the knowledge of where your accounts stand.
The unfortunate reality is that not every client will pay on time or accurately. Keeping on top of each payment, bill, and due date will help mitigate stress and make it easier to know who’s overdue, who needs a gentle nudge, and how your cash flow looks each month or quarter.
Dedicated organization will alleviate the stress of the unknown and will allow you to pre-plan, making projections and strategies accordingly.
The Bottom Line
While these tips won’t eliminate all sources of stress — sometimes things are out of your control — they will go a long way towards fostering a series of safety nets, providing you with financial peace of mind.
After all, having a positive, happy mindset plays a crucial role in both your personal and professional life.