People usually begin freelance work with lots of optimism. They are going to do what they love; they are going to be in full charge of their own work lives. And they are going to make a great living.

After all, look at all of the entrepreneurs out there who have achieved amazing success with their freelance work?

All it takes is the commitment, motivation, and hard work, right?

Not so fast.

Your enthusiasm is admirable, and it will take you far, at least in the beginning.

But there are some hidden dangers of freelance work that you may not have considered. Being prepared for them will help you recognize them and avoid falling “prey” to them.

Here are five categories of dangers that you will no doubt face when starting freelance work.

A. Business Organization/Responsibilities

There is a lot to do to set up a business, and you cannot ignore any of it.

  1. How will you organize your business – are you a sole proprietor, a partnership, or one of the many types of corporations? Each of these has legal and tax implications. To avoid trouble down the line, get some sound legal advice and file everything you need to file.
  2. How will you track income and expenses? The taxman wants to know. You cannot just “fly by night” and try to make up something when it is time to file your taxes. Get a good accounting software package – most of them will organize all of your financials for you, so long as you keep up and get those numbers in there.
  3. What kind of insurance do you need? If you might face any type of liability in the operation of your freelance work, you need insurance. Again, get legal advice on this matter. You don’t want to face a lawsuit that could wipe you out.

B. Client/Customer Relationships

This is the crux of your business. Without customers or clients, nothing happens. And those relationships can be great, good, or just horrible. Your job is to avoid the horrible.

1. Get everything in writing.

Verbal agreements only create misunderstandings down the road. Suppose you are engaging in verbal agreements with clients. All of a sudden, a client complains that you did not fulfill the terms of your agreement.

Maybe he feels you missed a deadline or did not follow their instructions. You have no recourse when they decide not to pay you as a result.

2. “Creeping Clients.”

These are clients or customers who keep adding on to the parameters of the project during the course of completion. You want clients, but there comes a time when one is just too demanding of your time. You can avoid this in two ways. Again, have it all in writing upfront.

And second, have the self-confidence to speak up, explain that his latest “demand” goes beyond the contract and give him the extra fee it will be. And, get that in writing, too.

3. Finding the Balance

Finding the balance between keeping clients apprised of progress and not responding to unreasonable demands for reporting. You will have clients who want daily reporting from you. You cannot do this. Tell clients upfront, based on the breadth and depth of the project, when progress reports will be given.

Another tactic will be to hold office phone hours and inform clients of those times. Do not answer the phone at other times. Get a cell phone specifically for business, and you can stick to your schedule. Never give a client your personal cell phone number.

C. Social, Family Life

Yes, your social and family life will suffer, at least in the beginning. You will be building a business, your days will be long, and your weekends will not be your own.

  1. It’s easy to get into this habit, even after it is no longer necessary. As your business grows and income is no longer a big issue, get yourself back into your personal life. It may be hard to do.
  2. Even in the beginning, plan at least one evening out with partner or friends, even if it is a short one. Just a few hours a week will help your attitude and help to prevent burnout.

D. Savings and Retirement Planning

This is a real danger of any freelance work. You do not have a work-related retirement plan. Your only source of retirement savings is your self-employment tax through social security. Certainly, you do not want to live on social security alone.

  1. The temptation is this. Once you begin to earn more than necessary to live, it is so easy to “live it up,” take that vacation, buy that new car, etc. Certainly, you should reward yourself for your hard work and success. But set a percentage that you will put aside, as your income grows – an IRA or other retirement plans.
  2. Do not scrimp on health insurance. A major illness or injury can wipe you out.

E. Emotional Health

It can creep up on you, without realization. The symptoms include reduced ability to focus, trouble sleeping, irritability, and sometimes just a general lack of enthusiasm and positivity. You are probably responding to stress and burnout. It’s common among freelancers who are trying to please clients, meet deadlines, worry about income and have sacrificed their personal lives to build a business.

Depending on the stressors, you will want to consider the following:

  1. Meet current deadlines. As you set new deadlines with current or new clients, set your schedule so that you have a few days when you are not facing any. Do this every month or so. When you have those days without the stress of deadlines, you will be able to work more casually, take longer breaks, and get to bed earlier. This alone will serve to renew you.
  2. You’ve heard it before, but it cannot be overstated. Physical exercise and a proper diet are critical for people who work under stress. These are two of the best methods of gaining a sense of well-being. If you feel physically good, your mental health will improve too.
  3. If you do not have enough clients to generate the income you need, consider expanding what you can offer. This may mean taking a class or two, or it may mean developing a new product. Just the change in activity will help.
  4. If your income is solid and your business still building, consider bringing in someone to reduce your workload.
  5. Make time for friends. Have lunch; go to happy hour; plan a party.

Your emotional health is critical to business success. Don’t ignore it.

Don’t Freak Out

If all of this sounds a bit scary or discouraging, understand this. Knowing these potential pitfalls of freelance work in advance will ensure that you can put into place those activities and behaviors that will avoid them. Freelancing is a great life if done right. You can do this!

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