Sometimes the concept of a freelance business can be vague and amorphic. You might think it functions similar to a regular business, but remotely. Or, perhaps you consider it more of a ‘side-gig’ that can cut through all the red tape that a regular business has.
It could be that the shimmering mirage of the freelance business model is holding you back from giving it some serious consideration. There are lots of variables that determine what your freelance business might look like, but let’s set some boundaries on the general structure.
What is a freelance business?
Freelancers are individuals who launch their own business and work for themselves. They source their own work, typically in the form of short-term contracts. As it is a business of one, all the responsibilities of running a business fall to them: seeking contracts, managing expenses, filing business taxes.
While challenging, these responsibilities also give you the freedom and flexibility to make your business into something that best suits your needs (choosing their own hours, their rates, and you work they engage in).
Freelancing is a rapidly growing practice, especially in recent years. Approximately one-third of the US workforce has engaged in freelance work during their career. In the past five years, there’s been a freelancing boom, bringing the freelance workforce to a staggering 57 million (Upwork, 2019). Understanding your compatibility with the freelance business model is key to making an informed decision about your future.
Long-term goals and priorities
Determining what your unique freelancing business model may look like relies on examining your professional goals and priorities. Ask yourself: what’s motivating you to become a freelancer? Is there something about the traditional 9-5 that you find grating? How might the flexibility of freelancing address those issues? Start by building up a familiarity with your needs within the workplace and familiarize yourself with the level of uncertainty you can tolerate.
It’s common to not know who your clients will be in the next month, and there are never any guarantees; you get what you put in. Does that idea thrill you or make you recoil? You’ll never have the same level of structure that a traditional business model would have, but you do have full ownership over things like hours, pay, and work you engage in.
Types of work
Given the remote nature of freelance work, there are some professions that are better suited to the freelance business model. Do you have a marketable skill that you can offer in a virtual space? To give you an idea, here are some of the most common types of work that are compatible with freelancing:
- Graphic Design
- Programming, Coding
- Marketing & Social Media
- Project Management
- Training, Teaching or Tutoring
That being said, you don’t need to pigeon-hole yourself into one of these professions. It just might require a little more creativity on your part to make a freelance model work for you.
Forming Client Relationships
Sourcing clients to grow your business is a key part of the freelance model. Lead generation may not be something that’s immediately intuitive to you, based on your past work experience. To start, figure out who your target market is, then research the best ways to connect with that demographic.
It helps to look at your direct competitors and monitor what’s working well for them. You don’t need to reinvent the wheel - what methods are they using that you can reformat? In a more general sense, the most common ways to source clients are through content marketing, seminars, referrals, or job boards (Upwork, Elance, Freelancer.com).
As you develop your list of clients, you may need customer relationship management (CRM) software to stay organized. Salesforce, SAP, and Microsoft Dynamics are all popular tools. CRM gives you a database of your client details and allows you to schedule tasks, generate reports to track data, and generate email blasts to be sent at strategic intervals. It’s also a great tool for segmenting your contacts into different groups (potential clients, current clients) to better target individuals at key points during their sales journey.
Determine pricing for freelance business
Freelance businesses differ from traditional businesses in that there is a lot more freedom in setting their prices. In a traditional business, it’s common to use competitors as a guideline to determine prices. In the freelance space, it’s more about the individual and the value of their services. Other freelancers should not factor into the decision process; your pricing should be based on the quality of your outputs and who your target market is.
Are you appealing to higher-end clients who want value pieces, or are you churning out quick services for a lower price? Finding a balance between these two ideas is the template you should use to get started. Learn more about generating a quote for your clients here.
As far as types of pricing go, the most common approaches to invoicing are project-based (it costs X for a website) or by setting an hourly rate. Which type of work you do may skew you towards one type or the other, but it’s entirely up to you.
Create and maintain an online presence
Just like any business, freelancers need to create and maintain an online presence so as to illustrate their credibility to potential clients. The more details that are provided, the easier it will be for customers to make an informed decision about your services. Your website should include your portfolio, pricing model, references, and background.
Why are you the best person to solve their problem? What projects have you worked on in the past that can illustrate your quality of your work? You may want to include details about who you are personally, as well. As they will be working with you directly, who you are as a person factors into their experience.
Finally, understand that your online presence is not static. It should be updated regularly and reflect the growth of your business over time. Having a documented history makes you a more reliable service-provider and shows that you’re invested in your work. As you develop relationships with your clients, it will also keep them engaged and encourage future investments in your partnership.
These are just a few of the features that determine a freelance business model- as you can see, they’re highly malleable based on the freelancer themselves. As a freelancer grows and changes, their approaches might adapt accordingly. Being nimble to change is one of the most attractive qualities of the freelance business model and is key to growing within the market and it's dynamic needs.