When your new business efforts result in a full pipeline but your wallet is still light, it can create a stressful situation. You might end up turning down a good opportunity only to lose a more lucrative RFP, leaving a big hole in your client portfolio. Or you might take on more work than you can manage, compromising your work/life balance. This can also impact your reputation due to overextending yourself.
Below are three common reasons that cause this situation, followed by suggestions for managing them.
Three opportunities, yet no contract
Here’s a hypothetical, though not uncommon, situation for a digital marketing freelancer we’ll call Franny. She has three new business prospects in the pipeline.
The first is a small project with a cool startup that she hopes will turn into something bigger down the line. However, the potential for ongoing work has never been discussed with the client.
The second opportunity is to join a team of freelancers that are pitching a large, well-known health tech company. If the team wins the business, Franny would be super busy, earn a high retainer, and get terrific exposure.
The third opportunity is with a small company. The client wants Franny to start ASAP. The retainer is solid, though smaller, than the other opportunities in the pipeline. Franny’s been stalling the smaller company because she waits to hear back from the other two prospects.
Here are some ways to think about each opportunity.
Opportunity #1: Small project with the hope of a long-term contract
On the plus side, this project provides income, the potential for future work, and the chance to make new connections. Those new connections could lead to referrals. However, the client never discussed future opportunities. Also, Franny hasn’t done the math to figure out if the work would be profitable.
When it comes to projects, many freelancers tend to think about them purely from a revenue-generating perspective. However, there are other factors to consider. This includes how much time you have available, how much time the project requires, and the client’s expectations. As a freelancer, you have to factor in the cost of health insurance, taxes, and retirement.
Based on that formula, not every opportunity is going to be profitable. In other words, can the time working on a project be better spent on new business development that leads to more lucrative opportunities?
Since Franny doesn’t know if the project will lead to something bigger, she has to make a decision based on the opportunity as it currently stands.
Opportunity #2: Join the team of freelancers
With this option, it’s best for Franny to let the lead on the business know immediately where she stands. That conversation should cover how many hours Franny would be available if she wins other business.
This approach doesn’t take Franny out of the running, and it’s fair for all parties involved. It also gives the lead enough time to redistribute hours or find an additional freelancer if necessary.
If the big client prospect doesn’t come through, that other freelancer leading the project will remember how Franny handled the situation. The other freelancer is more likely to contact Franny when future opportunities arise.
Opportunity #3: Take the small client with the secure contract
Looking more closely at this opportunity, there are many positives. The company’s products and services align with Franny’s area of expertise. The retainer matches what was outlined in the scope. And the client is reasonable and likable. Plus, the client is eager to work with Franny. What was her hesitation?
Franny got distracted by the idea of having even more business than she thought she could handle. She also thought she had the potential to earn more from the other prospects. In reality, we all know that a client is not a client until the contract is signed, and revenue can’t be spent until the check clears.
One potential scenario she considered was starting the assignment and then leaving if the larger team of freelancers won the big account. She knew she could temporarily put in extra hours while she found a replacement for the smaller client. However, this was not a great idea.
From the client’s perspective, they spent time securing the budget, finding the right freelancer, and investing their resources getting her up to speed. For the freelancer to suddenly walk for a seemingly better deal would impact Franny’s reputation and the client’s reputation with her management. And if the bigger opportunity didn’t work out for Franny, then what?
The Solution: The Secure, Long-Term Contract
After mapping out each opportunity and what-if scenario, Franny signed the contract with the smaller company before the opportunity disappeared.
She also turned down the short-term project because the numbers didn’t work for her. However, the numbers did work for one of her freelancer friends. Franny introduced him to the client. Both of them were grateful for the intro, and Franny was able to strengthen two relationships.
About a week or so later, Franny learned that the opportunity with the team of freelancers was still in the works, but there hadn’t been any changes in the status. It could be several more weeks before they moved onto the next stage, if at all. While she’s not banking on winning it, she’s also not wasting her time hoping it materializes. If it does, she says she’s committed to figuring out a way to make it work.
Freelancing can be feast or famine, especially when you’re actively going after new business. It requires a realistic perspective, which isn’t always easy when you’re in the thick of things. You can make that happen by working out every possible scenario and making the best decision based on the information that’s in front of you — not what you hope will work out. It also helps to turn to another trusted freelancer as a sounding board.
Subscribers can read the ebook, “The Complete Guide to Finding Freelance Work…Without Looking Desperate.”