This is a sponsored post from Joust, the first financial services company animated by and focused on the unique needs of freelancers. What if your bank admired your passion and respected your work? And what if it could guarantee you got paid? PayArmour, a revolutionary new solution from Joust, takes the hassle out of invoicing clients and protects you against client nonpayment.
You’ve landed a major client, hit an income target, or reached a significant milestone in your freelance practice. What are you going to do with all that income and work?
As an entrepreneur, I’ve seen the excesses of success among my peers and even learned a few lessons firsthand.
Celebrate your success — in moderation
First things first: yes, when you hit that meaningful inflection point, reward yourself. You’ve had your nose to the grindstone and you’ve been keeping it lean. Relax, enjoy, but don’t swing too hard back in the other direction. Don’t go overboard with a Maui vacation or a Tesla Model X. Instead, do something that will refuel you emotionally and physically—not something that will leave you with a hangover of regret. Here are a few moderate ideas:
- Dinner at a nicer-than-usual restaurant with the people who have been actively supporting you
- A weekend trip that’s restorative and reasonably priced (e.g. drivable or a cheap flight)
- A purchase or service you’ve been putting off that will meaningfully improve your quality of life (e.g. a more ergonomic desk chair or house cleaners)
Consider how expenditures, whether celebration, self-care, or infrastructure, will set you up to deal with all that’s coming.
Grab opportunities, let others go
Now it’s time to right-size your business development strategy. Again, you’re looking for that sweet spot.
Steady freelance work often starts with a one-off assignment. When it’s a promising client, focus on how you can convert that gig to a long-term relationship. Give them an indication that demonstrates your value and interest, maybe it’s a discount or a proposal for how to increase the utility of the project you’ve been working on. Show them how you can shine. Offer flexibility in working with them.
On the other hand, not every client will be worth the effort. After hustling to get business, turning down work can feel wrong. But sometimes it’s the right call. We entrepreneurial types often have an impulse to try to salvage situations — it correlates with our opportunity-seeking streak. Train yourself to be selective and decisive. Chalking up some prospects to “sunk cost” will save your resources — time, energy, and attention — for the long haul. If it’s a client you really want, go all in. But if an assignment is starting to smell bad, get out sooner rather than later.
What if you have the extreme case of a big-name dream client? That could play out a number of ways. Here are two anecdotes:
- A startup that drove itself into the ground trying to fulfill a contract for a major entertainment company
- A startup that did fine, had a successful exit, but missed a chance to fully exploit an introduction to a marquee-name tech leader
When it’s an opportunity that would max-out your bandwidth and that’s also too good to pass up, subcontracting might be the answer. Does the type of work lend itself to subcontracting? Do you have similarly skilled peers? (and do you trust them to not poach your clients?) Do you have the management skills to transition from “solopreneur” to “microbusiness” owner?
If you do subcontract, you’ll need to let go a little. Ensure a baseline level of quality, get out there, and go big on volume.
Next, how are you going to allocate this influx of revenue?
Oh wait, maybe we shouldn’t just assume that all those invoices have been promptly paid. If client late-/non-payment or income volatility is an issue for you — as it so often is for freelancers — look into troubleshooting it with Joust’s PayArmour invoicing tool.
Back to assessing your financial situation: Are these gains temporary or permanent? Spoiler alert: it’s always cyclical, so commit with caution. Here are some financial considerations, and I’ve bolded the list items that Joust can help with:
- What expensive debt could you pay off?
- If you need a big boost to operations, what inexpensive lines of credit could you access?
- You’ve been setting aside funds for taxes...right? Here’s the moment to catch up.
- What investments in your business would give you the most bang for your buck?
One classic pitfall: office space. In the past, I’ve made my own overly ambitious choices, and I have heard variations on this story again and again. In the era of remote work, wherever you can concentrate will be good enough. Don’t overdo it on the literal overhead.
Up until this point, you may have kept your business and household affairs all mixed together. Now that you have serious revenue, it’s time to separate them and add protections to how you operate. Here are a few best practices to start:
- Segregate your personal funds from business funds
- Use contracts and formal invoices to engage with clients
- Incorporate to protect your growing business from liability
Remember that the wave you’re riding can break. Map out a timeline for how you’ll deal with the next downturn — whether it’s macro-economic or specific to your clients. Look for ways you can hunker down. Look for new ways to grow your business and increase resilience. What are your risks? What would happen if you lost that anchor client? Remember the famine phase. Finally, although this is all cyclical, never forget that you earned the “feast” and that is definitely worth celebrating.