Roughly a third of the U.S. workforce is freelance, and of those, a large and growing number are full-timers who have professional portfolio websites and spend for all sorts of necessary infrastructure required to run a real business.
Whether it's with pencil and paper, a spreadsheet or a quick eyeballing of the financial data in your accounting package, that infrastructure should include forecasting. You can't make ends meet as a solopreneur if you aren't accurately forecasting income and expenses—using data to make good decisions about which clients to keep, which to nurture, and which to lose. Having data can also make it easier roll out rate increases and plan vacations.
For the last two of my 14 years freelancing I've used a spreadsheet to manage my income and to forecast revenue while we track family expenses with pencil and paper. It works, but it also leaves much to be desired: I can't easily see which clients are the most active, which pay the fastest, and which demand more of my time than they should.
So, about a month ago, I turned to Cushion, an app that helps freelancers track their schedule, income and expenses. Here are four things I've learned about my business since.
1. Cash flow is my biggest problem
Despite making good money as a freelancer, I can still suffer significant droughts in cash flow because over 50 percent of my earnings derives from monthly work for two large clients. When and how they pay makes a difference in our cash flow, and consequently, when I can pay bills.
At some point, we'd probably benefit from having a cheap line of credit for smoothing out dips that occur when one of my large clients is slow to pay. In the meantime, I've taken to paying for one of these clients to ship checks to me via FedEx. Everyone wins: I get paid faster, and the client avoids paying for postage or hassling with electronic ACH payments.
2. Big clients are less predictable
Freelancers dream of landing big fish clients who'll make life easier by paying fat sums on a regular basis. That can and does happen; it's happened to me more than once. The trouble with these big clients is they're sometimes unpredictable. Operating without a system which tells you how much of your schedule and income is dependent on the whims of whale clients can be dangerous; you won't fully understand the implications if the workload, payment terms or staffing requirements change.
In my case, Cushion is reminding me that at least two of my large, regular clients are so unpredictable that I'd do better to forecast as if they'll never pay me another dime. Realistically, I can't do that right now. But arranging work to get to that point would allow me to sock away savings as payments from these volatile clients, making it easier to navigate the inherent chaos of having a client that's seasonally busy.
3. Short projects boost my hourly rate
Stories like this one are not only fun to write but they also produce the best hourly rate because the work that goes into them can be done fast enough to make the effort worthwhile. They earn me a good hourly rate as a result. (Cushion doesn't just track payments and invoices, it can also track time spent on and duration of every project you take as a freelancer.) Having short projects is also good for me in another way: quick-turn, lower paying writing work fills gaps left when large clients are taking their sweet time with payments.
4. I usually get paid three times a month
My client list is varied and every month is different — that's the nature of freelancing, after all. But even with the constantly changing mix, Cushion has showed me that I tend to get paid in bursts: on or around the 5th, the 15th, and the last week of the month. Having this data means I can better structure our finances to pay bills. (I'm naturally bad at this, so any informed help is good help.)
Cushion isn't the only app out there, of course. Harpoon offers many of the same options and even more features, which, for me, was a problem: too many features means too much management and not enough insight. Harvest is an excellent time tracker and integrates with QuickBooks, but it's also more than I need as a freelancer.
Also, neither of these tools was cheap enough, or good enough, to keep me from building a spreadsheet to track everything. Cushion is my replacement for that spreadsheet—or at least it will be, once I get all my data entered.
What should your approach be? Only you can know for sure. Try every app that interests you. Experiment in short bursts and then evaluate and share your experience with fellow freelancers. Ask if they see ways to improve on your process and then tweak as needed.
I'd also advise listening to two podcasts from veteran freelancers: Ask a Freelancer, which is sponsored by Cushion and hosted by freelance illustrator Andy J. Miller, and Free Agents from freelance writer Jason Snell and independent attorney David Sparks.
You can also reach out to me on Twitter (@timbeyers) with other questions or comments. I'd love to hear what you're doing to make your something come to life.