Yahoo Finance Freelancing the Buffett Way: How To Build Wealth Using Warren Buffett’s Financial Strategies
Warren Buffett’s investing strategies have made him very wealthy, and many investors try to apply those strategies to their own portfolios so they, too, can get rich. But Buffett’s homespun wisdom applies to other areas of life, as well, and freelancers can learn a lot from what he has to say.
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Here are some of Buffett’s famous quotes and how they apply to freelancing.
“In the business world, the rearview mirror is always clearer than the windshield.”
This is another way of saying that hindsight is always 20/20. The underlying sentiment is to always learn from your past experiences, whether they’re good or bad. Keeping this adage in mind will keep you from repeating past mistakes, and, over time, will help you hone your freelancing business to the point where it’s a profitable, sustainable venture.
“Be fearful when others are greedy, and greedy when others are fearful.”
Perhaps one of Buffett’s best-known quotes, this one is much easier said than done. In the stock market, it means to invest in down markets and hold back when stocks are high. A similar tack can be taken in freelancing – working harder to get new business when things are slow can often give you a leg up, as your competitors may be disenchanted and give up. And freelancers often find that economic slowdowns work in their favor, as companies put off hiring but still need to get work done.
“Price is what you pay, value is what you get.”
As a freelancer, you likely have specialized expertise that you provide to your clients. Lending that expertise, even if it’s not within your specified scope of work, can increase your value to your clients, enabling you to charge a higher price for your services.
“You don’t have to swing at everything — you can wait for your pitch.”
Newly minted freelancers have a tendency to jump at every job that is offered – and with good reason. Getting a freelance career off the ground isn’t easy, and sometimes it seems like you’ll never have enough work. But once you have done a few jobs and have a little bit of a cushion, you can be pickier. Take only jobs that you enjoy, that pay your rate, and that will enhance your portfolio.
“If at first you succeed, quit trying.”
This may sound like contradictory advice, but what it means is to stop trying once you find what works. Once you have a niche that people will pay you for, and you have an established clientele, you can stop trying to figure those things out. It doesn’t mean you stop trying new things, just be sure to stick with what works.
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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
When you’re an employee, you can just walk into a new job where the responsibilities and tasks are all laid out for you. Freelancers, however, have to build their own job from the ground up and this takes time. Don’t forget to take the time to lay the groundwork for your future success.
“The most important thing to do if you find yourself in a hole is to stop digging.”
One thing budding freelancers struggle with the most is setting rates. There are several ways to do this, like determining what you need to earn per year and backing into an hourly rate, checking other rates to see what the market will bear, etc. But clients will often try to negotiate your rate, and it’s tempting to give in if you need the work or it’s a particularly attractive job. But you can’t win a race to the bottom, so practice saying, “My rate is $X,” and be prepared to walk away if the client won’t pay.
“Don’t pass up something that’s attractive today because you think you will find something better tomorrow.”
Scalability is an issue for most freelancers, since you can’t duplicate yourself. So, it may be tempting to pass up a job offer if something more lucrative is a possibility down the road. This is a mistake for two reasons. First, the future job may never materialize, leaving you with no job at all. Second, if you end up overbooked, telling one company, “I’d love to do this work for you, and I can start a month from now,” lets the company see how in demand you are. If the company can’t wait, see if you can outsource some work to a trusted colleague (if your contract allows it), or resign yourself to working 80 hours a week until one of the jobs is done.
The last resort is to turn down a second job. If you do that, be sure to let the company know why. They will likely appreciate your dedication to the client you committed to first and may think of you for future work.
“Never depend on a single income. Make an investment to create a second source.”
Buffett likely intended this comment to refer to people who work full time and invest to make additional income. But it applies to freelancers as well. Investing some of your profits is one way to do this. Another way is to have multiple types of businesses so that if one sector experiences a slowdown, you can pick up work in another area.
“The most important investment you can make is in yourself.”
Freelancers don’t have a line manager or an HR department to encourage professional development, so it’s up to you to keep your skills up to date and expand your abilities. Joining professional organizations in your field is a good place to start. If you are in the technology space, it’s especially important to continually improve your skills and stay up to date on the latest developments.
Freelancing provides a lot of flexibility in terms of hours, location, type of work and so on. But it can be challenging, particularly at first, to carve out a significant income. Whether your freelancing gig is your full-time job or a side hustle, applying Buffett’s strategies could make you wealthier.
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This article originally appeared on GOBankingRates.com: Freelancing the Buffett Way: How To Build Wealth Using Warren Buffett’s Financial Strategies
