1. Wrong pricing
Pricing is hard, regardless if you are selling a physical product or a service. How do you price your products to make money and grow your business? There are a few options:
If you sell physical products, make sure to account both for material and labor used to
manufacture the product, but also don’t forget the indirect costs such as product development, marketing, sales, etc. With online products and services, you can charge clients per hour, per project, or a monthly fee per bundle of services. The price depends on where you are in the process of starting your business and what you are selling.
As a beginner freelancer offering services, it’s a good idea to charge an hourly fee. This allows you to get the hang of your industry and your working routines. After a while, as you gain experience and productivity, it’s smart to switch to charge per project.
A project fee is all about putting a price on the value you deliver rather than labor hours. As a copywriter, you might spend a few hours to write a sales email with the potential of bringing in thousands of dollars in revenue for your client. The labor cost for the email might only be a few hundred dollars, but the value is much higher.
2. Not hiring a lawyer
Hiring a lawyer might seem like a redundant cost, but abstaining from it can have much bigger repercussions down the line. Online templates for client contracts and NDAs can be helpful, but establishing a business entity, setting up contracts for equity and ownership rights, protecting intellectual property, and making sure you are not violating any laws should be handled by a lawyer. To keep the costs down, always be prepared for the meetings with the lawyer. Bring your business plan with you. That will be the guideline for the lawyer to advise you on what you need.
3. Hiring the wrong people
Start-ups that grow rapidly find themselves in a situation where they need help quickly without having a big (or any) budget to spend on hiring. Often, many end up hiring friends or family simply because they know them, not because they are good. However, if your team does not understand your business nor shares your drive and values, you will end up losing money and time. A good question to ask people during interviews is what they know about your business and your industry. You’ll quickly realize if someone is just out to get any job or if they really are passionate about the same things you are.