5 Legitimate Reasons Why Your Business Income Isn’t GrowingWritten by InvoiceBerry Team on October 12, 2020
As a specialist doing freelance as a small business, you are most likely to determine success by the number and quality of orders you get from clients. The problem is that the more you work, the more challenging it becomes to grow.
No matter how hard you try to organize the process, some factors seem to prevent you from further success, and you can’t understand where the catch is.
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It’s all about your behaviors.
Here are five reasons your freelance business income may not be growing and what you can do to change that.
1) You don’t think like an entrepreneur
Freelancers aren’t the same as entrepreneurs: While the former convert time into value, spending more and more hours working on getting more money, the latter use money to make incremental revenue. In plain English, if you want to grow your business income as a owner, you need to change your mindset on building your growth.
Adopt an entrepreneur’s mindset
View yourself as a business of one, not a specialist being your own boss.
For freelancers, working more time seems obvious. The more they do, the more money they earn. It’s a classic time-money conversion of most freelance jobs. They focus on hour rates and start spending days and nights working to see money flowing to their bank accounts.
As far as you understand, it’s a surefire way to burnout and health problems rather than steady income growth. Moreover, you can’t convert more than 24 hours per day into money, agree?
It would help if you didn’t consider freelance a job but a business. Please focus on the outcome, not the process. Think like an entrepreneur: Don’t grow the number of working hours, but make your freelance business grow for you.
Start with a business plan for both long- and short-term goals. Think of accountable milestones and deadlines for incorporating them. Whether you want to grow income by 20% or get a certain number of new clients, you should hold yourself to specific, measurable, and time-bound goals.
While you’re a freelance resource to clients, you’re also a business. Think of increasing your value:
- Build your online presence as an expert: a website, a blog, a portfolio, professional social media.
- Get a custom email address.
- Do a full-scale analysis of your business ecosystem; analyze the market’s needs regularly, and adjust your skills and services accordingly.
- Work on building your online reputation and network.
Increasing value is challenging, and it takes tons of time and energy. Make it a part of your day-to-day tasks. A higher value means higher rates because customers are more likely to pay for your expertise than your freelance time.
2) You don’t know when and how to raise your rates
Increasing the price of your freelance services seems another obvious way of business income growth. If you’re a freelance writer taking $100 for a 1,000-word text, you can grow an income by increasing that cost to $150, right?
First, there’s a chance that some of your customers will leave you because they can’t afford your new rates anymore. (Actually, it’s the #1 fear of most freelancers thinking of when to raise rates: They don’t want to lose loyal clients.)
Second, it might not be as easy to get new clients with your updated rates as you think. (And that’s the #2 fear: Freelancers don’t understand how to raise rates so that they wouldn’t alienate potential customers.)
And while some loyal clients will stay with you and cover that churn, such an approach is more about staying afloat than growing your overall freelance business income.
What you need to do before raising rates is a cost-benefit analysis of such a decision. Also, do your best to realize how the value of your work increased over time.
How to know when it’s time to raise your rates?
- Do market research once a year to understand how much other experts with similar backgrounds/experience are charging, whether hourly or per-project. Make sure you compete with other freelance business owners in the niche.
- Consider your relationship with every single client. If you’ve been working with someone occasionally for a few months, it’s probably not the right time. For regular clients, those communicating with you frequently for a year and happy with your work, the right time to ask for a pay increase is now.
Increasing your rates once a year is OK to stay current with the market.
How much more to charge for your services?
There’s no straight answer. Everything depends on your value, business plan, and goals. While some freelancers agree to increase by 10% or 30%, others argue that a 50% increase could be well-justified too.
How to raise your freelance rates?
- Raise them on Upwork or any other websites you use so that new clients would see your new rates at once.
- Email your standing customers an advance note. Two or three months before your intended increase is the best moment to send it: Therefore, you allow them time to decide what they want to do, and you give yourself some time to hunt for other opportunities if a customer chooses to leave.
3) Your clients don’t pay on time
For your freelance business income to grow, you should take a proactive mindset to expand it and get paid. The ugly truth of life is that more than 70% of freelancers have trouble getting paid at some point in their careers; but, it’s up to you to control the situation.
Very often, clients don’t pay on time. The reasons are different:
- They aren’t motivated to pay. (You deliver the full project before asking for payment.)
- You communicate with a person who’s not responsible for meeting invoices.
- A client didn’t see your invoice. (It went to the wrong folder or got buried in their inbox.)
- They simply forget to honor your invoice.
- They didn’t like your work and refused to pay, ignoring your attempts to resolve the problem.
But while you sit and wait for them to send you money, your business income leaves much to be desired.
Organize your work with clients so that the risks of getting into the above troubles would be reduced to a minimum:
Send invoices before the project starts
This is to show a client that you care about getting paid. Or, agree upon some advance money to motivate both of you to form a business relationship. Also, consider holding back a portion of the work until payment, or send it with a watermark so the client could review but not use it.
Set up a few friendly reminders
This helps clients to honor your invoice. Using online invoicing software for small businesses can help to automate everything and get paid faster.
Find out who’s responsible for processing invoices at your client’s company
Do your best to have a few alternative contacts to reach and clarify arrears in payment.
The same is true for having a few alternative ways to contact a client. If you send invoices by email, call or text customers in messengers to let them know an invoice is on the way. Also, there’s no need to practice creative writing when it comes to payments: Make it extremely clear, using “INVOICE” in subject lines to have no questions about what you are sending.
For clients refusing to pay, consider offering alternatives (a payment plan for those run out of money, or fixing your work so that both parties would be happy with the result) or ultimatums (send an attorney letter and consider a small claims court for those ignoring or dishonoring you).
4) You do everything alone
Most freelancers become independent creators or business owners because they love doing their work. But back to adopting an entrepreneur’s mindset, it would be great if you took your freelancing as something more significant than work.
If doing everything alone, you won’t be able to grow, both professionally and financially, because you’ll lack time and resources. Let’s face it, it’s physically impossible for a freelancer to do all the work alone: Sooner or later, there will be a saturation point.
To do sustainable business, try delegating some of the work to other specialists when applicable. Focus on the most significant part of growing your freelance business income — networking and building relations in your niche.
That was exactly what Adam Enfroy, an independent blogger making over $80k a month, did:
“I decided to treat my blog like a business from day one.
…I bought the latest software and blogging tools. And I hired an assistant to help manage my guest blogging process, a content writer to help with first drafts, and called up a few developer and designer friends.
It didn’t cost much and allowed me to focus my energy on what I’m really good at — building relationships in my niche.”
With such a mindset, you can shift from single-serve orders to passive income that will multiply your revenue by far.
5) You don’t trace the financial ins and outs
With a freelance as your small business, you can’t ignore its financial subcomponent. While you may not have a consistent income flow every month, you still can trace the ins and outs to organize the budget accordingly so you could plan and manage taxes, save something for retirement, track and plan expenses, and more.
- Ensure you know the basics of accounting to be diligent when it comes to managing your freelance business income.
- Understand seasonal cash flow, monitor and measure your income, and keep a tab on your money’s movement.
- Invest in apps and cloud-based invoicing software such as InvoiceBerry to automate these processes, and don’t hesitate to ask for the professional when needed.
Invoices, balance sheets, the ins and outs statements, and cash flow statements are the top four finance documents for you to have.
All this will help to keep your business operating smoothly and clearly understand its financial health to act accordingly for its future success.
In a Word
Sure enough, you try to improve your professional skills and organize all your freelance business processes. But sometimes its financial success depends on tiny details that go beyond finance — your attitude towards your work or the way you craft and send invoices to clients, for example.
We’ve covered five possible reasons why your income may remain lower than you’d like to have. Feel free to consider this post a food for reflection and — why not? — rethinking your small business income strategy for greater financial success.
Lesley Vos is a professional copywriter and guest contributor, currently blogging at Bid4Papers, a platform that helps students and authors with writing solutions. Specializing in data research, web text writing, and content promotion, she is in love with words, non-fiction literature, and jazz.