What is the one thing you know now that you wish you knew when you started your freelance copywriting business? – Kim S.
My answer to this question is something I did already know, but it can’t be emphasized enough. You should diversify your income as much as you can. I use a 30% guideline to help me do this. Here are two tales as to why:
- I worked for a small company “XAY” (not its real name) for a few years and shortly before I left, one client was providing about 75% of the company’s revenue. When that client moved its business to another firm, XAY scrambled to keep the lights on, but they couldn’t get new clients fast enough. Within a few months, XAY closed for good.
- This past fall, I allotted about 115% of my time to one client, thinking that it was okay because it was their new brand launch and it was a finite time. Plus, at the time, it seemed like the only way to keep my sanity. Unfortunately, they didn’t pay me on time. Although it had never happened before, they paid several very large invoices 60 days late, which meant I was broke and stressed out at the holidays. It was my mistake—and one I don’t intend to make again.
I’m not saying that you can’t have regular clients or a retainer with one client. It’s dangerous when you let your business—and your financial health—be tied to one source of income. In fact, I still work with the client who paid me late, though we now have agreements that projects stop when invoices aren’t paid on time.
Several of the larger companies I’ve worked with have supplier contracts stating that the company can’t account for more than 30% of the contractor’s sales. Some may even reserve the right to ask for sales reports as proof (I haven’t signed off on such a request, but I’ve seen it in contract templates). These big companies are protecting themselves, but freelancers can use this as a valuable planning tool.
I use this 30% guideline as much as possible. While one project may need more of my time, I try to make sure I also have several smaller deliverables for other clients. I also always ask for deposits from new clients and, occasionally, I’ll negotiate a deposit with a current client if the project is especially big. I’m still learning balance. One month this spring, I booked almost double the hours I should have because I was trying to keep one client from dominating my time. In retrospect, I should have tried to space out the project timelines better.
Okay, that’s my soapbox. Readers, what about you? What do you know now that you wish you’d known when you started freelancing? What tips for diversifying income and managing clients have you earned through tough lessons? Please share in the comments. (To post a comment, you’ll have to click on the title of the post and then you’ll get a screen with just that post and a comment box.)
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