Five things it took me five years to figure out

In early 2012 I found myself thrust into the teeming ranks of unemployed journos attempting to transition to freelancing. Spoiler alert: I seem to have made a go of things over the subsequent half decade. But not without plenty of mistakes and missed opportunities along the way. Here are five of the most important lessons I’ve learned the hard way.

1) EVERYTHING comes back to the Pareto principle

It was only once I began operating a business that I truly appreciated just what an iron law it is that approximately 80 per cent of outcomes come from 20 per cent of inputs. Want a few pertinent examples?

Unless you take steps to avoid it, 80 per cent of your income will end up coming from 20 per cent of your clients
Twenty per cent of your clients will give you 80 per cent of your grief
Eighty per cent of your leads will come from 20 per cent of your marketing efforts
Perhaps most importantly of all, 20 per cent of freelancers make 80 per cent of the money
The ratio may vary – sometimes it’s 70:30, other times 90:10 – but the dynamic inevitably plays out. The secret to maintaining your solvency and sanity is relentlessly reviewing which 20 per cent of inputs you should be ramping up or screwing down.

2) Journalists know nothing about running a business

Ever mapped out your customers’ journey? Are you au fait with the difference between economies of scale and economies of scope? Can you state your value proposition?

No?

Me either in the early days.

At most, half of having sustainable freelance career comes down to technical ability. The rest revolves around mastering the fundamentals of capitalism. That is, working out how to produce something a sufficient number of people will buy at a sufficient price to keep you in printer ink and two-minute noodles. (See below for some further clarification of this point.)

There’s no shortage of overpriced shonks out there selling the secrets to entrepreneurial glory. Avoid them. A reputable business mentor, ideally recommended by someone you trust, can be a great investment but you can teach yourself the basics at little or no cost. Just about everything you need to understand about how to create a successful business can be found in Michael E. Gerber’s The E-Myth Revisited. Tim Ferriss’s The 4-Hour Workweek and Tools of Titans are also accessible reads for small business neophytes. Plus, there’s a tsunami of free education info floating around in cyberspace.

3) You either offer a quality product or fight for scraps at the arse end of the market

First-world freelancers can’t compete on price with third-world ones. Or even local graduates willing to intern for prolonged periods. You need to create a non-commoditised product that will allow you to earn a premium – or at least liveable – income. For your sake and theirs, avoid getting into race-to-the-bottom price wars with freelancing colleagues.

4) You do jobs to develop a relationship, not vice versa

Shortly after going freelance, I started doing some writing for a government agency. I’ll call the commissioning editor I was dealing with Heather because that’s her name. Heather sent around $10,000 of work my way while she was working for the Federal Government. Then she moved to a content marketing agency, where she sent a lot more than $10,000 worth of work my way. Then she moved to a financial institution, where she continues to send thousands of dollars of work my way. That’s not all – Heather has also recommended me to her successors when leaving roles and her colleagues at new roles. Directly or indirectly, Heather is responsible for over $150,000 of the income I’ve earned over the last five years.

The moral of this story? Firstly, Heather is a champ. Secondly, I started off thinking you established relationships to get work flowing in. Now I realise you seize opportunities to provide work in the hope it will lead to a long-term, mutually beneficial relationship.

5) Some clients just aren’t worth it

While we’re on clients, sooner or later you’re going to get one who is, on paper, a dream. They’ll pay good money, process your invoices on time and send lots of work your way. Yet every time you see their number come up on your phone, you’ll get a sick feeling in your stomach. You’ll try hard to ignore that feeling, especially while you’re checking out your bank account. But it won’t go away. In fact, it will get progressively worse. Eventually, you will somehow bring yourself to act on that feeling and fire the client. You will take a financial hit, possibly a frightening one. Nonetheless, you will come to realise it was the right decision and never regret it.