One of the key points of my trifecta of a Money Outlaw lifestyle is entrepreneurship. I believe every person should be, first and foremost, an entrepreneur. The financial security, freedom, and wealth-building opportunities that come with owning your business are unmatched. One of the best and easiest ways of achieving this goal is to be a freelancer. Freelancing is an easy and low-risk way to start a business. If it is structured correctly, it can give you all the stability, income, tax advantages, and size of a much larger business, but without the same stress, risk, and headaches.
If your impression of freelancing is being overworked, alone in your basement, staying one step ahead of the bill collector, you are wrong; read on. A freelancing business can be structured to have predictable and stable income, working with people, and having staff, freedom, and creating many of the same benefit plans for yourself as having a full-time job. Plus, as a freelancer you can take advantage of amazing tax saving benefits for having a business.
Total U.S. Freelancers in 2021
My Freelancing Journey
Over the years as I have talked to different people about starting a business or becoming a freelancer, I am often met with interest by most people, but only a very small minority will ever try. The reason is most people are terrified to give up full time employment, regular salary, and benefits. I understand, I was there once. It feels safe and secure, but it isn’t. Your perceived security is an illusion. I overcame my fear and I want to share my journey from a full-time employee to entrepreneur. It might be helpful to others thinking of starting a similar journey.
I worked in the technology and marketing fields as an employee for the early part of my career after a disastrous, even earlier career in banking. Once my banking career ended, I decided technology was my true passion. I had always liked information technology (IT) and thought I might enjoy computer programming. I went back for an MBA and found my trajectory changed a bit. I discovered a love for marketing during my MBA program and decided to find a way to merge technology and marketing into a career. Since this was the early days of the commercial Internet, this was not a hard transition to make.
During my MBA program I was recruited by a consulting company and began a new career in technology and marketing. I spent several years circulating through different positions, companies, and opportunities. I even spent some time in a fast-paced tech start-up, alas my story didn’t end with me cashing out of a company like Google with millions…
The tech startup was exciting. I was riding high, traveling the country, and assembling multi-million-dollar partnerships. I had almost a million dollars in stock options and a healthy salary. Then almost without warning it all collapsed and my glittering career in tech and fast technology-based riches vanished overnight. The dot com bubble burst and took me and my job security and paper wealth with it. After this crash I bounced around to some other technology and marketing positions and opportunities. I just never quite fit in with the employer/employee model of making a living. I didn’t blend into the workplace environment, didn’t have a lot of freedom or latitude to pursue my interests and spent far too much time trying to convince management and colleagues to move in certain directions.
In my final and last full-time employee position I had a serious disagreement with my employer over my management style, so we parted ways. Well, actually, they tossed me and my proverbial box of stuff to the curb!
When this happened, I considered this a big blow to both my ego and my wallet. I know this is cliché, but it really was the best thing that ever happened to me. It was the last straw in a long string of disappointing career starts and stops. I decided I was finished with the whole employer/employee relationship and started my own consulting company. My journey to entrepreneurship and freelancing began in earnest.
The journey of a thousand miles begins with one step.
However, I would be lying if I didn’t say that I also wasn’t necessarily a committed entrepreneur at this point either. I was somewhere between these two positions. I didn’t want to work for anyone again, but I was also terrified to start my own business. In the early months I grudgingly moved forward with my business. If someone would have offered me a job in that first year, I might have taken it. It didn’t happen so I was never faced with that decision. So, don’t think that I was committed from day one and success was on its heels. It wasn’t.
I decided to offer web design, digital marketing, and CRM services. The first year was the hardest. I didn’t have any clients and was trying to start up from ground zero. I don’t recommend anyone start this way as it is a rough and bumpy road. I found several gaps in my skill set, both from a web design perspective and how to run a small business—nothing like jumping into the deep end of the pool when learning how to swim.
I figured with an MBA, I was qualified to run Fortune 500 companies, so how hard could a small business be. Isaac Newton’s apocryphal story about being hit on the head with an apple and discovering gravity was a bit like my discovery, except instead of an apple, it was a 10-ton rock!
After the first-year business began to pick up, I started building a client list, referrals, and a basic brand. Over the years, the company has morphed and changed. My interests have changed, and new technology have forced me to change and adapt the way I deliver service.
For example, while I had been a decent public speaker, I had no idea this was a service people would pay for. I started speaking to local organizations about digital marketing, mainly to market my services; eventually, it became a service offering I got paid to do. I have traveled the country speaking to companies and associations. Professional speaking wasn’t even on my radar when I started.
That is the great part of freelancing. Your business can change and adapt as your interests and the market change. You can be quick, agile, and change directions rapidly. Things I do today weren’t even an offering when I started. I was able to change and adapt in ways I couldn’t have imagined when I started.
I have now been freelancing for almost 18 years full-time. Below is an outline of how to start successfully freelancing. I can’t imagine a better way to work and live.
Key points from my journey to entrepreneurship:
- Job security is an illusion You can lose a job at any time for any reason or no reason.
- Losing a job means a loss of all your income at once.
- You don’t need to be perfect at your service offering before you start freelancing.
- You don’t need to have everything set up and perfect to start.
- You can start part-time and have lower pressure and risk.
- You can start full-time and accelerate the process to success.
- Freelancing gives you much more freedom & flexibility.
- Freelancing will create financial stability; you are unlikely to lose all your income at once.
Freelance Area of Expertise
The first thing you need to figure out is what area you want to freelance in. The services you can offer are nearly limitless, and almost anything an employee does for a business, you can offer. I recommend sticking to business services vs. personal services.
Choose something you enjoy and have both the skill set and aptitude for. You don’t necessarily need to be an expert when you start. I wasn’t. I was good at digital marketing but only average at web design. I was largely self-taught and simply stayed at it until my skills improved.
There is an old adage, which turns out to be true. Find something you love, and you will never work a day in your life. It simply means finding what you enjoy is a key to a successful freelancing career. You will look forward to work, be passionate about your business and services, and want to learn more and improve your skills. These are all necessary ingredients for success.
My friend, author, and entrepreneur, Barbara Winter, who wrote the book Making a Living Without a Salary talks about creating a portfolio of money-making activities in her great book. She calls these money-making activities multiple profit centers. If you can’t decide on a single thing, you can combine several things together and build a business around that. I loved her idea and have been doing that for a large chunk of my career as a freelancer. When you are a freelancer, you have a lot of opportunities to create multiple streams of income if you apply some creativity to the problem.
Full or Part-Time
When I started, I did it full-time from day one. It was challenging and not very profitable the first year, but it has pros and cons. While I had to learn a lot and had a short time frame to make it work, this contributed to my early and long-term success. I was forced to make it successful fast and didn’t waste time, possibly for years, messing around part-time with it.
Starting part-time will take longer but comes with lower stress and risk. You will have time to set up your business, assemble marketing, learn any skills you may be missing, and build a client list. You won’t feel as much pressure to replace the income from a job so quickly. Here are the tradeoffs of doing so:
- Jealous Employer: If your freelance business is the same as your full-time job you may find an employer that believes you are unfocused at work or are stealing business from the company and decide to let you go. Admittedly with over 40% of Americans having a side-hustle, the risk is probably low but varies by person or situation.
- Comfort: If you freelance for a little extra money, tax write-offs, and pick and choose your projects, you may find you get too comfortable with both a full-time employer-based paycheck and a little extra cash on the side and never make the leap full-time. That may sound good on the surface, but you miss out on so many incredible benefits by not being full-time.
- Time Management: It is also hard to meet with clients and network when you are part-time. Your clients will work traditional hours, and you will find it difficult to meet or talk to them while working a full-time job. In addition, most networking events happen during regular working hours. Networking and referrals are the number one way most freelancers build a client list. It is possible to work around these things, but it is more complicated.
- Sacrifice Personal Time: You must work a side hustle into your free time. It also conflicts with family obligations, time with friends, and downtime. You may find it is difficult to sacrifice that free time to work on a side hustle. Because you don’t or won’t put in the time after work, you will find your business never gets off the ground and stays a pipe dream.
Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do.
Despite these shortcomings, if you are disciplined and willing to put the time in, you can start part-time and build up a business before going full-time. Starting part-time allows you to learn some of the skills to run a freelance business.
You can build up clients when you have a basic business structure up and running. Acquiring clients will teach you marketing and sales, which are critical to success for every freelancer. You can set up a website, print business cards, and do other startup activities during this time. Finally, you can use this more relaxed time to beef up your skills. My lifelong learning article will help you figure out how to fill in the gaps. When you are ready, it will be time to make the full-time leap. Here are some tips for doing it successfully.
- Have Cash Reserves: When I started, I had only a small amount of savings. I made it harder on myself than necessary. If I had to do it over again, I would have at least six months of my monthly living expenses in cash. Twelve months would be better, but six is a minimum. Having this will take a lot of pressure off you to start. A slow month won’t stress you out. It gives you breathing room.
- Steady Clients & Recurring Revenue: Have some initial clients and some referral sources, but also build up some recurring revenue from some clients. For example, I have monthly retainers for websites I manage and ongoing marketing services I provide. I didn’t have this when I started, but I think having monthly recurring revenue is essential in the early days and critical for long term success.
- Working Spouse: If you have a spouse that works full-time, this can be an incredible advantage when you start. My wife was steadily employed in a nice career and loved her position. She was able to supply predictable cash flow when mine was so unpredictable in the early days. She was also able to provide medical insurance, which is a very important consideration.
No matter if you start part-time or full-time there are certain things you need to put in place and certain skills you need to have. Some of these are key items to have when you start, and some you can add later or adjust as you go. Don’t feel like you must have everything perfect before you can begin. Some things are not as critical as others, and some things you will end up learning new or better ways to do later.
You don’t have to be great to start, but you have to start to be great.
Too many freelancers default to being a sole proprietor when they start. This is easy and the default if you don’t do anything else. It is also the most expensive and risky ways to run a business. You are open to lawsuits, and you pay the dreaded self-employment tax. I strongly recommend freelancers set up a formal business structure such as an LLC or S-Corp to start. This might sound like overkill to a small brand-new business, but it isn’t.
When I started, I set up an LLC (Limited Liability Corporation). In most states these are usually easy and inexpensive to set up. In most states these structures are also easy to manage and maintain. You can choose a tax method that will benefit you when the time is appropriate. These structures will also give you some asset protection in case you are involved in a lawsuit for any reason.
A huge advantage of running your own business is the incredible tax advantages you get for doing so. Unfortunately, to take advantage of a lot of these requires that you have the right business structure. I don’t want to delve deeply into this topic for this article. I am not a CPA or attorney, so I don’t dispense this kind of advice. I strongly recommend that you seek out materials from Mark Kohler and Sandy Botkin to learn more about small business tax strategies.
By setting up a formal structure it is easier to structure taxes to avoid some of the self-employment tax and to also set up benefit plans for your business. You can set up your own 401(k) plan, medical reimbursement account, HSA, and other goodies that the large companies provide to their employees, but these would be tailored to you. Your freelance business, if set up correctly can give you many of the same benefits as large companies that spend a lot more to set them up.
I started with an LLC and later changed to an S-Corp as my business has grown. What I didn’t realize at the time was that the LLC could have been taxed as an S-Corp when the time was appropriate. Had I done a little more education I could have saved myself a lot of expenses. This is why it is important to have a good CPA and Attorney but also do your own education. In any case, I was able to implement a lot of tax-saving strategies using the two authors above with help from my own CPA and attorney. I find the structure easy to manage, relatively inexpensive, and have some peace of mind for asset protection. This becomes more important as you build wealth over time.
Today I have multiple businesses and more wealth including my alternative investment portfolio that is at risk if I get named in a lawsuit for something I did in my business. Having and more importantly, maintaining corporate structures solves some of these problems. Again, learn from people like Mark Kohler how this is done. The legal strategies are not DIY activities. You need to work with an attorney. Yes, it will require some money and might be a little expensive, but doing it wrong will cost you a lot more if things go sideways.
Essential Business Skills
I outline a variety of skills and strategies you need to learn and apply to your freelance business below. Some of these are skills and some are a combination of skills to learn and things to put into place. While you don’t need to be perfect at all of them to start you should have some basics for every one of them in place fairly quickly.
Keeping track of income, expenses, invoices, and bank accounts are critical to any business. In my first year, I did a terrible job managing these items. I used a spreadsheet and sticky notes! My books were a total mess! I couldn’t answer even basic questions about business performance. I also couldn’t locate important documents and information easily. Please learn from my mistakes and start off the right way.
I eventually implemented QuickBooks and hired a bookkeeper to set it up and help me create a filing and tracking system for everything. This early step is truly worth its weight in gold! I still use a bookkeeper to come in monthly. She enters expenses, reconciles accounts, and fixes any mistakes I might have made in-between visits. She will also file my quarterly taxes and reports with the endless government bureaucracies I must deal with.
At the end of the year, she will make sure everything is cleaned up and annual reports are filed with the appropriate government bureaucracies, issue my W2 and 1099 statements for my contractors, and print out financial statements for my CPA. I can’t emphasize enough how important setting this up right from the beginning and maintaining it over time is. You are more organized, track and optimize tax strategies easier, and stay out of trouble with various government bureaucracies. Plus keeping good books and records is a key requirement of maintaining your corporate structures.
If you are inclined you can learn bookkeeping in any number of online courses or read a few books. You will find bookkeeping is mostly about data entry and organization. If this stuff drives you up a wall as it does with me then hire a bookkeeper to help you stay on track. No matter which route you go, just do it.
Financial organization is important, but so are other types of records. You will have client materials, correspondence, and project files that need to be organized. In my early days I wasn’t the most organized person with these materials. I had a few embarrassing incidents where I had to go back to clients because I had lost materials, they gave me or couldn’t find correspondence about items we had discussed. This hurt my credibility and productivity.
Have a physical filing cabinet for client files and internal business records. Take the time to set up a system that makes sense to you and can be figured out by someone else if you aren’t available. Do the same with your computer files. Create a system, checklists, and organized folders that makes sense for your type of business and the clients you work with. This will be different for everyone so I can’t give you a one size fits all solution.
Today I use a variety of checklists and an intake form for each new client. As I check off items that come in, I file them in appropriate folders on my computer and in my filing cabinet. I have project folders set up and organized by client. I know exactly where everything goes, and I can find it quickly and easily. This has saved me a lot of time and presents a very professional image to clients.
Finally, depending on what type of freelancing you do security might be an issue. If you are handling sensitive materials from clients and need to maintain their privacy, then good cybersecurity is important. Make sure you maintain secure computers with anti-virus protection, encryption for files, and proper backups. Also maintaining physical security for files by keeping them in a locked cabinet could be necessary.
Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.
Make sure you are tracking your expenses and keeping receipts and records for all your expenses. One of the most valuable things about a small business is the tax advantages you get. However, you must know how to take tax deductions and document and save proof of them. A couple of resources for small business taxes:
- Mark Kohler: I have mentioned Mark in several articles. I am a big fan of his work. He has excellent books, blogs, podcasts, and YouTube videos on various tax and bookkeeping topics. Check out his site at Mark Kohler.
- Sandy Botkin: I have also mentioned Sandy in other articles. He writes some great books you can get on taxes. His best is Lower Your Taxes Big Time, which you can purchase on Amazon. He offers excellent strategies for getting the maximum tax deductions possible for small businesses and documenting and backing up your deductions. He used to be an IRS agent so he understands what the IRS is looking for in terms of documentation.
Some of you may be thinking that reading a book on taxes is too painful to comprehend. I feel your pain. It isn’t exactly John Grisham type reading, but it is necessary and important. If you think you will have your CPA or tax preparer, take care of this, you are in for a rude awakening.
Most CPAs don’t do tax strategy planning for small businesses. YOU will be responsible for learning these strategies and reviewing them with your CPA, and then keeping the appropriate paperwork and documentation to use them. Let me repeat that; YOU are responsible for learning and implementing the strategy. Your CPA is there to help you file taxes at the end of the year and acting as a second set of eyes on your process, documents, and proof. That is why reading from the two authors above is essential. In easy-to-understand layman’s terms, they can teach you tax strategies that will benefit you for years to come. Don’t put this off. Learn it. Put money in YOUR pocket- NOT the government’s.
I recall hearing Mark Kohler on a podcast that yes it takes a little time to learn these, but once you know them and have reviewed them with your CPA you benefit from them year after year. In other words once you understand them they will put a lot of money back in your pocket for many years. However, keep in mind that tax laws do change, so occasionally you will need to update your knowledge in this area.
Essential Business Skills & Resources
Sales & Marketing
Without marketing you have little to no sales. With no sales you don’t have a business. Both sales and marketing are required to make a business function. These are two separate items and serve different functions. Both are items that a vast majority of freelancers stink at when they start.
Most simply don’t know where to start and spin their wheels on unproductive tasks thinking they are gaining ground but aren’t. I have outlined some basic activities in both areas below to get the beginning freelancer started.
Marking is the art of making people aware that your business exists. When you think of brands like BMW, Polo Shirts, and Coca Cola for example, you are experiencing a brand that is the creation of a marketer. Marketing is what you do to generate leads for new clients, building a brand, and making people think of you when they need the service or product you offer. Here are some essential tools every freelancer should plan on having for basic marketing:
Have a professional business card made up. Please don’t go to Vista Print and choose a standard template. When I first got started, I was trying to save some money, so I went out to Vista Print and decided on a cool-looking template. I used their interface to type my information in there and ordered some cards. The cards arrived a few days later and were full color and looked incredible. I used them at my networking group and was quite proud of myself.
One day one of our members came up to me and said he thought I had joined another group. I asked why he thought that, and he pulled out my exact business card, but with someone else’s information! Apparently that person thought the exact same template on Vista Print looked cool as well. I tossed my cards that day. It is not that expensive to use a service like Fivver or a local graphic designer to create a nice business card that is completely unique to you and your business. With low-cost printers everywhere you can get 1,000 full-color, two-sided, business cards for around $150. Having a nice unique business card will set you up right from the beginning.
Every single business must have a website, period. I know that sounds a bit self-serving since I design websites, but it is true. You need a website that you control. Having a Facebook page or Google My Business listing doesn’t replace your website. You can and should have these items, but those are in addition to a website, not a replacement for. If you don’t have a website today, people won’t take your business seriously. Today setting up websites and managing them is so much easier than when I started. There are programs like WordPress that once set up allow you to maintain a beautiful site without a lot of technical expertise. If you don’t have the technical skills to set up your own site, hire a web designer, but whatever you do, don’t skip this item.
This seems like an unnecessary expense to start, but it isn’t. You will use your logo more than you think. As humans, we are conditioned to identify symbols quickly. Think of the McDonald’s Golden Arches or the Nike Swish. You need to have a unique logo designed for your business, printed on your business card, and placed on your website. You can have a logo designed on Fivver or by a local designer. I had my logo set up 17 years ago by a local designer, and I still use it today. For some new ventures I have built over the years I have had additional logos created and using services like Fivver or 99 Designs I have had nice and unique logos created for less than $300 dollars.
BNI is a business referral group. Their sole purpose is to meet weekly and share business referrals with their members. Every member knows why they are a part of the group and that finding and bringing referrals for the other members is expected and required. It is like having your own personal sales force. I started in a BNI group during my first month in business. Yes, you can join the Chamber and other service groups, but BNI is designed to feed you referrals. I was a member for 16 years. I left about two years ago because I now have business coming in from an extensive referral network and existing clients, but I would never have arrived at this point without BNI as a starting point. I might go back again if I can find the right group. I believe strongly in the importance of being part of a business referral group for your marketing. Word of mouth marketing is one of the most potent ways freelancers find business, and BNI makes it very easy to start. You will get training in being a better networking and referral partner and developing a source of referrals for your business. You will also develop strong business friendships that will serve you for life. Check out BNI.com
You have likely run across lead magnets before. If you have ever been offered a tip sheet or eBook on a website, or any other number of items, you know what a lead magnet is. In short, it is a giveaway item that you give to potential prospects in return for their contact information. Many times, it an educational piece of material delivered in a variety of formats. I use several when I follow up with people I meet while networking or potential leads. Consider writing an article or tip sheet if you need an easy lead magnet. I have used both items before. I wrote a comprehensive article on lead magnets which you can access on my consulting site.
Since I am a marketing consultant, I could probably go on forever about marketing strategies and tools. Still, if you do the five items I mentioned above, that will give you a great start and build a solid foundation for marketing your freelance business. See my resources page for good books and other resources in this area. I update and add to this article periodically.
Once your marketing starts generating leads and you have people to talk to, you will need sales skills. Most people don’t have natural sales abilities. It is a learned skill. That means YOU can learn it. It is not some magical power bestowed on the worthy. Everyone can learn it, and if you are going to be a freelancer, you will NEED to develop these skills.
Instead of writing pages about sales, I will list a few things I have used over the years and then list some good books that I think you should read. You can and should consider taking a sales course or two. There are some good ones on LinkedIn Learning, which you might be able to access through your local library for free. See my article on lifelong learning for more information.
This is a brief introduction to people when they ask the “what do you do?” question at networking functions. It is delivered in the time it takes to ride an elevator, so about 10-20 seconds or less. It should be imaginative and generate curiosity in the person you deliver it to. Here is the elevator speech I have used for 17 years…
I work with businesses that want to explore how to use the Internet to generate more leads, boost sales and avoid costly mistakes along the way. I call my process spinning the web into gold!
Here is one I use when I am trying to generate real estate leads
I buy excess houses from people that don’t need them and solve difficult real estate issues. I often rehab these houses and provide nice houses for families to live in. I do this with a network of private investors where they earn a 12-15% return. If you know anyone that has a house, they need to get rid of or has some money they would like to put to work earning a great rate of return please introduce them to me.
Short, simple, and easily delivered in less than 10 -20 seconds. I almost always generate follow-up questions with these elevator speeches. Nearly every business owner I meet wants more leads, better sales, or learn how to avoid costly mistakes. In addition, if none of those three items gets their attention, they usually ask me about my last comment, spinning the web into gold. Almost everyone who has met me remembers that part. It is both a great branding tool and an easy way to generate curiosity and further conversation. The latter example, people know people selling houses and everyone would love to earn 12-15% on their money.
You will find having a concise and catchy elevator speech that you have rehearsed and memorized is so much easier to use than stumbling when you are asked that question of “what do you do?” Once you deliver this speech you will often get an opportunity to answer questions or continue the conversation. Eventually, if it makes sense, you turn that conversation into an invitation to meet again and follow up later.
A commercial is like an elevator speech but is longer. It goes into a bit more detail and is typically about 45 seconds to 1 minute in length. You will use this at your BNI group and in other business functions where you are allowed to give a brief commercial about what you do. Again, the primary criteria here is short, concise, memorable, generate curiosity, and further conversation.
Here is a quick tip, my commercial always starts with my elevator speech (see above) and then has a quick add-on about what I am promoting at that time. For example, if lead generation is something I want to talk about, I start with my elevator speech and then talk about a service I offer to generate new leads. The next time I give my commercial I might change from lead generation to web design or copywriting for example. Sometimes I tailor my add on to the audience I am talking to. For example, I once gave a commercial to a room full of lawyers so my add on was about my expert witness consulting in technology related matters.
A fantastic way to generate leads and sell is to develop public speaking skills and start giving presentations. This bit of advice is a little blurred between marketing and sales. It is a bit of both. I have been giving presentations for years. I have a variety of talks on topics that people will find both educational and engaging around my area of expertise, digital marketing. These presentations vary in length from 15 minutes to 1 hour. I can easily tailor them to fit a particular audience and adjust the length to fit just about any time frame. I have given them to business groups like the Chamber of Commerce and service groups like Rotary. The key to doing this well involves the following items:
- Public Speaking: Learn to be an excellent public speaker. If you need to learn this skill, please join a Toastmasters Club. These clubs are all over the world and will teach you to be a confident and skilled public speaker. The skills I learned in Toastmasters have returned thousands of dollars to me over the years.
- Educational: A good educational talk is, well, educational. It is NOT an opportunity to give a sales pitch to a captive audience. If you get the chance to give a presentation and end up giving a giant commercial for 30 minutes, you will damage your credibility and probably won’t ever get a chance to speak to that group again. The art here is providing an educational talk on the topic that relates to your service. It should be educational and engaging. Toastmasters can help you in this department.
- Lead Magnet: The lead magnet I mentioned above comes back into play here. Since you can’t sell to your audience, you need to generate leads from the talk and start conversations. Some of that will happen as people come up to you after and ask questions. However, having a giveaway item, i.e., a lead magnet, is even better. Remember that article I mentioned above? At the end, I will tell the audience that I have this article that expands on my talk, and if they would like a free copy to give me their business card, I will send it to them. Bam! I just generated a bunch of leads and positioned myself as an expert in my topic.
In addition, it gives me a reason to follow up with the person later and see if they enjoyed the article. It might also give me an opportunity to send them a second lead magnet and nurture them into a strong sales lead over time by sending them educational and beneficial lead magnets and content. In the sales trade this is known as nurture marketing and while it takes a bit of time is an effective approach. You end up building a relationship and credibility, both are very useful when it comes to time to close a sale.
If you absolutely can’t think of a good lead magnet you can always offer to send a copy of your slides to people that will leave a business card with you. When you get back to your office just email them a copy of your presentation slides. This is brain dead easy and accomplishes the same thing.
Understand that the chances that some random person you meet at an event just happens to be in the market for your product or service AND decides you are the right person is a very rare event, nearly impossible actually and a not a realistic expectation to have. People learn about you over time. Relationships don’t happen over night, which is why nurture marketing, lead magnets, and relationship building is so important.
If you are more introverted, sales can be a little tricky at first, but not impossible. You will need to learn to sell to be a successful freelancer. Unfortunately, this skill cannot be outsourced, and understanding it is essential to your success. I have only outlined a few items that I have found helpful, but when you get into the nitty-gritty of talking to a prospect, you will want some sales skills. Sales isn’t some type of Jedi mind trick you use.
Sales is just a way of having a conversation with a prospect where you uncover their needs. You build rapport and offer a solution. Some professionals call this consultative selling. You might need to overcome a few objections, but it is not any more complicated than that. If someone doesn’t need your service or doesn’t have a problem you can solve, nothing you say will “trick” them into buying from you. The fit isn’t there, move onto other prospects or follow up with them over time in case things change. There are several books I have read and found helpful in learning this crucial skill on my resources page.
Once you set up your freelance business and learn to market and perform sales, that will eventually lead to your service delivery. Delivering a service has many issues, from pricing to project management and customer service. Not everyone is good at all these things when they start, but over time you can learn what works for you and what doesn’t in each of these final areas. Here are some basics:
This is a constant struggle for every freelancer and will probably continue to be so forever. I still struggle with my pricing today. Price yourself too low, and you won’t make enough money to survive. Price yourself too high, and people will find an alternative. The best advice I can give here is to do a little research into what other freelancers in your area are charging. This will take a little time as most other freelancers aren’t always quick to share what they charge with a potential competitor.
However over time you will likely build rapport and working relationships with other freelancers and can learn over time what they charge. If you are looking for a little faster way consider going to some seminars, conferences, or events out of town where other freelancers will be. Talk to them. Most freelancers that live in a different state from you will typically be a little more open to talking to you about this stuff because they don’t perceive you to be a competitor.
Also, as you attend conferences, seminars, network with other professionals in your area, read books, and take online classes you will learn more ways to price your services. I have learned from all these methods over the years. In addition, since I am a consultant, I found Alan Weiss’s book Million Dollar Consulting and his discussion on value-based pricing to be invaluable.
As your skills, reputation, and referrals grow, you will be able to charge more. I charge considerably more today than I did 18 years ago, but I am well established in my market with a solid brand and reputation. I have a large portfolio of work and projects I have completed over the years. I also have several long-term clients that send me referrals and give me excellent references. It took time to build, and it will be the same for you. Do good work, deliver what you promise on time, and ask for testimonials and referrals. If you are good at what you do, these will be easy to get.
Every business must have customer service, and freelancing is no exception. You will need to help customers that have questions or problems. You may occasionally need to calm a client down when they are upset with something you did (or didn’t do). The basics here are to follow up with customers quickly. Answer calls when you can and return calls promptly—ditto for emails. Learn to communicate in person, by phone, and in writing. Learn to admit when you make a mistake and how to own up to it and make it right. While good customer service is a business skill, I find it is also a heavy dose of common sense. Treat people well. Imagine what it would take to make you happy if you were in your client’s shoes and do that. Relationships are critical to businesses and providing good customer service will help you maintain happy customers for years to come.
As a freelancer, you generally work alone and don’t have any employees. Once you start adding employees to a business, your level of complication increases 10-fold, and your expenses jump dramatically. I don’t have any employees other than my wife on a part-time basis. However, I do have several independent contractors. These contractors fill in the areas I don’t do well and/or add extra capacity when I need it.
These areas include programming, graphic design, and specific content providers. It is a fantastic arrangement. These people are not on my payroll when I don’t need them but are available when I do. Each has their own business and meets every guideline for being classified as an independent contractor by the IRS.
I call it the “Hollywood” business model because, much like with a movie, a team of actors, directors, producers, and writers come together for a single movie project and then disband once it is complete. I do the same thing. I pull a team together that best fits my current project and separate when we are finished. I pay them for their work, and everyone is happy. This arrangement allows me to deliver higher quality work and more capacity than I could do alone. I can pay my contractors well and save on taxes. The client wins by getting agency quality work without paying for all the overhead that comes from working with a large agency. Everyone wins!
Delivering services when you are a service provider may not be as straightforward as it sounds. Do you deliver your services by the hour, or do you give a fixed quote or an estimate? I do all three, depending on the situation. I charge hourly if I am fixing a problem where I am unfamiliar with the issue. If I understand a project, I typically give a quote and carefully spell out what they get for that price.
I will also “package” my services. I create various offerings at different price points. By presenting multiple options to clients, they can choose what price point fits them and I know what I need to deliver. It solves both my pricing and delivery issues.
Ultimately delivering services is the core function of your business. There are probably as many ways to do it as there are stars in the sky. There is no “right” way to do it. What works for me may not fit your service, clients, or business. What works for you may not be a good fit for me. Every industry and service are a bit different. You will need to experiment here and figure out what works for you.
The only thing worse than starting something and failing… is not starting something.
Think Long Term
One last thing I will mention that I touched on in a few other areas, but didn’t expressly call out. Think long term. Too many people don’t think more than the next customer or project down the road. Some people are short on ethics and do things that harms their reputation and integrity by pursuing a short term gain. This is a fast road to failure. I once had another freelancer I was working with on a project. I was doing work for one of his clients, but he was in charge of managing the client and overall project. To make a long story short this person was stealing from their own client by accepting money, but not delivering what he promised. When this theft was discovered the client fired him. When that happened he compounded his mistakes by not paying me. It turns out he was desperate for cash and didn’t think the client would notice that he was skimming the ad budget.
In this one situation he damaged his business in ways that can’t even be comprehended. I would never work with him again. His client will no doubt tell others of his dishonesty. He made an extra few thousand dollars by screwing everyone, but gave up potentially tens of thousands of dollars over a career. The relationships he damaged and what those relationships could have been worth over 10 or 20 years are incalculable. Stepping over dollars to pick up pennies.
Your reputation and relationships will be the X factor that will determine your success over the long run in just about anything you do, but even more so in your own business. Protect them with everything you have and NEVER think that a short term decision will be of more benefit than a long term relationship.
Also take time to imagine what you want your business to look like in 5, 10, or 20 years down the road. I am always taking time to plan 10 years out for both my business and my investing. Taking time to craft a vision of the future will give you a guidepost when the day to day events of running a business become crazy and hectic. It will help keep you on a solid road of growth while eliminating distractions. This vision doesn’t have to be cast in stone. It can and should change as you change and grow, but at least it gives you something tangible to hang onto today. My vision, goals, and ambitions have changed many times over the years. Just remember think long term about your business.
Starting a freelance business is one of the most rewarding things I have ever done. That is why when I started this blog, I made it a core piece of my trifecta. It has allowed me to generate income, do work I find inspirational and creative, and live life on my terms. I have incredible personal freedom, flexibility, and quality of life by having my own freelance business.
It isn’t always easy. I have bad days, just like everyone else. There are many skills you may not be comfortable with if your only experience has been working for an employer. Some of the things you need to learn aren’t fun or come naturally, but they are necessary. I view it as a fair trade-off for all the benefits I get from my freelance business.
Freelancing is the easiest and most low-risk way to start a business. You can start with very little money. Going into debt to start a business is very dangerous, especially if you are new to it. Failure doesn’t just mean you don’t get paid; it also means you walk away with debt that could take years to pay off.
Starting a retail store, restaurant, or franchise involves putting a lot of cash up front. It might include putting years of savings or, worse, debt on the line. Failure could mean a devastating setback and take years to recover. Some people never do. I would rather start a business with low risk and low upfront investment. Freelancing fits that bill perfectly.
I started my freelance business for about $2,500. That included my software, business cards, and other stuff I needed. There aren’t too many businesses you can start with such a small sum of capital. If it doesn’t work out, you can always move it to side hustle status and get a job. You won’t be buried under colossal debt or blow years of savings.
Figure out what you are good at, investigate how you could offer it as a freelancer, develop a plan and get going. I completely understand the fear factor. A job with an employer feels safe. Sadly, this is an illusion. An employer can fire you with zero notice, and your income is gone in a heartbeat. That doesn’t sound secure to me. Having multiple streams of income sounds much safer to me.
The life I have built for myself around my freelance business is so liberating compared to working a 9-5 job. I can earn income, save on taxes, maintain a flexible schedule, work on inspirational projects, and experience an incredible amount of personal freedom. The first steps are the hardest, but it gets easier. I promise.
Check out my resources page for some good books. Pick up some magazines like Entrepreneur and Inc. Dream, plan, and build!
The information contained within this website is provided for informational and educational purposes only and is not intended to substitute for obtaining legal, accounting, tax, or financial advice from a professional tax planner or financial planner. Full disclosure
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