The secrets of smart freelancers: 5 questions for Michelle Goodman

The freelance marketplace is a cauldron of activity. Those of us who have been at it for years are finding work from the very employers who have been showing employees the door. And many of those exiting employees are realizing that it's about time to acquire some freelancing skills -- whether for short-term survival or long-term livelihood.

When it comes to dispensing smart advice about freelancing, there is no greater guide than Michelle Goodman, author of the books, The "Anti 9-to-5 Guide" and "My So-Called Freelance Life." Not only does Goodman have the answers to the most vexing questions about freelancing, she is also a vocal advocate for the rights of freelancers, and for reminding independent workers to speak up for ourselves. Below is Goodman's wisdom on how to survive and thrive as a freelancer today.

Shine: Freelancing must be more competitive than ever with all the formerly employed folks now in the game -- is there enough to go around?

Goodman: There's still a ton of freelance work out there for those willing to hustle hard and diversify. CareerBuilder recently reported that to save their beans, almost a third of U.S. companies planned to hire freelancers and contractors this year. (We're cheaper than employees because we're short-term and we buy our own benefits.) And while more people are freelancing now, they won't all be your competition. Different writers, designers, programmers, marketers, and business consultants have different niches -- meaning you're not all vying for the same jobs.

Shine: Have you seen freelancers develop any creative arrangements to improve their opportunities in this competitive environment?

Goodman: More and more freelancers are collaborating on project bids to boost their odds of getting work and to chase down more lucrative gigs. Instead of vying for three big contracts in one month, a copywriter who teams up with a web designer or project manager can perhaps shoot for half a dozen contracts or more in a month.

Shine: How do you land that first client?

Goodman: If you have an empty portfolio or client list, you can remedy that by volunteering your services to a pet non-profit or community group for a project or two, or by bartering with a self-employed pal. If you already have work samples and client testimonials, but don't have a website, a couple of social media profiles and an email out to everyone you know saying you're open for business, it's time to get cracking. Other ways to find paying clients: Contact outsourcing agencies. Befriend other freelancers though Freelancers Union meetups and sites like Biznik; some may need subcontractors, others may have leads to pass on. Also, be flexible. Sometimes you can land that first client by taking a last-minute rush job or by agreeing to do a small, paid segment of a larger project (e.g., editing a chapter of a book) as a test run.

Shine: How do you find legitimate work-from-home opportunities?

Goodman: Steer clear of Google ads; most are scams. Instead, see the site Rat Race Rebellion, well-known for its scam-free at-home job listings. Some freelancers swear by sites like Elance, many of which have checks in place to ensure you don't get ripped off. Be prepared to give Elance a cut of your fees though. Finally, if using Craigslist, don't waste time on ads that don't list a company name or URL, or any startup that offers to pay you in promotion only - unless you need portfolio samples.

Shine: What are the most common mistakes that freelancers make?

Goodman: Not charging enough. When setting prices, some newbies forget to account for health insurance, vacation and sick days, the self-employment tax, and the fact that we don't get paid for our admin work and business development. An easy formula is to double the market rate for a salaried worker at your experience level, in your industry and geographic location. (Here's a more precise formula.) Being afraid to negotiate is another big mistake new freelancers make. Not asking for what you know you're worth because the economy's bad or because you don't want to offend the client is ludicrous. This will only lead to you working extra hours so you can afford to live, doing shoddier work in your rush to finish, and driving down the rates for the rest of your field. It's important to remember that you're running a business, not hosting a dinner party.