The mistake that’s ruining your freelance money goals
There’s this phenomenon that drives me batty. I’m not sure if it’s caused by the rampant personal development market based around money blocks or just ignorance, but here’s what happens:
- Freelancer/entrepreneur decides they want to make more money
- They set a goal of $X/month
- They bust their asses trying to reach the goal and…fall short
- They can’t figure out why they fell short, so they beat themselves up and work even harder
- …because they never did the math and realized that reaching that dream income is physically impossible
Here’s the thing: there’s only so much time in the day.
We all know that. And we all know we can only work so many hours or create so much in one day. But we don’t often think about that as it relates to our income. Here’s a few things to remember:
- If your business is service based, you should probably plan for having 15–20 billable hours a week. (Setting your income goals/hourly rates based off of a 40 hour work week is common mistake #1.)
- If your business is more consulting oriented, and you only bill for time spent at appointments and getting to/from appointments, you should base your hourly rate off of having 10–15 billable hours a week, unless you are an extreme extrovert.
- If you base your rates off some other metric, then you still need to make sure it’s reasonable by doing some cold hard math.
For example: I don’t charge hourly for my writing services, I charge per word (partially because I write so fast that per-word tends to come out better for me, even factoring in for email and editing time). I know that 2,500 words per day is pretty much my absolute max output. My current per-word rate is .25 so 2,500/day = $625.
What a lot of people would think here:
$625/day x 22 workdays this month = Holy crap, I can make $13,750 this month! I’m gonna be stinkin’ rich!
What is actually the truth here:
If I write 2,500 words/day, no matter how long it takes me, I don’t usually get much else done. I have maybe an hour of work left in my brain before I’m totally fried. In that time, I need to:
- keep my client funnel filled by following up with previous clients and potential clients, and pitching new potential clients
- work on my marketing by writing blog posts & scheduling social media shares of said blog posts or of other useful content
- create this week’s newsletter and schedule it
- edit any pieces (for me or for my clients) that need edited
- work on other projects that keep me feeling creatively fueled, like my Kickstarter or my novel
- answer emails from readers and potential/current clients/customers
- send invoices and track income/expenses
- work on the content for any products and/or courses I’m currently creating/running (and for courses, answer participant questions, etc.)
And honestly, I’m probably forgetting things off this list. I could theoretically make that much money a month if I did nothing but work on client work all day every day. But if I did that, here’s what would happen:
- I wouldn’t have any product income coming in
- I wouldn’t have any class or course income coming in
- I’d be at the mercy of my current clients and when/if our work together came to a close, I’d be left without any interested parties to help fill that income gap (because I hadn’t been pitching or marketing)
- I’d be burning out because I wouldn’t be working on anything that wasn’t just for me or my creativity
More realistically, I can plan on working at max capacity for billable writing three days a week. That puts my freelance income cap at my current rate at $7,500/month. That’s gross, not net — it doesn’t take into account taxes, etc. It also assumes I have 2,500 words worth of client work to write, three days a week, every week of the month, which I normally don’t.
And remember, 2,500 is my absolute max. A much more comfortable number is around 1,500–2,000 (which brings that monthly number into the $4,500–6,000 range), and most months that’s closer to what happens. After all, I want to have time left over to work on my business and my other projects.
If you look at your rates this way, taking all of this into account, I’m betting that creating the fabled five figure month isn’t possible. And hitting much more modest income goals might be impossible, too.
“So that’s why I keep falling short. What do I do now?”
Did you do your own math and realize that, oh shit, your dream income is actually-factually out of reach? Here’s what you can do to fix that:
- Raise your rates. Obviously.
- Diversify your income streams. Make products, if you’re used to offering services, or vice versa. Experiment with sponsorship — Patreon or Passionfruit can help. Do a class (a one-off event people pay for) or a course (a longer, ongoing learning process). Once the live events are done, package them into self-study courses, like Emilie and I did with our Multi-Passionate Branding course.
- Start delegating. If you look at the “all the other things that go into running a business” list above, you’ll notice that several of those items can be delegated. You can get started without hiring an assistant by delegating basic things like researching by using services like FancyHands (although it’s worth noting there’s a significant quality difference between that and working with a full-fledged assistant; it’s up to you to determine if the trade off is worth it). Here are a few more tips on delegating. Of course, delegating frees up more of your time, but it also costs money — so it’s important to keep track and make sure that you’re coming out ahead.
There’s so much more that can be said about all of these potential solutions, but that’s a good place to start. Hopefully, double-checking your income goals with this in mind will give you a reality check, and you’ll realize it’s not your fault you’ve been falling short of your income goals — the goals were just impossible to reach. Or maybe, you’ll be delighted in realizing your goals are totally attainable — in which case, go get ‘em!
And, if you want help breaking your income goals down into doable daily chunks, and focusing on the tasks that’ll grow your business, check out the Freelancer Planner — the Kickstarter is running now.