As the old saying goes, “Don’t put all of your eggs into one basket.” That’s as true in business as it is in life.
For freelance web designers, this means not relying too much on a single client or project. Doing so is risky. If something unexpected happens, you could find yourself without a major source of income.
The reality is that clients will come and go. And while losing a client could cost you significant revenue, the goal is to be able to survive and move on.
With that, it’s important to diversify your client roster and revenue sources. This will help to prevent a tough situation from becoming a disastrous one. Your ability to stay in business may depend on it.
Thankfully there are several ways to distribute those proverbial eggs across multiple baskets. Let’s explore some ideas to help strengthen your web design business.
Find Out Where You’re Most Vulnerable
To start, take a look at the big picture. How is your business doing? What sources of revenue do you have?
Since you’re likely keeping track of revenue for tax purposes, this information should be readily available. And it can tell you a lot about where you stand in terms of diversity.
For instance, if you see that a single client makes up a majority of your incoming cash flow – that should set off alarm bells. It’s not that you shouldn’t have big clients. But if that gig suddenly went away, where would it leave you?
The importance of some clients will be obvious. But you may be surprised at how much a particular project means to your bottom line. That’s why it’s worth taking the time to assess where your money is coming from.
The more information you have, the better you can prepare for an uncertain future.
Look for Opportunities to Increase Revenue Diversity
Now that you have an awareness of any clients that make up a disproportionate chunk of revenue, you can do something about it. However, the path you choose is a personal one.
It depends on what your goals are and the type of business you want to run. If you want to stay within the same niche, the answer could be simply marketing to more potential clients. Booking a few new projects could provide the balance you need.
But what if you don’t have enough time to take on new clients? This is a common pitfall of freelancing. We’re limited in time and resources. Thus, adding to our pile of things to do isn’t an efficient solution.
In that case, finding sources of recurring revenue may be the answer. That could be converting clients who pay hourly to yearly maintenance contracts. But there’s also regular cash in reselling third-party services such as hosting, or in creating a product and selling it yourself.
The idea is to add diversity in a way that works for you. Think about what makes the most sense for your situation.
Create a Long-Term Plan
If your client roster is tilted heavily in one direction, making a significant change will take time. As such, don’t expect to create more diversity overnight.
By creating a long-term plan, you’ll be able to work towards your goals within a specific timeframe. For example, let’s say that your biggest client is 50% of your yearly revenue. You could create a goal of reducing it to, say, 40% within a year.
From there, it’s about implementing a solution that will help you get there. Regardless of how you plan to do it, you’ll at least have some guidelines to follow. And you’ll also have a way to measure progress.
That said, the exact percentages are ultimately up to you. While it’s great to have as much balance as possible, it’s unlikely that any of us will be perfect in this area. In the end, it’s about finding numbers that make you comfortable.
Watch Where You Put Those Eggs
When you started your freelance web design business, client and revenue diversity probably weren’t at the top of your mind. That makes sense, as the first goal is usually to find paying gigs.
But as your business grows, leaning too heavily on a big client could backfire. Should they disappear, there’s always a chance that you’ll be left with too many bills and not enough money to pay them.
Instead of putting all of your eggs into one basket – diversify. Figure out how your revenue is divided. And, if you’re out of balance, consider your options for adding new sources of money.
Finally, create a plan and start implementing it. If things still aren’t moving in the right direction, you can always adjust along the way. The beauty here is that nothing is set in stone. You can evolve according to your needs and industry trends.
The hope is that you’ve set yourself up for long-term success and can withstand those unexpected bumps in the road.