How to Start a Freelance Business Whether You’re Just Starting Out or Just Getting Serious
So you have a skill or a service that you know people need, and you’re ready to get on this gig biz train. You’re excited and — let’s face it — a little nervous. No worries, we help you figure out how to start a freelance business.
We all are when we first start branching out into the world of entrepreneurship. As a freelancer, you have a lot of control over your work life, and that level of ownership can be a little intimidating.
We’re here to make the process easier for you. The freelancer industry is welcoming and helpful, and your potential clients need you!
Writers, graphic design artists, tech gurus, and everyone else ready to work for themselves fall under the “freelance” umbrella.
This guide is for everyone looking to turn their hobby or side hustle into a paying gig – everyone who wants to start a freelance business. Whether you’re just starting or are digging in and getting serious, we have you covered.
1. Outlining the First Steps
Defining your product or service is the first thing you’ll need to accomplish.
This can’t be vague, though. The better you know every aspect of your soon-to-be business, the easier this process will become.
There are three parts to the creation aspect of step one:
- Spelling out your product/service
- Researching the competition
- Learning your market
What Will You Offer?
You have a skill that makes you think a freelance business is in your future.
What is it?
Even more importantly: how will you tell your potential customers what you can do for them?
Break down your service or product to the bare bones.
As a self-employed small business owner, you have a ton of flexibility. But if you aren’t clear from the start about what you want to provide, you might find yourself getting distracted with all the possibilities.
Focus on your basics as you build the foundation. Then, you can expand later and set loftier goals.
Researching the Competition
As you get started, you don’t want to stress the competition, but you do want to learn from them.
Now that you know your target area, audience, and niche, do a little Googling to find out who you might be competing with.
As you research, keep a notebook next to you and write down these points for each competitor:
- What you like about their site and what you don’t
- Do you notice what seems to be working for them
- What they charge for similar services
After you’ve evaluated a few of the leading businesses like yours, think about how you can stand out and be unique.
Learning Your Market
Finally, it’s time to learn more about your target market. Don’t assume you know who needs your product or service. Dig into your audience and get to know them.
To clarify, targeting a particular market means you’re putting your budget where the need is the greatest. You’re not excluding anyone else. You’re simply focusing your marketing materials efficiently.
Digging Into Your Target Audience
There are a few ways you can effectively find and understand your market. Start with your current customer base if you have one.
- Who are your main clients?
- What do they have in common?
- Why are they buying from you?
If you’re comfortable doing so, ask each person what attracted them to your business and if there would be anything else they’d like you to offer. This helps you to understand their interests and needs better.
Then, use the analytics features of your preferred software program to learn about demographics. You’ll find dozens of options.
Scan through each of them to look at the report features and data visualization on the dashboards.
2. Registering Your Business (All the Tax Tricks)
Here comes the fun part:
Do you register your business with the IRS as an independent contractor, sole proprietor, or LLC?
If you have no idea which one is best for you or where to start, this section is for you.
Breaking Down the Categories
The main reason people register as a business entity with the IRS is to benefit at tax time. When you’re a part-time or full-time business, you can claim deductions that you don’t get with your personal finances.
Here’s a quick summary of the three categories that mean you’re your boss.
Independent Contractor or Freelancer
As an independent contractor or freelancer, you do work for another business, but you dictate the hours and the rates. The two terms are similar but distinctly different.
Independent contractors work on hourly or project-based rates. These amounts vary based on the clients, but you may have one or two steady clients that provide the bulk of your work.
A freelancer typically has a variety of one-time customers. They choose their schedule, rates, and who they work with, as well.
The next step up from independent contracting/basic freelancing is a sole proprietorship. In this designation, you are an unincorporated business entity.
The primary reason to become a sole proprietor is that the label separates your business and personal finances.
As an independent contractor or freelancer, if one part of your life is struggling, both can be liable. But in a sole proprietorship, the two areas exist separately.
Sole proprietors are often lawyers, doctors, and those in careers with a chance that a lawsuit or bankruptcy would affect their assets.
Learn more about being an independent business owner vs. sole proprietor here.
The last option is a limited liability corporation (LLC). It’s a business structure in which the owners are members of the entity. You can have one owner or as many as you’d like.
LLCs benefit entrepreneurs. To maximize the protections afforded by an LLC, open separate business and personal bank accounts. Avoid commingling the assets and funds.
As a freelancer in any of these categories, you are responsible for paying taxes out of your income quarterly or annually.
Make sure you’re organizing your documents and setting aside part of your pay …
Or you could end up shell-shocked when you file your first freelancing income taxes!
Use the legal and tax experts at Selfgood to help you get started.
3. Setting Up Your Online Presence
Whether you’re going to have a brick-and-mortar shop, an in-home office, or e-commerce shopping, you need an online presence. If you’re an unknown business, the first thing most people will do is Google you to see if you’re legit or a scam.
Your online presence doesn’t have to be anything fancy. A LinkedIn profile, a business Facebook page with testimonials, or a website will all work.
If you do plan on building a website, keep in mind that it can get pricey. You’ll need to buy a domain name, host it on a server, and create the site. Start with a basic presence through social media for your online business first, then build up to a website when you’re ready to use it.
Getting a Business Profile
Both social media and websites are great, especially if you want to promote a podcast or host videos. But setting up with directories like Google My Business is an excellent first place to start.
Google My Business and similar directories let you set up a business profile for free. This tool puts the control of your business’s appearance on Google Search and Maps in your hands. You add things you want potential customers to see — like your website, hours, and contact info.
It also lets you connect with customers and share updates, take orders online and manage your business in other ways.
To sign up for the free Google My Business account, head to google.com/business. Click the “Manage Now” option, then follow the steps to create your account.
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4. Networking and Marketing
You’ve established yourself as a legitimate business with an online presence. Now, it’s time to network and start getting clients for your freelance work.
Depending on the type of work you do and your current network of people, you may already have a group to start with. Share your online profiles with your friends and family, and ask them to share as well. Slowly, this will build a large enough audience that garners new clients. But it’s a short-term solution.
As you grow and feel ready, you can head over to marketplaces and content marketing groups. These are places where like-minded people connect to a network and help promote each other’s businesses.
For instance, a freelance writer who needs a website can ask for advice about finding a good web designer. Or, if you want to grow your client base, you can offer to do a few freelance jobs at a reduced rate in exchange for paid referrals.
5. Setting Up Your Timeline
Jumping into your freelance career isn’t an immediate step. You need to set goals and milestones and add a timeline to follow.
This will be different for everyone. However, if you want to become a successful freelancer, you’ll need to treat it like a full-time job. There’s a lot of hard work involved, and your work has to be high quality if you’re trying to build a solid reputation.
That said, there are some consistent milestones almost every freelance business owner goes through.
Here’s an example of what yours could look like, tweaked for your needs:
Analyze and break down skill sets, research competitors.
Research your target market of prospective clients.
Determine pricing strategy, invoicing templates, and hours.
Set up an online presence with Google My Business, and register with the IRS.
Set up an online presence with LinkedIn and Facebook, and purchase a domain name.
Create a marketing strategy, including word-of-mouth advertising and social media sharing.
Start building a website using WordPress.
Begin long-term project development planning (podcast and blogs), continue marketing design and website building.
Sign up with Selfgood and prepare health insurance, finalize marketing design and website.
Release official marketing on social media and go live with your website.
If you’re ready and have income, you can release yourself from working for someone else. If not, you start planning the ramp-up to the day you quit your day job.
This slow-start approach to setting up a freelance business isn’t the only way to do it. However, if you’re not going all-in immediately, it’s a strategy that lets you earn an income while you’re preparing to freelance full-time.
As with parenting, there is no step-by-step guide for creating your own startup business that works for every situation.
But with these tips and help from resources like Selfgood, you can have a successful freelance business as quickly as you’re ready to get started.