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There’s a giant difference between a thriving freelancer and one who’s barely getting by. The truth is: you CAN get wealthy as a freelancer. Even change into a millionaire freelancer.
But you’re not going to get there by wasting your money on the unsuitable things.
So below, I’ve got an inventory of common expenses that wealthy freelancers almost never spend their money on.
These expenses don’t grow a business, they waste your money and put your online business in danger.
So the actual query is: do YOU spend money on any of those?
A elaborate office
This primary one might surprise you, but freelancers who ultimately change into very wealthy almost never spend money on a flowery office.
After all, you would like somewhere to work. And you must probably do greater than work out of your couch in your pajamas.
But spending 1000’s of dollars every month on a coworking space or (worse) leasing office space that won’t really generate more revenue is a fast option to kiss your freelance profits goodbye.
With regards to your office, think “revenue per square feet.” In other words, if you happen to get an even bigger office, will that mean more income in your online business?
And if not, you must think twice before wasting your money.
The newest technology
Wouldn’t it be nice to at all times own the newest Macbook Pro or use the nicest DSLR on your web meetings?
Sure.
But will those things make it easier to generate more revenue?
Probably not.
With technology, the bottom line is to discover the purpose of diminishing returns. In other words, at what point are you really losing money by not replacing your laptop since it’s consistently powering down unexpectedly or simply takes way too long to process a PSD file?
The will to be truly efficient (not fancy or boastful) ought to be the driving force behind your next big tech purchase.
Non-Revenue-Generating Assets
Technology isn’t the one thing you could be tempted to buy for your online business.
There are numerous non-revenue-generating tech gadgets and other expenses that won’t make it easier to grow your income. As a substitute, they’ll take out of your checking account every month.
These sorts of expenses include things like:
- An excessively expensive office chair or desk.
- Expensive office art.
- Over-the-top office speakers.
While these assets may make your office a cooler place to spend your time, they’ll have only a marginal impact in your actual revenue.
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That’s to not say you possibly can’t have nice things in your office. But these are the sorts of indulgences you must save for, select properly, and limit in frequency.
Hiring too early on
It’s hard to know when to make your first hire. Do you hire so which you can get more clients? Or do you get clients after which hire?
The reality is, many freelancers hire too fast, too soon.
Startup culture has taught us that headcount (the variety of team members you might have) is probably the most essential metrics of growth.
But the reality is: headcount is a liability. A price. An expense.
After all, to grow you’ll have to hire. But hiring for the sake of growth, or hiring in hopes that you’re going to grow later is a dangerous option to run a contract business.
Hiring the unsuitable role first
Not only do some freelancers hire too fast, but they hire the unsuitable role first.
We’ve had numerous freelancers tell us their first hire can be a VA (Virtual Assistant).
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But a VA doesn’t make the perfect first hire.
That’s because a VA typically handles administrative tasks—most of which can liberate your time or take responsibilities off your plate, but do indirectly generate revenue.
As a substitute, ask yourself: if I hire this person, will they assist me generate as much or more additional revenue than I’m paying them every month?
So many software subscriptions
What’s odd is when many freelancers are too timid to rent an worker or sub-contractor, many opt as an alternative for software to assist solve their problems.
This is especially true as A.I. can do increasingly in our businesses.
The issue is: there are only a few software tools for freelancers that really generate revenue for you.
Unless a tool helps with sales (like Reply.io) or automating tasks like invoicing and proposals (like Moxie) then software becomes just one other expense keeping you from growing profits.
Services that don’t generate revenue (like a lawyer)
Much like software, if you happen to’re paying anyone on retainer they usually’re indirectly generating revenue for you, it’s time to take a re-assessment.
While these service providers could be helpful (even critical) at times, keeping them on a monthly retainer could be dangerous.
For some services (like legal services) you possibly can simply work with a lawyer on-demand; paying by the hour for services rendered.
For other services (like bookkeeping), explore your options. As a substitute of paying a bookkeeper, accountant and tax skilled, you would join for Collective and get a complete team to make it easier to for much less.
Attending events and conferences along with your peers
Events and conferences could be an excellent option to construct your book of business.
But sometimes freelancers make the error of attending conferences where all of the attendees are their peers.
As a substitute, put money into conferences where all the attendees are potential clients.
Agency-builder David did this to get tons of clients from events.
Then recent agency-owner Clay tried it with massive success.
Now, David and Clay have each sold multiple agencies for a very nice exit.
Ineffective Ads: FB ads, client email lists, paying for followers, etc.
Whenever you’re eager to grow your freelance business and undecided where to search out clients, you could be tempted to spend money on ads, email lists, and even paying for social media followers.
Fair warning: don’t.
Of the choices mentioned here, NEVER pay for email lists or social followers.
Ads can work. And so they do work for a lot of freelancers. Nevertheless it takes a whole lot of time, effort, and learning to make them be just right for you with a positive ROI.
Corporations like Google and Facebook will attempt to persuade you that running ads is an excellent option to grow your online business. And while that could be true, start small, experiment and see if you happen to can get anything to stay.
Where will you stop wasting money?
After reviewing this list, I just have one query for you: where will you stop wasting your money?
With regards to business, remember ROI is king.
Anytime you spend money, ask yourself: will this investment generate more revenue for my business? And if it won’t you might have to think long and hard about whether or to not spend the cash.
The more none-revenue-generating expenses you possibly can remove from your online business, the higher you’ll set yourself for long-term wealth and success as a freelancer.
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