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Posted by on May 2, 2012 in General Advice, Running a Business | 0 comments

The 5 Biggest Mistakes I’ve Made as a Freelancer and How You Can Avoid Them

1. Underestimating time & project costs


Skip the frustration by learning from my biggest mistakes as a freelancer

Underestimating time and project costs is easily the biggest mistake I’ve made, and also the biggest mistake freelancers make in general. Why? Because it’s extremely difficult to calculate how long a project will take when you haven’t completed a similar project in the past to use as a reference.

I’ve found that the largest “unknown” factor that consumes much more time than I expected is communication with clients and making countless revisions and minor changes to a project.

I believe the only truly effective way to produce more accurate estimates is to carefully track time on projects now so that in the future, when you have projects similar in scope, you have some real, hard data to use for calculating the estimates.

2. Accepting equity (shares) in startup companies as compensation instead of hourly compensation

Accepting equity, or shares, in a startup company instead of hourly compensation is the second largest mistake I’ve made as a freelancer. The reality is the vast majority of startups fail.

On a few occasions earlier in my career as a freelancer, I met with prospective clients who were extremely enthusiastic about some new great idea they had for a website (internet startup). It’s really easy to get caught up in all the hype and excitement surrounding the potential of getting rich quickly from a new idea, but be very careful (and rational).

Unless you are absolutely confident that the “idea” provides real value, is truly unique (or significantly better than the competition), and is marketable (do your research!), chances are you will end up working for countless hours without any compensation whatsoever. Additionally, it’s likely your relationship(s) with your business partner(s) will suffer as soon as you start having doubts about whether the business has potential for success.

3. Not requiring 50%+ downpayment before work begins

I’m a very trusting person, and the reality is most clients (and people in general) can be trusted to pay for the work you’ve done, but it’s much better to be safe than sorry. There are people out there who may decide – even after you’ve worked hard – that they no longer want what you’ve created for them, or worse, they just don’t want to pay for your work.

It’s very easy to protect yourself financially by asking for at least 50% upfront for the project cost estimate. I admit it can be a little awkward to ask a new client (who you may have just met) for money before you’ve even started working, but it’s a important protection that ensures that even in the worst case scenario, you’ve at least been paid something for your efforts.

4. Not having both parties sign an explicit contract beforehand

This mistake goes hand-in-hand with not requiring a 50% downpayment upfront – even though it can be annoying spending time writing up an agreement, it’s critical to create a clear, concise contract (wow, alliteration!) or agreement between you and the client before starting a project. A well-worded contract will protect you and your business legally and financially.

As I explain in mistake #5 below, a good contract prevents scope creep; that is, it clearly sets expectations for your client that protects you if your client asks – during the middle of a project – for additional features, elements, or services than you initially did not expect when you first estimated the project cost.

In addition to establishing expectations for your client, a good contract also clearly sets expectations for what you should be paid (compensated) as the freelancer.

5. Not being clear enough about what deliverables or services are included in the cost estimate of a project

This mistake is subset of #4 – make sure the contract specifies exactly what is included in the project cost, especially how many revisions and whether or not ongoing technical support is included. Scope creep (also called feature creep) is one of the most common problems freelancers face – this is when a client asks for more and more as the project goes on. The problem is, most of the time, the client expects to get more without paying more for your time and energy.

For example, a client may ask for another page to a website after the project is already in progress. The problem is, that additional webpage wasn’t included in the original estimate, so either you as the freelancer can basically create the page for free or you can remind the client that that part wasn’t in the contract and that you will need to charge extra for that page. A contract should specify that any additional services are billed in addition to the original cost estimate.

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