Before I was pregnant with my daughter, I was working a lot in my husband’s General Contracting business–filling a wide range of jobs to help him scale the business. When I got pregnant, I had to hone in on specific tasks that were not so physically-intensive. I couldn’t do heavy lifting, crawling, or standing in the Texas heat for long periods like I could before the baby. The new addition to our family forced me to focus my attention on what I was really good at: marketing, advertising, website design, and so on.
Marketing was my greatest passion above all the other tasks I was doing, but the Contracting business wasn’t at the point where the budget could sustain a full-time marketer. I did marketing tasks for my husband, but I had a desire to use my skills more and make more money with them, so I decided to start a freelance business.
My freelance business has been a source of great income (even from very early on), and I’ve heard other very promising freelance stories, which is why I’m writing this article to share. Some startup entrepreneurs may choose an affiliate marketing model, some may choose a direct sales model, and there are many other business models you can choose from, and freelancing is one of them. In this article, I’ll be sharing with you How To Start a Freelance Business from Scratch (even if you have no experience).
- 1 Step One: Create a Plan Of Action
- 2 Step #2: Begin Networking
- 3 Step #3: Create Processes and Systems
- 4 Step #4: Choose a Money Management Solution
- 5 Step #5: Balance Working in Your Business vs. Working On Your Business
- 6 Step #6: Reinvest to Grow the Business
- 7 Final Words on How To Start a Freelance Business
- 8 Now, it’s Your Turn…
Most people know how to come up with ideas, and some even know how to make goals. The narrower crowd are the people who come up with ideas, make goals, and act on them. Often times, the reason why the ideas don’t turn into fruitful outcomes is because the ideas lack some vital components in the action plan.
Decide Your Minimum Viable Income
One of the vital components is a minimum viable income. I learned this term from the team at Fizzle.co in one of their courses.
They discussed how we each need a certain amount of money to pay for our basic needs. Each of our minimum viable income amounts may be different, but it’s important to know what the amount is.
To calculate your minimum viable income amount, you’d want to add your expenses like:
and other things you believe are essentials.
When you have that amount in mind, you’ll have a target in mind of the lowest possible income your freelance business needs to bring in order to support yourself.
Calculate How Much You’ll Be Investing
In the beginning of every business, there’s some money that has to be invested. Then, when the business begins to bring in a cashflow, you’ll have to re-invest some of the income back into the business. The cashflow–whether being invested from your job or reinvested from your business sales–is an important calculation to have.
With the cashflow, you’ll be able to decide:
- How you’ll acquire customers: Paid advertising, organic marketing, or both?
- How much you can spend on training
- What materials and equipment you’ll be able to pay for to perform the job
- What your office setup will be
- What type of connections you’ll be able to come around
- Whether you’ll be in professional networking or mastermind groups
- and so much more!
Create a Maximum Viable Work Schedule
You may be starting your business as a full time employee, a stay at home mom, a single parent, or simply with alot of time constraints. In order to do freelancing, you need to have time and a consistent measurable output (maybe even moreso than a job).
Before you go sending out proposals or welcoming work, you want to decide what’s the maximum amount of time you’ll be able to commit to the business on a consistent basis. Hiring managers or up and coming entrepreneurs rely on their freelancers to be able to manage their time and render deliverables within specified time frames. If you don’t have a maximum viable schedule, you won’t forecast right, you might overbook yourself, you would definitely frustrate customers, and you can get a bad reputation.
I suggest using a time management tool to make sure your time is a reflection of your values, so if you haven’t seen my article on How To Use a Time Management Chart, I recommend you check it out! It’s one of the most popular articles we have on How To Entrepreneur, so I’d say it’s pretty good.
Hone in on a Few Marketable Services
With the time and money numbers in mind, you’ll want to identify some services that can help you achieve your minimum viable budget within your maximum viable schedule. You may want to consider pricing strategies to price your services and multiple streams of income.
When I was freelancing last year, things were going very well until we had a health issue in my family. I needed to care for my loved one, which took away from my maximum viable schedule. In fact, caring for my loved one crushed my maximum viable schedule because the support I needed to provide was a full time job of itself.
I wasn’t sure how long my schedule change would be required as health is very fragile and sometimes unpredictable, so I ended up losing my clients. As a result of my experience, I decided that I would never put majority of my time into earned income again. I would need to balance my streams of income with earned income and additional streams. For me, that’s when I got into affiliate marketing, and I’ve had an uphill climb since learning from Wealthy Affiliate.
For me, I have services I offer thru How To Entrepreneur and I offer referrals to other businesses thru affiliate marketing and ad revenue.
Similarly, you’ll need to decide what services can help you to use your time and achieve your financial goals.
Identify Where Your Buyers Might Be (Online and Offline)
If you’ve accomlished the previous few tasks and you’re here, you’re doing well and you’ve come a long way.
Now, you want to start thinking about the marketable services you wrote down and where the people who would want to pay for those services might be. You want to think about the problems they might be having without your service and where they’d be going to solve that problem. Write down some places the people who may potentially buy your service might be.
Step #2: Begin Networking
Most people start their brands with a small social circle of only friends and family. When you start like that, you have to build from the ground up. Networking is a powerful way to begin building a wider social circle and building close connections.
Here are some ways you can find networking opportunities:
- Live Networking
- Vendor Events
- Networking Events
- Live Video or Webinars
- Content Marketing
- Email Marketing
- Social Media
If you’re interested in making the most of your networking, you should check out my article How To Find Business Networking Events.
Step #3: Create Processes and Systems
Your brand isn’t entirely in your control. There’s a major component of your brand that you influence, but you don’t control–that’s the customer’s perception. Your customer will create a perception of your brand based on your first impression and every components of the customer journey, and if you want this to be positive, you should be interntional about creating processes and systems. Some processes to start mapping out are:
Not every person who says they need services like or equivalent to what you offer is going to be a good deal. Some people may want to be penny pinchers. Some may not be able to afford what you’re offering, and some may not have consistent values or a mission you want to be apart of. You have to think about who qualifies as a customer.
- Is there a certain income that demonstrates they can afford what you offer?
- What size budget do they need to have to make your service a comfortable fit for them and an opportunity to yield ROI for you?
- What causes or values do you staunchly stand against?
- Is there a certain time frame you need to complete the work?
Create a list of who your target audience is, and who they are not. For more help with this, check out my article “How To Target an Audience: Top Methods to Find People Who Love What you Do!”
Structuring Sales Presentations
Especially in the beginning, sales presentations can seem very awkward. In awkward and unstructured situations, you can say things that make uncomfortable scenarios, or you can forget to say things that are very important.
For example, I’ve had door to door salesmen who knock on my door and monopolize the relationship by disclosing too much information about themselves. I get it…their trying to build rapport, but when you’re getting too personal, it makes the customer even more hesitant to do business with you.
To avoid awkwardness, it’s best to create a process and structure for sales presentations. In their article The Most Persuasive Sales Presentation Structure of All, Hubspot recommended the SCR Method. With the SCR Method, you’d identify the “S” or Current Situation, then the “C” or Complication, and the “R” or Resolution.
If we used the SCR Method to sell our #1 Recommended Internet Marketing Training, we could say:
Situation: A local business is doing all of their marketing and client fulfillment thru offline marketing and advertising. They’re doing door-to-door, live networking, billboard advertising, and direct mail, but they’re getting less results than they previously would. Their customers are complaining that they want to be able to pay online and potential customers are stating they chose a competitor over them because they didn’t have a website.
Complication: The local business doesn’t know how to create a website, do search engine optimization or social media. They don’t have anyone working for them that’s competent in internet marketing.
Resolution: For free, they can sign up whoever they want from their organization for our recommended Internet marketing training, get their website up in 30 seconds, and learn how to use the website to attract more customers.
Once you’ve done the compelling presentation, and the customer says “I’m interested”, you want to quickly return something to them that will tell them the pricing and parameters of the agreement. Usually, freelancers would write a proposal that gives the potential client details about how much the project will cost, when it can be done, what information is required, what the reporting arrangements will be, how deliverables will be sent, and how revisions are handled.
You’ll want to create a template or something that helps you price and deliver proposals quickly. If you are too slow with your proposal process, it’s likely the customer could choose to give their business to someone else, or they could find something else to spend their money on.
If you proce off the cuff, it’s likely your minimum viable budget could be blown out of the water! You may underprice for materials, labor, or equipment, and at the end of the contract, you could end with no profit, and maybe not even a paycheck. Pricing is crucial, so you want to be clear about the mathematical formulas you’ll need to do to price your work.
You’ll also want to take into consideration what your pricing strategy is. Will you be competitively pricing or will you be doing markup pricing? Check out this article on Pricing Strategies for help with deciding which angle your going to use to add uniformity to your pricing.
Creating a Contract
After the proposal is accepted and the price is set, you’ll want to draft a contract that the customer will sign to confirm their agreement with the terms. The contract is a legal document that either party can use to defend themselves if the contract was broken, so you want it to be very clear.
Rather than simply stating 100% customer satisfaction guaranteed, state how many revisions you’ll do before forfeiting the service. Check out other contracts for freelance services in your niche and identify common issues that cause friction in the business arrangements. Try to add verbiage within your contract that makes note of those common breaches of contract or legal issues of your field.
Amending a Contract (with addons or subtractions)
From time to time, you might have a customer who decides that in addition to the services you agreed on, they want to add more services. On the other hand, you may have a customer who says instead of doing all of the services you’d agreed on, they want to remove some.
When the service agreement changes, you need to have a process for amending the contract, getting a new signed agreement, and modifying the service delivery to suit the customer.
Starting a Project: Retainers, Onboarding Info, and Account Management
Whether at the very start of the project or as a result of an amendment, you’ll need to undergo some process for starting a project. Many freelancers like independant lawyers or other service professionals, will require a retainer before beginning work to ensure their paid for their time.
The retainer can cover half of the price of the service, a third, or whatever arrangement is agreed upon by you and your customer. You can decide if you want the retainer at the beginning of the contract, and at the beginning of the amendment to add on more services, or how you want to use it.
In addition to retainers, you will probably need some onboarding information to begin your work. For example, accountants may need Quickbook access, or Social Media Managers may need admin access to social media.
Reporting and Project Management
Often times customer want to know the status on a project. Some are very inquisitive and others might be fairly laid back. You want to have a way to answer their questions whether it be a customer relations managment software you keep updates or a contact phone number for questions, you want to have a process for them to have questions answered.
Others use processes like:
Sharable CRM interface
An account manager’s phone number
An email address
Regular reporting thru graphs, charts, or a written report with status updates.
Invoicing is a very necessary part of a freelance business because it’s how you’ll get your money. Some invoicing providers will be difficult for customers to use. There’s options where you can:
- Pay directly on the invoice
- Pay by phone
- Use various bank cards
- or, do a Bank funds transfer
You’ll want to choose a solution that works easily for you and for your customers.
If you’re using a platform like Upwork, Fiverr, or another of the sort, it’s probably best to submit deliverables directly on the website. For other scenarios, it might be best to submit deliverables by email, google drive, or some other way. You decide, inform your customer, and follow thru.
Revisions can be a tool to get better skill or a way to waste a lot of time and money if you’re not careful. If you’re finding that you’re getting an excessive number of revisions, you’ll want to go back and do some customer journey mapping, refine your revision policy, and hone in on what the market expects from your marketed services.
Offboarding and Terminating Contracts
Finally, you’ll want to create a process for how customers will leave your customer journey cycle. They could leave because maybe your product is for a specific life season, or the contract could end sour and you need to call the quits.
For offboarding, it’s important to send customers off with the most information and direction that connects them to the solution you originally agreed on (when possible), and to be clear about a breach of contract when peaceful offboarding is not possible.
Step #4: Choose a Money Management Solution
As the money is flowing in, you want to be careful to consistently track your income and expenses. Often times, you can get an accounting solution like Freshbooks and manage your money, time, and invoices in one!
You’ll want to pick a money management solution that works for you. Some common choices are:
Step #5: Balance Working in Your Business vs. Working On Your Business
Once things in the business start moving along, it’s easy to stay very focused on working IN your business rather than working ON your business. When this happens, you may have very irregular flows of customers or stagnant numbers of brand recognition and impact. You want to make sure you’re balancing working IN the business with working ON the business.
Working IN the Business Activities
- Delivering customer services or products
- Creating for customers
- Selling to customers
Working ON the Business Activities
- Creating a vision board
- Drafting goals
- Creating or tweaking the business plan
- Finding opportunities to increase brand awareness of tap into new markets
- Customer journey mapping and making process improvements
Step #6: Reinvest to Grow the Business
It’s so easy to withdraw the money from the business account and spend it on something, especially when you don’t have accountability. Unfortunately, when you pull all of the money out of your business account, you leave nothing there for recurring expenses, working capital, or preparation for growth. When you get money, in addition to satisfying your personal desires, you also want to make sure not to quench the business, and to save for:
Hiring more help
Upgrading tools or equipment
Networking or associations
and “Just in case” something irregular or unforecasted comes up.
Final Words on How To Start a Freelance Business
The goal of this article was to show you how to start a freelance business even if you have no experience. Freelancing can offer an amazing career for the person whose willing to put in the work.
If you have questions or concerns about this, don’t hesitate to leave them in the comments section. I’d love to help you out!
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Now, it’s Your Turn…
Have you started a freelance business before? What tips would you add or take away? What nuggets or experiences can you share about freelancing businesses? Leave your comments below.