Career Growth

The Ultimate Guide to Growing Your Revenue as a Freelancer

Bret Lawrence
April 26, 2023

This post is sponsored by the good folks at Hopscotch and was originally posted on their blog. Hopscotch helps freelancers and small businesses pay and get paid instantly with zero transaction fees. You can can create a Hopscotch account today for free.

To grow as a freelancer, you have to think like a business.

This post covers:

I. Which processes, workflows, and admin tasks to automate early on

II. How to build and use network connections as you productize your approach

III. What financial goals you should be setting and when to raise your rates

I. Establish processes and standardize workflows

No matter what industry you’re in, freelancing tends to provide a crash course in business operations and strategy. Before you can even start producing work, you might have to pitch clients, develop relationships, order inventory, finalize contracts, and onboard customers.

To manage all those moving parts, your freelancing business needs to work like a well-oiled machine. That means systematizing as much as possible so you can focus on doing great work that grows your business and moves you toward your financial goals. Here are some basic ways you can get organized and develop processes that position your business to make more money over time.

Stop saying yes to everything

It might sound counterintuitive, but the first step toward increasing your revenue as a freelancer is getting way more strategic about which projects and clients you take on. Rather than filling your calendar with a mix of random assignments, find your niche. Once you do that you can focus on creating a portfolio that builds your expertise.

Specialists make more money than generalists.

Picking a niche is the first step toward raising your rates—a standard business practice that you should absolutely be working toward. Your niche can be based on an industry or topic (SaaS, telecom, personal finance, etc.) but it can also be based on the type of asset or product you create. For example, some freelancers specialize in designing landing pages that convert, while others are skilled at developing case studies, conducting research projects, or writing e-books.

Start automating workflows

Email correspondence, accounting chores, meeting with clients. Admin tasks like these are the “necessary evils” of any job, the day-to-day work that makes the world go round. But spending too much time on admin tasks isn’t the best use of resources for your business.

Looking to maximize your output? Create “set-it-and-forget-it” workflows to cover recurring admin needs, then reinvest that time in revenue-generating activity. Here are two high-impact workflow automations that freelancers can benefit from:

1. Customer onboarding

Standardize the way you onboard clients. Templates are your friend! Create email boilerplate copy, scope-of-work templates, meeting agendas, and work revision processes. Having all this documentation upfront will make it easy to plug and play with future customers. Then you can refine and reuse those materials on a recurring basis.

2. Payment processes

74% of freelancers have experienced late or non-payment at some point in their careers.

That’s more than just inconvenient, it’s downright dangerous. Waiting for money to hit your account disrupts cash flow, undermines your ability to invest working capital in other parts of your business, and makes it difficult to cover your expenses. So why not optimize your payment process so that it’s easy for clients to navigate, free of transaction fees, and encourages on-time payments?

First things first, you’ll need to choose a payment method and set up a basic invoicing process. Depending on the needs of your freelancing business, you’ll probably also want to select an accounting platform to track expenses and invoices. Once you have those basic components in place, you can start thinking about how to train your clients to make payments on your terms.

For example, you might want to auto-generate invoices at the same time every month so they know when you expect the bill. These kinds of workflow automations ultimately create a better experience for everyone—your clients included—by reducing friction and setting clear expectations.

Do financial housekeeping

Especially in the early days of any freelancing career, making the mindset shift from “side hustle” to “bonafide business” can be tough. But the sooner you get there, the sooner you can start driving higher revenue.

Think of your freelancing business just like any other professional entity that needs legitimate financial infrastructure—including setting up a separate business account and using professional payment and accounting tools to track your cash flow.

  • Set up a designated bank account for your business. Many freelancers default to getting paid directly into their personal bank account—but creating a separate account makes it easier to track the money coming into and going out of your freelancing business. You’ll be able to more accurately maintain visibility on your earnings and expenses when it’s not mixed in with personal spending.
  • Develop an emergency fund to get through gaps in cash flow. One of the biggest benefits of being a salaried employee? Consistent paychecks. When you’re a freelancer, payments don’t always run like clockwork. You can prepare for lean times with cash flow management tools, but another best practice is to set up an emergency fund for at least 3 months. This way you won’t have to dip into savings or scramble to make ends meet if a big client pays late or you have a slow quarter.
  • Choose a legit payment process that works for your business. Personal payment platforms don’t offer many benefits for businesses (especially now that the tax reporting threshold for income earned on apps like Venmo and CashApp has changed) and some business platforms charge transaction fees. Hopscotch is built for business payments, making it super easy to pay and get paid instantly without any fees. When it’s time to send an invoice, you can manage the entire process in a few clicks and keep track of everything in one clear, streamlined ledger.
  • Plan ahead for tax season by setting aside income as you work. Salaried employees have tax money taken out of their paychecks automatically, but self-employed individuals like freelancers are in a different position. You’ll have to calculate and deduct the money you owe for taxes throughout the year from every paycheck you earn. Be sure to accurately track all your sources of income, keep a record of employment documentation such as 1099 forms, and understand your qualifying tax deductions to accurately calculate how much you owe.

II. Develop support networks and productize your business

As your business becomes more sophisticated and you take on more ambitious projects, concentrate on finding ways to maximize the impact of your most important resource: time. You can’t be everywhere at once, so you should develop strategies for generating revenue that go beyond your capacity for personal productivity—the most successful freelancers know how to delegate, productize, and balance priorities as their businesses grow.

Outsource when possible

Just because you’re a freelancer doesn’t mean you have to fly solo. Find reliable connections that you can subcontract work to when needed. You won’t necessarily have to turn down larger projects (aka more exciting, challenging, and revenue-generating opportunities) if you can collaborate with a partner to manage the workload. And being able to say yes to bigger clients without sacrificing the quality of your work is key to making more money over time.

Another great reason to find reliable subcontractors is that you’re human! You’re going to have bandwidth issues, scheduling snafus, and availability conflicts. But calling in sick or taking personal days can be more difficult for freelancers. Establishing coverage from trusted peers will help you manage client requests effectively and keep customers happy when your plate gets too full.

Productize your business

At a certain point, your revenue can’t be directly connected to your level of effort. Businesses don’t grow by burnout (working harder) they grow by maximizing ROI (working smarter). One of the most effective ways for freelancers to work smarter is by productizing.

Productizing is a way of packaging services at set prices and deliverables. Rather than meeting with clients individually and tailoring your contract to their needs, clients come to you and select options from a predetermined menu. This not only makes your onboarding process way more efficient, but it also helps you elevate your pricing strategy (more on this in the next section.)

Another way that productizing can increase your revenue as a freelancer is by unlocking passive income streams. Let’s say you create a product that can be purchased by clients—a class, e-book, training course, etc.—and then you make it available for purchase and download. After doing the upfront work, you’ve created a source of potentially unlimited recurring revenue that can reach a wider audience.

Engage with community

Freelancing can be an isolating experience, but there are plenty of resources for staying engaged with peers in your industry—and you should take advantage of them. Making an active effort to find colleagues and mentors can enrich your work life, help you level up in certain skills, and stay aware of emerging trends and best practices to benefit your business. If you can’t connect IRL, listen to podcasts to keep growing in your career and stay motivated.

Aside from the social benefits of engaging with your community, you can also pick up tips and tricks. If you have a project that doesn’t go well, conduct a retrospective with a trusted mentor. Ask for feedback on how you could improve the quality of your products/services or even your management style with contractors. You won’t be able to scale your business without getting critical feedback and consistently honing that competitive edge.

III. Set clear financial goals and adjust pricing strategies

Once you have effective operational strategies up and running, your freelancing business is ready to spread its wings! But you need structure to guide your financial growth. Consider creating a business plan with specific revenue goals, then reverse engineer and make any necessary adjustments to your pricing, client roster, and cash flow management to hit those profit milestones.

Control your cash flow

Having clear visibility of cash flow helps freelancers manage their business finances and make more strategic decisions about revenue.

On average, full-time freelancers manage about 6 different clients at any given time.

Keeping track of the money coming into your business, accounting for what’s already been paid, and remembering which invoices you need to follow up on can easily become a full-time job. So how do you control your cash flow?

  1. Choose the right payment tools. Having to chase down critical payments is time-consuming and disruptive to cash flow, especially for businesses with small teams and limited resources. Luckily there are digital platforms that can help streamline the payment process and even give small businesses the power to leverage unpaid revenue when cash flow gaps occur. Hopscotch Flow lets you instantly unlock funds tied up in unpaid invoices, creating a much-needed safety net for freelancers.
  1. Use budgets and forecasts to plan. Budgets are financial planning documents that help businesses identify available capital, predict spending patterns, and estimate revenue. Freelancers can use budgets as a roadmap to higher profitability. A financial forecast, on the other hand, uses historical data to make up-to-date projections of your business’s financial future. You can use forecasts and budgets in tandem to track your progress toward larger financial goals and make adjustments as you operate.
  1. Avoid taking on debt. Might seem like a no-brainer, but debt can undermine your cash flow. Many small businesses are tempted to take on debt as they scale their operations—if you find yourself in this position, make sure the expense has a justifiable ROI and that you can manage to repay it a.) in a reasonable time span and b.) in the context of your other recurring operating expenses.

Raise your rates

As you gain more experience, you can update your pricing model to reflect your value. Ideally, you’ll work with higher-value clients as time goes on—developing a sense of what projects to say yes to and which projects to pass up is a strategic skill. You want to improve the quality of clients you collaborate with as you get more experienced, and say yes to work that is worth your while. Part of that depends on setting the right rates for your business.

As you grow your freelancing business, you should ideally start to base your pricing on the value provided rather than the time committed. Charging an hourly rate actually punishes freelancers for getting more proficient at their jobs. The more skilled you are at a specific task, the less time it takes you to complete—so if you’re charging an hourly rate, you’re making less money as you improve when you should be making more!

Reinvest your capital

Once you streamline admin operations and financial processes, you can start spending more time on revenue-generating activities like productizing your business and working with subcontractors to book higher-paying projects. If you stick with your budgeting strategy and work toward hitting those more ambitious revenue milestones, pretty soon you’ll have more cash flowing into your business. But that’s not the end of the journey.

Once you start making more money you need to have a plan for how you’ll reinvest a portion of those earnings back into your business. Education, training, and/or equipment that will improve your productivity or the quality of your work typically make the most sense. (Remember that this part of the process comes after you’ve done things like set aside funds for tax season, made payments to subcontractors, and set up an emergency fund.)

Ready to grow your revenue as a freelancer? Make the jump to Hopscotch and keep more of the money you earn. Create an account, get paid instantly with zero fees, and access financial tools designed for freelancers.

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