Setting up your freelance gig and drumming up business can be overwhelming. You want to build a network of happy and satisfied clients so that they continue to partake in your services and also spread the word. But to produce quality work for your clients, you first need to ensure your business is running smoothly. In other words, you need to set up your freelance business efficiently and legitimately to avoid any hiccups in the future. Then, you can focus on what you do best and make money off of it!
How Can Freelancers Set Up Their Business for Success?
We have seen a tremendous rise in the gig economy since 2020, with more and more people choosing freelance and remote working opportunities for a better work-life balance. But how can you successfully launch your freelance business and make a stable income? Here are some important best practices and tips for freelancers starting a new business:
Calculate Your Rates
Before you start reaching out to clients or taking on orders, you first want to set rates for your business. This depends on the type of freelance service you offer. Consider the following when setting your rates:
- Location-based rates for the service you offer — Different countries and states price services differently; research to find out the average for your product or service.
- Technology and tools — Everything you use to create the product (communication tools, project management systems, design or writing software, and the likes).
- Your level of experience — Most entry-level freelancers charge $25-$50/hour, while more experienced freelancers charge $65-$150/hour.
- Expenses for running your freelance business — Calculate how much you spend to keep your business up and running, and therefore, how much you need to make monthly or per project to profit.
- Your tax situation — More on that below.
Once you have considered these factors, you can set your rates. You can even use a rate calculator to determine what pricing is best for you. Different pricing structures include:
- Hour-based pricing — Most freelancers start here till they find their footing and gradually increase their prices or charge a pre-set fee per project.
- Project-based pricing — Charge your client by the project or the client — for example, $75 for designing a logo or $50 for infographics.
- Retainer fee — Pre-negotiated or pre-paid fees for clients on retainer.
- Flat fee — If you only provide one type of service, then you could just set a flat fee for all the work you do.
Next, you want to decide how and when you will receive your payment. For bigger projects, you can have clients pay you half or full price upfront, or you can set a monthly invoice date. And you can have clients pay you via e-payment channels (PayPal, Venmo, Google Pay, Apple Pay) or traditional methods such as bank deposits or money orders.
Understand Your Tax Situation
A critical factor in successfully running your freelance business is to figure out your finances. Every country and state has different tax policies, so you must understand what taxes you owe as a freelancer.
Most likely, you will be subject to self-employment tax, where you file an annual return and pay the estimated amount. You need to find out what is the best way for you to file and save on taxes. You can look for detailed and helpful guides on tax filing websites such as TurboTax and H&R Block.
Prepare a Contract
It is a familiar scene when a freelancer and potential client decide on a project verbally or non-formally via text messages. Sometimes, freelance opportunities come up quickly, and you don’t want to lose them, so you jump in and say yes. But without a contract outlining essential details, this leaves a lot of room for the client to back out, reject your work, or refuse to pay what you deserve.
This is why contracts are crucial. They help you solidify key factors before you start working on a project and save you from potential legal issues. Most contracts include:
- Parameters and scope of the work,
- Negotiated rate the client will owe you,
- Deadlines and other requirements,
- Policies for revision and edits,
- Project cancellation and reimbursement policies.
It is a good practice to use contracts before jumping into any project to get paid for your work without worrying about losing your client.
Invest in an Invoicing and Accounting Software
Next, you may choose to take care of your invoices and accounting on your own or use invoicing and accounting software like Bonsai, QuickBooks, FreshBooks, FunctionFox, and so on.
Cloud-based invoicing software keeps a record of your services, rates, clients, contracts, taxes, and clients. So, when you create an invoice, you can easily pull this information in and automate your invoicing processes from anywhere.
With reports and analytics, you can get insights into which projects or types of service bring you the most money and what services sell more. You can then use this data to steer your business in the right direction.
You should consider subscribing to an invoicing software If you don’t have the math or accounting skills and don’t want to waste time dealing with numbers.
Get the Right Technology and Tools
To help you produce quality work with little downtime and interruptions, you need to set yourself up with the right technology. This means investing in tools and software that help you work better and faster. These tools will cut down time spent on menial, repetitive tasks, and help you organise your business better. They will also assist you in creating products that match the promises you make to clients.
So, what tools and tech do you need? This depends on the work you do. For instance, graphic designers and web designers will need:
- Creative software like Adobe or Sketch
- HD monitors
- Designer tools like PicsArt or Canva
- Writers, on the other hand, might need:
- Writing aids like Grammarly or Hemingway Editors
- Content management systems like WordPress or Squarespace
- Project management systems such as Asana or Monday.com
- Accounting software
- Images from Shutterstock or Unsplash
- Productivity tools like Todoist or Evernote
- Content studies like GatherContent or Topic
For communication tools, you may need:
- Business phone number
- CRMs and help desk software
- Chat and messaging tools, and so on.
Research what tools people in your field are using to increase productivity and quality. Then, compare different providers and find one that fits within your budget and caters to your needs.
Make it Easy for Customers to Contact Your Business
Lastly, you want to make it easy for clients and customers to contact you and start doing business with you. Have a separate business email address and phone number. This will keep your personal life and work separate. Then, advertise your contact information on your website, email signature, social media accounts, business cards, and marketing materials.
Be responsive on these channels so that customers find your business reliable. You might even set up automated email responses to let customers know that you have received their query and will respond soon. Similarly, be active on social channels and interact with the community as well as interested clients. This will make your freelance business more visible to potential clients.
It is also a good practice to keep a record of all communication between you and your clients, especially if communication occurs across different channels. This will help eliminate any confusion or misunderstanding.
Make Money Doing What You Love
Take time to plan out how you will run your freelance business before you get started. This way, you can prepare for hiccups or potential issues. And you can spend more time creating quality products and services. And for moments of crisis, keep a list of resources available so that you can get help quickly and accurately. With these measures in place, you can run your business efficiently and successfully. Good luck!