To spend or not to spend?
It’s a hard question to answer.
When I started out as a freelancer, I had a bit of cash up my sleeve but certainly not a Silicon Valley startup amount. At the time, I had the mindset that you should never spend money on something if you could do it yourself.
That has changed as I have grown my business and I realised there is a difference between an expense and an investment.
It has taken me a long time to get used to spending money on my business. Here is a collection of my thoughts when it comes to handing over your cash. Note that this is not personal finance advice!
Just get started
Speaking of Silicon Valley, you don’t get anywhere in that world unless you at least have a minimum viable product.
So my advice if you want to earn money as a freelancer sooner rather than later is to at least get the ball rolling. In the early days when you don’t have a lot of clients you will have time to build your business and get work done for other people.
Register for an ABN, choose your business name (the basic advice is to go first name, last name, type of business e.g. Joe Smith Construction Consultant but it is really up to you) and find your first client however you can.
Start with an email address and a LinkedIn profile or a Facebook page, depending on your target audience. Tell your new clients you are just getting set up and they will understand.
It’s not worth pouring tens of thousands of dollars into setting yourself up as a freelancer before you even have an idea if it will work for you or not. You will need to spend some money but you can tell people what you’re doing and start doing it without the need for all the bells and whistles.
Spend some money on a professional website
My first website was a DIY job. I spent $300 or thereabout getting someone to show me how to use WordPress and I was pretty happy with the result.
But while it had all the information it needed, it didn’t really do much in terms of generating traffic from Google. It also couldn’t ‘speak’ to my email or perform any automated actions. The other problem was that if it stopped doing what I wanted it to, I had to fix it. And I would lose half a day trying to figure out how to do that.
The site didn’t make me look like I was at the top of my game. So after two years, once I was happy with how things were going, I did a rebrand and invested a few grand into a website made by someone who 100% knew what they were doing and could help me make changes when I needed to for a minimal monthly charge.
It was a big step and a daunting one but most customers who contact me through Google say they really liked the look of my website. What’s more, they can use it to book meetings and download my lead magnet, which triggers an automated set of sales emails.
In a nutshell, if you can skip the cheap DIY job and spend at least $2k straight away, go for it. Otherwise keep it simple but make a plan to upgrade if you want to bring in those top clients.
And don’t spend $10,000 on a website right off the bat… it’s not necessary.
Choose your subscriptions wisely
Every time you turn around there is new software that promises to make your life easier, for just $129 per year.
This is a tough one. I have held out on using some platforms for months, only to instantly regret waiting so long. Active Campaign is an example. It does so much without me and helps my communication look professional.
Some of the platforms I subscribe to are:
- Calendly to make it easier for my clients to book meetings
- Grammarly to check my spelling and grammar
- Vidnami to make videos and add soundtracks (use this link for a free trial)
- Uber Suggest for SEO research
- Xero to manage my money
Each of these makes my life easier and more convenient. They save me time and effort.
With subscriptions, it’s all about return on investment. If you know you will use it, you can see how it will save you money and it is simple to incorporate into your workday, it’s worth it. The argument that ‘I can just do that myself, for example creating invoices using Word, is well and good but how much extra time are you spending and how much of that time could be used doing other things?
The thing to be aware of is subscription creep. It can be easy to sign up for services, stop using them then find yourself getting an annual bill because you forgot to cancel.
Get help so you can earn money as a freelancer
Should you pay a bookkeeper?
Should you pay an accountant?
Should you pay an assistant or junior to work with you?
Again, you could do it all yourself. But do you have time? And is it something you’re not that skilled at, or which anybody at all could do if they were trained?
If your career is progressing and you are earning money as a freelancer, you’ll hit a natural point where you realise you’re better off spending an extra ten hours working in a month than the time you’re spending chasing invoices or dealing with your taxes.
You’ll also start getting frustrated by the tasks which don’t bring you any revenue, like responding to enquiries, preparing proposals or following up on missed appointments. When you are saying things like “There are never enough hours in the day!” or “I wish there were two of me”… this is an indicator that you have the clients you need to call for backup and pay for it.
Make a budget
Hopefully, you will reach a stage when you are earning enough to pay yourself, pay tax and have some leftover.
When you do, you can make a monthly budget, review your essential expenses and see if there is anything left over to invest in, something like an additional training course or a professional photoshoot so you feel better about putting yourself out there.
Consider where your spending will get you
All businesses have to take risks to grow and obviously you shouldn’t take on more risk than you can handle but you will have to test things out to see what works.
If you want to spend money on something, ask yourself what the return will be. It may be one step back for three steps forward. It may mean you can knock off at 5:30 instead of 7 pm.
Find a free trial if you can and see if the risk will work for you. That way you can walk away if it’s not a good fit.
Depending on how you earn money as a freelancer, your expenses can be kept quite low. However, if you fail to commit some of what you earn to growing your business, either by marketing yourself or by investing in time-saving tools, you’re likely to tread water financially.
It’s scary but don’t let a fear of spending a small amount of money hold you back from earning a lot of it.
With that being said, here’s a final thought from my accountant when I asked him about the subject: Don’t let vanity dictate your spending. You don’t need the world’s fanciest laptop if you’re spending money on features you won’t use. You don’t need to splash out on a new car just because you can write it off as a tax expense. Stick to spending money on the things you need to really grow your business.
Want to earn money as a freelancer? Join the Six Figure Freelancer group on Facebook (it’s free so it’s an easy decision!)