7 Tips to Start a Freelance Business
Now is a great time to start a freelance business. 47% of hiring managers are more likely to hire independent contractors since COVID-19. In fact, 59 million Americans did freelance work in the past 12 months, representing 36% of the U.S. workforce and contributing $1.2 trillion to our economy.
For companies, hiring freelancers is a way to quickly and efficiently scale up during economic uncertainty, without having to get headcount approvals. For individuals, freelancing offers a flexible lifestyle, the ability to control what you work on and who you work for, and the bliss of never having to be part of an agile tiger team strategy session.
As a freelancer, I have at most two Zoom calls per day — often, I have none! That alone might be enough to draw some of you into the self-employed world.
I started freelancing in 2018 after getting laid off from my startup job, which was a blessing in a disguise. I’d been interested in freelancing but was too scared to quit my job without having something else lined up, so the layoff was just the kickstarter I needed.
Since then, I’ve grown my freelance gigs into a viable business, and in 2020 saw 26% year-over-year growth. Aside from the financials, I love the lifestyle. I’m able to focus more on my standup comedy, and working from home allows me to travel to comedy festivals and visit family and friends without having to take time off.
I’ve connected with quite a few aspiring freelancers who want advice on how to start freelancing. While it’s different for every freelancer and every industry, here are seven tips that helped me launch a freelance career.
1. Get 5-8 years of career experience
Okay, I hate to start this list off by telling you to “just wait a few years” — especially since half of the Gen Z workforce (age 18-22) has freelanced in the past year. And hey, if you can get freelance work right out of college, that’s awesome! You’re way ahead of me.
That said, I do think it’s helpful to get a few years of experience under your belt before shifting to a full-time freelance career. Not only will you build up your expertise and be able to charge a higher rate for your skill set, but more importantly, you’ll have a wider network to help you find clients. I’ll get into this more in tip #5, but pretty much all of my business comes from referrals.
Before launching a freelance business, I started my career at a PR agency, which led to a job at Hewlett-Packard, which led to the startup job. Having three sets of coworkers to reach out to when I was first starting out was critical in getting my business off the ground.
2. Identify your niche
When I first started freelancing, I had just come off of that startup job where I wore many hats. As the first marketing hire at that company, I led branding, content, demand gen, email, events, social media — you name it. So as a freelancer, I thought it made sense to call myself a generalist in order to cast the widest net possible. I proudly told prospects, “Name a marketing task, and I guarantee I’ve done it!”
But I found that the generalist pitch was a turn-off. Clients didn’t know what to do with me and my long bulleted list of marketing skills. It wasn’t clear to them how I could fulfill a specific need. Over time, I learned to narrow down my offering. Instead of a marketing generalist, I thought about my core skill set and started calling myself a copywriter.
It worked. Clients could quickly wrap their head around this specific skill and think of outsource-able writing projects. Having a clear niche makes it easier to pitch yourself and helps clients understand how you can add value.
3. Create a website to highlight your portfolio
When you connect with a prospective client, the first thing they’ll ask for is your portfolio.
Unlike traditional job interviews which often focus on “culture fit” and answering hypotheticals, freelance interviews are pretty much all about your work experience. Clients want to know whether you’ve done this specific thing they need help with, and will ask for examples. The easiest way to share your best work is to put it all in one place as a website.
There are a million website builders out there — some free, some paid, some clunky, some developer-friendly. Here are my hot takes:
Wordpress is kind of the industry standard and has a lot of features, but design-wise isn’t the most flexible.
I’ve heard great things about Webflow but haven’t used it personally.
I built my website on Squarespace, which was pretty easy to design without any coding skills. And, it’s been great for SEO — I have put very little effort into my website’s SEO strategy and it’s currently the #2 and #3 search results when you Google my name (it even beats out LinkedIn!).
Do some research but don’t go crazy trying to compare every option. The most important thing is that your website looks professional and makes it easy for prospects to see your amazing work.
4. Determine your rate
The second thing prospective clients will ask for is your rate. Figuring out your worth is something that all freelancers struggle with — but the nice thing is that you can always change it. You can raise your rate for existing clients, and charge a higher rate when you get a new client.
First, you have to choose whether you’ll charge a flat project fee, a monthly retainer, or an hourly rate. Ready for more hot takes?
With flat fees, you can charge a set amount for a type of project (e.g., $800 for a blog post). Ideally, as you gain experience, you’ll spend less time per project while earning the same amount, giving you more free time to tackle a passion project like making sourdough.
Retainers are fixed monthly fees for ongoing client work. While they’re great for stability, they can get tricky as the project ebbs and flows. In a busy month, you have to watch out for scope creep to make sure you’re not working overtime without getting paid more. In a slow month, clients will question why they need to pay you the full retainer.
I’ve found hourly rates to be the most fair option for clients and freelancers. With hourly rates, you get paid for hours worked. That means if a project requires multiple revisions you hadn’t accounted for, you get paid for that extra work. The trouble with hourly rates is that it can be difficult to scale — if you want to make more money, you either work more hours or raise your hourly rate.
Whatever pricing strategy you choose, charge what you’re worth. Talk to other freelancers or people who have hired freelancers to understand the industry rate for your skill set and experience level. Browse UpWork to see what high-quality freelancers charge.
It’s best to ask high while leaving it open for negotiation. I always phrase it like this:
“My rate is $X/hour, but if you have a specific budget in mind let me know and I’m happy to discuss.”
Don’t be afraid to ask for what you want. Companies have more money than freelancers, so asking for an extra $20/hour isn’t that big a deal to them, but can make a big difference to you.
And if you’re not happy with the rate you ended up with, deliver consistently great work for a few months and then ask for a raise, or get a new client at a higher rate.
5. Reach out to your network
Okay, you’ve got your experience, your niche, and your portfolio. Now it’s time to find clients.
Out of the 11 clients I worked with in 2020, only two were from recruiters’ cold emails. The rest were referrals from my own network.
When I first started freelancing, I reached out to basically everyone I’d ever worked with. Some of those contacts I hadn’t spoken to in years, but because I had built a strong foundation and had been a good person to work with, it didn’t feel so awkward.
That’s why my biggest career advice, whether you’re freelancing or full-time, is: Don’t burn any bridges. Ever.
It’s a small world, and you never know when you’re going to need something from a former coworker. Be someone that people enjoy working with — someone who produces high-quality work and hits deadlines.
When you’re starting a freelance business and offering your services to former coworkers, you want them to remember how dependable and smart you are. Remind them of your skill set, include a link to your portfolio, and ask whether their team needs any freelance support. Even if they don’t need help right away, when something comes up in a few months they’ll know who to reach out to.
6. Set up all the administrative stuff
There’s more to freelancing than just finding clients and doing the work. You’re also running a business, which comes with a lot of administrative tasks.
Getting organized will ensure you get paid on time, do your taxes correctly, and understand your business performance. Below are just some of the administrative items that are part of starting a freelance business:
Templates: Create customizable templates for key documents including proposals, contracts, and invoices.
Accounting: Figure out how you’re going to track your income and expenses. You can use a software tool like Quickbooks or Honeybook, or a start with a Google spreadsheet.
Taxes: As a contractor, the money you receive for work does not have taxes taken out. Therefore, freelancers have to make quarterly estimated tax payments — you proactively pay federal and state taxes four times a year. This can get tricky, as self-employed people are taxed differently than full-time employees. I recommend hiring an accountant who works with freelancers because you don’t want to mess around with the IRS.
Business banking: While not a requirement, it’s a good idea to create a separate bank account to avoid commingling personal and business funds. Check out modern banks like Mercury or BlueVine that have no-fee business checking accounts for solopreneurs.
LLC: Again, not a requirement right away, but once you’ve got a sustainable freelance business you should consider setting up an LLC. There is an annual cost (in California it’s $800), but it will protect your personal assets if you ever get into legal trouble.
Business cards: With everything virtual now, these probably aren’t relevant anymore — but honestly they’re an inexpensive, fun way to make your freelance business feel official.
7. Talk to other freelancers
As a freelancer, you don’t have coworkers to bounce ideas off of or ask for guidance, which can feel isolating. That’s why it’s important to find other freelancers who can share tips, answer questions, and offer referrals.
Early on, one freelancer friend answered all of my nitty-gritty questions and gave me an accounting spreadsheet template that I still use today. Since then, we’ve been able to partner on projects and refer clients to each other.
I also love the Being Freelance podcast, which features interviews with real-world freelancers on how they started and scaled their businesses. Not only does it provide helpful advice, but the Being Freelance Facebook group connects freelancers around the world.
Another freelancer friend gave me excellent advice to help evaluate potential projects. She said to focus on three factors:
The client: Are they easy to work with? Do they have reasonable expectations? Are they organized and clear on what they’re looking for?
The work: Is the project in line with your skill set? Can it be a valuable asset for your portfolio? Do you enjoy the work?
The money: Are they paying you enough?
Her advice was that every freelance project should meet at least two of these three criteria — otherwise, it’s not worth the trouble.
Talking to freelancers to get tips like the above is something you should continue to do on an ongoing basis, not just when you’re launching your freelance business. Find a community among fellow solopreneurs and you’ll get something much more valuable than office chit-chat.
Ready to take the leap?
The number of freelancers has been growing steadily over the last few years, and, like many trends, COVID-19 has only accelerated it. Freelancing is not as risky as it seems, and taking the right steps early on will set your freelance career up for success. If you’ve been thinking about starting a freelance business, I hope these tips help you take the leap.
Have you successfully started a freelance business? Leave your tips in the comments below.