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Ask HN: What mistakes did you make when starting as a consultant/freelancer?

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Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#1

Post by _qjt0 »

What was the specific mistake, what did you learn from it, and how did you change the way you do business as a result?

For example, I was told by someone who started a project without taking an advance, only for the client to decide not to pay. So he now refuses to take on a project without at least 30% advance.

What lessons did you learn the hard way?

I'm setting up my own consulting practice: kartick.org and would like to learn from other people's mistakes rather than repeating them myself.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#2

Post by sigmaprimus »

My biggest mistake working as a freelance consultant and truth be told still one of my biggest weaknesses is under estimating the the amount of work a job will require. I now tell myself any time I plan a project, whether for myself or someone else to double my estimate of the work required.

Many times it wouldn't even be my underestimating but rather the clients changing their plans halfway through and I would end up losing out rather than risking having them give me a bad review.

It is always better to estimate high then charge less than the other way around.

If you don't get a job because your too expensive don't be too upset, don't sell yourself short. IMHO it's better to not get the job than to work your fingers to the bone, miss out on other jobs and get burnt out only to go broke in the end.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#3

Post by mattferderer »

Hire a good tax person immediately. Maybe hire 2.

A significant amount of your income earned is gained through having someone walk you through handling taxes & health insurance. I'm not suggesting cheating on taxes. There are common practices such as knowing how to best incorporate your business for your situation. How to best pay yourself (dividends vs income) & how to handle your personal & company expenses. This can easily make a difference of between 20-30% of your income.

By a good person, I mean someone willing to sit with you for over an hour & understand you family situation, what expenses you have & what expenses you plan to have as a business. Someone who will also sit down with you once or twice a year & re-discuss as well.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#4

Post by dfsegoat »

Embarrassing but honest:

Pay your taxes on time (quarterly), assuming you are US based and on a 1099. Put that money away as soon as possible with ea. payment - just like an employer were withholding it.

I managed my finances poorly, and it gets increasingly difficult to catch up. All good now but was the most expensive lesson I learned.

Edit: seeing other replies here, I would meet with a tax/financial person from the start.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#5

Post by im_down_w_otp »

Setting my rates too low.

Here's what I figured out those many years ago. Clients who are cheap are also really into wasting your time and trying to micromanage the project. Clients who will pay a lot more also give you latitude to do your job (after all they're paying you to be the expert).

Keep jacking up your rates with each new client until you hit a ceiling. Whatever you're charging now, without even knowing what it is, I'm certain it's too low.

When I got started I billed $35/he. When I ended 5-6 years later I billed $300/her. Now in what very limited ad-hoc consulting I do, I bill significantly more than that.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#6

Post by dceddia »

Just a few hours ago I saw this post on Product Hunt: "Freelancember is a collection of 31 gifts for freelancers, one for each day. Templates, checklists, guides how to get better clients, raise your rates, etc." Might be helpful! https://www.producthunt.com/posts/freelancember

Some other folks mentioned taxes -- I highly suggest reading the book Profit First and implementing the system. I'm not a freelancer myself, but I'm solo & self-employed, and it's such a relief to have a pre-destined pile of cash to be sent off to the appropriate authorities each quarter.

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#8

Post by wwweston »

mattferderer wrote: post #3

Hire a good tax person immediately. Maybe hire 2. A significant amount of your income earned is gained through having someone walk you through handling taxes & health insurance. I'm not suggesting cheating on taxes. There are common practices such as knowing how to best incorporate your business for your situation. How to best pay yourself (dividends vs income) & how to handle your personal & company expenses. This c…

What are some ways to (a) tell a good tax person from a bad one and (b) look for a tax person in such a way that increases your odds of finding a good one?

Re: Ask HN: What mistakes did you make when starting as a consultant/freelancer?

#9

Post by chirau »

im_down_w_otp wrote: post #5

Setting my rates too low. Here's what I figured out those many years ago. Clients who are cheap are also really into wasting your time and trying to micromanage the project. Clients who will pay a lot more also give you latitude to do your job (after all they're paying you to be the expert). Keep jacking up your rates with each new client until you hit a ceiling. Whatever you're charging now, without even knowing wha…

Is it better to charge per project or per hour?
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