The Financial Dangers that keep Freelance Writers up at Night and What do to About Them

Photo by Raúl Nájera on Unsplash

As a freelance writer, you’re exposed to countless risks. But, if you prepare and act proactively, you can reduce or eliminate some of the worst ones.

From losing your most important client to working for free and experiencing a fatal dry spell, here are some simple and straightforward ways to avoid disaster and find success in your freelance writing practice.

Losing a whale

Normally, getting dumped by a client isnt a huge deal. If you’ve been in this game a while, you’re probably used to it. There are all sorts of reasons a client may choose to close a contract with you, most of which have nothing to do with the quality of your service or the manner in which you provide it.

In most cases you’ll simply move on, find another client to fill the void, and keep writing.

But there is one circumstance in which the possibility of losing a client becomes an unacceptable risk — when that client generates the majority of your income. In other words, they’re a “whale.”

In extreme cases, freelancers work for only a single client. And if that client leaves, they’re taking the writer’s entire income with them.

It’s easy to see why some freelance writers get caught up working primarily for a single client. That person or company is probably their best, most profitable engagement, and it only makes sense to want to improve and expand that relationship.

But there’s a dark side to focusing on a lucrative relationship with a single client at the expense of other business development. You become dependent on the whale to maintain your business and your lifestyle.

Think of your client portfolio as a basket of securities. Just as you shouldn’t invest 80% of your money in a single firm’s stock, you shouldn’t allow one client to dwarf the importance of every other client you serve.

Or, as Alexander Lewis puts it in one of his recent articles on freelance writing risk:

What percentage of your recurring monthly income comes from one client? The higher that percentage, the higher the risk.

(By the way, Alex’s article is a fantastic read. Check it out below.)

If you find yourself in a situation where you’re effectively dependent on the income provided by a single client, take active steps to diversify your client base. Use whatever spare time you have to recruit additional clients (who will preferably be in a different industry or region than your existing client) who can reduce the impact of losing your whale.

It may even be necessary to reduce the work you’re doing for your existing client. While this is unfortunate, the end results of a diversified client portfolio and additional income stability are well worth it. Be careful doing this, however. You need to balance the need to pursue other client work with protecting your relationship with the whale.

Working for free

Many freelancers lose sleep over the possibility of not being paid for their work. But there are simple ways to mitigate this risk. (I’m going to skip the possibility of being paid in advance because that one’s a little too obvious.)

Sidenote: The techniques below do not provide perfect protection against getting ripped off. They have been extraordinarily effective for me, though. I’ve lost only 1.06% of my revenue to unpaid bills. I’m happy with that ratio.

The newer the client, the smaller the deliverable

Keep deliverables for new clients on the low side. If you’ve just met a client and they ask for $1000 worth of work, request that the work be broken up into smaller deliverables of $250 each. On the other hand, if you’ve been working with a client for years and they’ve never failed to pay you on time, there’s very little risk in doing the entire job before being paid.

What counts as a “large” job will depend on your circumstances. For some writers, losing out on $1000 wouldn’t matter much. For me, it’s a big deal.

Never start a second job for a new client without being paid for the first one

You can compartmentalize your losses by refusing to start a new project until the last one is paid in full. Yes, you might get stiffed on the first job, but at least you haven’t wasted time and energy on a second assignment.

Be wary of new clients who set off your spidey sense

Not all new clients are the same. Some seem like they’re on the up-and-up from the first time you speak to them. Others, however, give you some pause. For whatever reason, they make you think twice about working with them.

Trust your instincts. Don’t take risks with people who strike you as “off.”

I’m currently disputing $1300 fraudulently initiated chargeback for writing I properly provided to a client who I suspected from the beginning was going to be trouble, for reasons I couldn’t quite put my finger on. It’s a major hassle and it was entirely avoidable.

Some client warning signs are particularly concerning. They include:

  • If you’re on a freelancing platform, suggesting that you violate the Terms of Service of that platform. If they’re willing to breach a contract with the platform, they’ll breach a contract with you.
  • Failing to respond reasonably promptly and professionally to communications.
  • Insisting that you communicate exclusively by voice and refusing to make agreements in writing.
  • Inappropriate communications that exceed the boundaries of propriety

Clarify expectations throughout the client engagement

A happy client is a paying client. On the other hand, a client who feels they’ve been misled or underserved is one who is more likely to “forget” to pay you when the bill comes due.

Do your best to set, manage, and understand your client’s expectations through the duration of your relationship with them. Listen to their concerns when they express them. Communicate openly, honestly, and with an eye to solving their problems. In short, do your job well and your clients will tend to pay you in full.

I’m a big proponent of offering a satisfaction guarantee in freelance writing engagements. If the client is unhappy with the work I deliver or feels I didn’t provide what I promised, I don’t request payment. The mere existence of this option not only puts my new clients at ease but also seems to increase their level of satisfaction and their likelihood to pay. And I’ve only ever had to forego payment once.

A persistent shortage of work

Ultimately, failing to thrive as a business is a risk faced by all freelance writers, especially those who are new to the game. And it’s a big topic, since there are as many reasons a business can fail as there are for a business to succeed.

But there are ways to mitigate the risk of stagnation.

Knit a financial safety net for yourself

Even the healthiest of freelance writing practices can have a bad month, or three, or even six. You could have a slower-than-average year or encounter a health problem that keeps you from writing for a few weeks. My point is, life is unpredictable, and freelance writing income is even more so.

That’s why it’s so important to build a financial cushion for your writing practice. A cash reserve lets you ride out the bad months without finding yourself in desperate straits.

And if you’re making decent cash but finding it difficult to put the money away anyway, follow this simple strategy:

  1. Decide on a monthly salary you’ll pay yourself. It should be a modest but realistic amount, one that doesn’t leave you miserable but doesn’t allow you to live like a queen either. We’re talking about an “I drive a 2018 Honda Civic” salary. Totally adequate, but not crazy.
  2. Also, decide on a realistic monthly salary you’d like to earn. We’ll call this your “aspirational salary.” This should be enough to enjoy life and support yourself and your family. We’re talking about “yearly vacations and regular retirement fund contributions” kind of salary.
  3. Every month, pay yourself the modest amount from #1 on this list. Sock away any money you make after expenses and salary in a separate account.
  4. Once you’ve got 6 months of your aspirational salary saved up in that separate account it’s time to switch to paying yourself your aspirational salary every month.
  5. Continue to put income that exceeds your salary and expenses into a savings account or short-term investment each month.

Now, you’ve got six months of healthy salary saved up in the event that your business hits a downturn or you encounter personal difficulties that make it hard to produce.

You’re also paying yourself the same amount of money every month. And that makes life a lot easier.

Sidenote: I get that not everyone can afford to follow the strategy I’ve laid out above. I don’t mean to be insensitive to freelance writers who are just scraping by and can’t afford their next electric bill, let alone put any money away for a rainy day. At the same time, success in this business requires one to get a handle on the volatility of income and, sooner or later, every freelance writer will need a business account with a hefty balance (or a credit line with a lot of zeros).

Diversify your client base

In addition to making sure you’ve got a b

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