Financial security for freelancers

So I decided to write this post to show that a freelancer can have autonomy and financial security, yes! All it takes is a little planning and understanding some important concepts.

1. Financial Planning

Unfortunately, in Brazil, this is not something that is taught in school. At most, it is a little dominican republic phone number list homework assignment in which the student compares the prices of products that their parents bring from the market. However, learning financial planning can be crucial for your life, whether you are a freelancer or a CLT.

Financial planning is understanding:

• How much do you have;
• How much is needed;
• How much do you want;
• When will it have.

Of course, to answer these questions you will need to go through the “Hows” and “Whys”. You will need to understand what investments will be necessary and/or important and advantageous.

In the next items I will give an overview of the concepts that I consider the most important within the financial organization system of a freelancer, and why not say entrepreneur.

2. Initial investment

Many freelancers ignore the idea of ​​investing initial middle East Mobile Number material capital in their business. Often, because they don’t have the money and other times because they don’t understand its  importance. My advice? If you want to be a freelancer or start your own company, first raise some initial investment capital. This capital is essential… or rather: crucially important for your business to take off.

Okay Cadu, but what is it for? Well, it is used for many things. I will list some:

• Buying equipment : having good tools can increase your productivity and consequently your profit margin. This will allow you to produce more in less time, with more quality and with less effort. For example, for those who work with graphics software, buying a powerful computer can save hours of work per month. Or having a digital drawing table can make the process of creating illustrations much easier. Don’t skimp on your work tools, as they can even become the differentiator of your business.

3. The company wins

One mistake I see 99% of freelancers make is thinking andorra business directory that all the money that comes in is theirs. Regardless of whether you are self-employed or in a partnership, you should treat your profession as a real business, that is, as a company. And, when a sale is made, the money should go into the company’s account and not the account of the professional who works for it.

“Any company is always made up of at least two people: the legal entity and the individual.”

I like to say that any business is always made up of at least two people: the legal entity and the individual. All contracts are made in the name of the legal entity, which is the entity that receives payment for the products and services sold. The individual is your employee, working for a salary. This concept should be applied whether you are an individual entrepreneur or a company with two or more individual partners. This allows the company’s finances to be planned, to be able to account for profits or losses, and to have a working capital reserve.

But Cadu, what happens to the surplus? Well, the surplus is the company’s profit . At the end of a fiscal period, when a balance sheet is made and the financial plans are reviewed, a decision is made on what to do with the profit, whether to reinvest it or distribute it among the partners, for example. Normally, this decision is made beforehand, in the financial planning done before the beginning of the fiscal period.

4. Sales and pricing planning

This is a topic that generates many questions: how do I price my services? Well, there are many strategies. You can charge based on the difficulty of execution, the time spent on the task, the type of project, combine all of these methods, etc. In any case, the amount charged X the quantity sold must meet the company’s financial needs. In other words, it must pay all costs (including your salary) and, preferably, make a profit.

Three things are essential to consider: the mix of services you offer, the demand supported and the objective to be achieved at the end of the fiscal period. To better clarify this idea, let’s look at an example:

How to create scenarios to plan sales and pricing:

Let’s say that to cover all costs and make a 30% profit, your business needs to earn R$10,000.00 per month, or R$120,000.00 per year. Let’s assume that you sell two services: an institutional website and an online store.

In this scenario, you could sell 6 websites for R$1,666.66 or three online stores for R$3,333.33 per month. What do you think is easier or more viable to sell? Six websites or three stores? This can give you a clue as to how to act.

It may be easier to sell six websites each month, however, you must evaluate whether you can produce and deliver this demand. It may be more feasible to deliver 3 stores. If you cannot deliver any of these demands, you can think about the opposite. How many websites and how many stores can I sell and/or deliver per month? Let’s say you can deliver 3 websites or 1 store. Which is more advantageous? Three websites may give you more profit (in this case R$4,999.98), but they may take up all your time. Selling one store would give you less, but you would have time left to work on your marketing and add value to your business and in the medium term you would be able to sell just one store for R$5,000.00.

5. Sell monthly services

Another alternative to guarantee your income is to sell monthly services. This type of recurring income guarantees you income every month, but it is harder to increase profits, since customers shy away from high fixed costs. But it is worth considering this model. We have a post here on the blog that talks about “ 8 services that generate monthly income for a digital agency ”, it is worth reading!

So, did you like this article? Did it help you think about your business? Do you have any interesting experiences to share with us? If so, I invite you to leave a comment!