What if Your Freelance Work is Not Profitable?
In order to remain in business freelance workers almost always have to make profits. Sure there might be the odd freelancer who is independently wealthy and doesn’t need to make a living from their freelance work, but this is definitely the exception rather than the rule.
For the vast majority of freelancers, sorting through their finances to make sure that they are turning profits is imperative. Freelancers who are not making profits must address the situation immediately. Cutting costs, reducing staff, taking on more work, and increasing fees are all options for freelancers who are finding that their work is not profitable, or not profitable enough.
Increasing Profits: Cutting CostsOne way to increase freelance profits is to take a look at a business’ finances and identify areas where costs can be cut. This can be difficult for freelancers who do not have consistent cost information as part of their finances, so keeping good records and analysing them thoroughly is very important. One area where a cost may be cut is how much money is spent buying goods.
Another area to cut a cost can be in the overheads associated with a freelance office. Still another area to cut a cost can be on marketing methods that are having no direct returns. Every item that a freelancer spends money on must have a direct relationship to increase profits or it is worse than worthless, it actually drains a business of its value.
Increasing Profits: Reducing StaffSome freelance workers hire staff in order to free up their time and energy to take on paying work. Unfortunately if a freelance business is not profitable then reducing staff is a good way to try to rectify the situation. For example, a freelancer who employs a virtual assistant for office tasks could undertake these tasks or even get creative and offer an internship to someone interested in learning more about their business. Some freelancers may even be able to contact a local school or university and work out a way to offer students some kind of credit in exchange for an unpaid internship opportunity.
Increasing Profits: Taking On More WorkRather than stopping the outflow of money from their businesses some freelance deal with unprofitable freelance work by taking on more paying work to make up for any deficit. This only works to a point, however, as there is only so much work that a freelancer can take on and still complete to a high standard.
While it is possible to decide that no job is to small, and thus bring in more money from many different sources, freelancers interested in taking on more work should try to work smarter, not longer, in order to make more money from fewer clients and have fewer projects to which they’ll need to devote their attention.
Increasing Profits: Increasing FeesIn order to make more profits freelancers may also choose to charge more for the work they do take on. While this can be relatively uncomplicated when dealing with new clients, charging existing and past clients more for the same amount of work will probably require some justification as to why the increase is needed. Telling clients that it is because freelance work is currently not profitable is probably not the best idea, but freelancers should also take care not to lie to clients about why an increase is needed.
Freelancers have many options if they find that their work is not profitable. Before it is too late freelancers can cut costs, reduce staff, take on more work and/or increase fees to try to increase profits and turn around their freelance businesses.