6 Tips for Opening a Freelance Business the Right Way
Are you thinking of letting go of the traditional 9–5 to become a first-time business owner? If so, you’re probably on the right track. Opening a freelance business can offer more flexibility to live a lifestyle that you enjoy. You’ll have the freedom to choose when, how, and who you work for, including the kind of work accepted. But other considerations can make or break your business in the long-run. Few people consider them when they start their business, but in this article, we’ll cover each.
As a new business owner, you may have to start freelance as a side gig until it develops into a sustainable business. Therefore, you might find it tough at the beginning of your journey but it’ll be worth it. Freelancers contributed about five percent to the United States GDP last year, which is almost 1 trillion dollars. So if you’re concerned that freelancing isn’t profitable or that the market is small, don’t worry, it’s lucrative and the gig economy is thriving.
Here are some essential tips to help ensure your business is successful.
1. Define your objectives
“The trouble with not having a goal is that you can spend your life running up and down the field and never score.” —Bill Copeland
It’s tough to make progress without clear goals, so set targets. In the beginning, you may have one or two objectives and that’s ok. Your goals should be specific, measurable, attainable, realistic, and with a set time-frame for completion (aka SMART).
Here are some examples of clearly defined goals for a first-time business owner.
- Make 30 thousand dollars of extra income with the business by year-end.
- Grow the business to a full-time income in six months (insert date).
You should set primary and secondary goals. Primary goals are typically huge and require a longer timeline to achieve. Secondary goals are things that support the attainment of your primary objective. As an independent business owner, you should focus on goals that generate business revenue. Income generation is what will keep your business operating.
However, we’re not suggesting that you shouldn’t pursue charitable causes or any other endeavors. Only that to succeed at opening a freelance business, cash flow should be the top focus.
2. Create your portfolio
Decide on what skills or expertise you want to trade and create a portfolio. Clients need proof that you’re competent, especially for professions that demand critical thinking. You need an impressive collection to win those projects.
Go through all your past work and pick out the best pieces, those projects that make you shine. If you have nothing to put in your portfolio, then find creative ways to gain experience. For example, you can task yourself with a few projects, such as designing a bunch of sample websites concerning various niches.
For the customer, it’s all about assessing the risk. People hire and pay more when they are sure you’re a safe bet or can perform the task well.
3. Sort out how you’ll keep track of sales and expenses
One of the common mistakes of a new business owner is not thinking about sales and expense tracking early. That is an integral part of running an independent business, so figure out how you’ll keep track of revenues and costs. The best way is to use reliable accounting software with all the essential features.
QuickBooks is probably the most complete accounting software on the market right now. You can record virtually everything, such as general expenses, revenues, cost of goods sold, even track the time elapsed on projects, and much more. The software can also remove the manual work involved with data entry if you connect your business bank account.
4. Build a brand around your business from the get-go
Opening a freelance business isn’t easy, but it gets easier over time, providing that you establish a brand. This is very important because it helps convince prospects to hire you and can set your business apart from the competition.
Start by developing your USP (unique selling proposition), which is the reason why people should pick you. The USP is the specific value you provide that helps your business gain customers. Then move on to creating your brand assets (e.g., logo, website, etc.) and a brand story. Your brand story is something you can publicly share that is capable of evoking the right emotions.
Then decide on how you want to market your brand. Aside from using the apparent freelancing websites, it would help if you market your brand in other ways too. One of the best ways to market a business is with content marketing and here’s how to get started.
- Develop a content marketing mission statement. This is one to three sentences that summarize your reason for creating content and should focus on the target audience’s needs.
- Add a blog to your website. That is where you’ll publish content such as articles and other information. Search engines will typically detect, index, and rank your publications so people can find them online. That should attract visitors to your website.
- Commit to publishing content on a regular schedule. If you can’t commit to a specific schedule, keep things as consistent as possible.
The process above is a quick way to start, but there’s much more to content marketing than blogging.
5. Save a portion of your income for tax time
As an employee, a portion of your income is deducted automatically for taxes. However, government-regulated automatic tax deductions stop when you operate a business. You have to deduct those tax obligations yourself. For that reason, consider putting aside a portion of the revenue you earn each month. This way, you’ll have enough funds left over for tax payments.
You can also put money aside automatically using both your bank and accounting software.
- Bank – Figure out roughly how much income you need to set aside for taxes each month, then contact your bank. Tell them you want that amount deposited into a different account every month. Most banks can set this up for you.
- Accounting software – Use a dependable accounting program that lets you specify and collect sales tax on invoices. Aside from QuickBooks, FreshBooks does this well and the calculations are accurate.
6. Develop the habit of entering income and expenses early
Try not to delay the entry of income and expenses so that things are easier come tax season. Ideally, you should track income and expense daily, bi-weekly, monthly, or quarterly, but don’t wait too long because things can pile up. Furthermore, knowing how you’re projecting in expenses and revenues can improve planning for tax season.
There are opportunities in opening a freelance business
More companies realize the benefits of working with freelancers. Contracting freelance businesses can reduce hiring costs and gives organizations access to specialized expertise, including skills. So the demand for capable freelancers should increase. You can use the tips we’ve discussed here to ensure your business starts on the right track.
Set clear goals, put together a great portfolio, address accounting needs early, and build a brand around your business. You can create a successful freelancing business because many others before you have done so. Finally, opening a freelance business gives you control of your income level to a large extent. So your growth isn’t dictated by someone else. Good luck.
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