If you have a budding freelance career, you may be wondering how to shift it from being a lucrative hobby into a full-fledged business.
Here are some stats that can help you to get a better picture:
- According to the Small Business Administrations, there are 28.8 million small businesses in the United States which accounts for 99.7% of all the business in the U.S.
- On average, small business owners require about $10,000 as the startup capital.
- 42% of the startups fail because of a lack of market need. That’s the no.1 reason for failure.
This article provides 6 strategies that any freelancer looking to start a business can benefit from.
1) Come Up with Your Selling Points
Unless the product or service you offer is truly one-of-a-kind, you’ll likely be competing with hundreds or even thousands of other freelancers and businesses. Therefore, it’s important to identify why you are worth hiring over your competitors, according to The Muse contributor Kate Kendall. To help in this process, Kendall recommends figuring out what your strengths are.
Specifically, Kendall advises considering your experience, pricing, likability, and current partnerships as potential selling points. You can also use this as an opportunity to identify a specific niche you will operate in.
Here are a few ways that can help to brainstorm your unique selling points:
- Identify what you can offer, the experience you have or the geographical advantages that your competitors cannot imitate.
- Search and compare the skillsets you have with your direct competitors and identify the benefits that set you apart.
- Try to put yourself in your customer’s shoes. Scrutinize what your customers really want and what could convince them to buy your service.
Additionally, if you don’t have a portfolio of work samples, now is the time to build one. Curate a collection of your best work and be ready to provide it to clients who ask to see what you can do.
2) Build Your Online Presence
The selling points you come up with will be a huge part of another important ingredient: your online presence. These days, any business without a thriving digital identity will likely fall behind its competition.
Over at Forbes.com, entrepreneur Andrew Gazdecki recommends the following strategies for building an online presence:
- Be present on multiple channels. That means creating an attractive, up-to-date, highly usable website. It also means being active on social media platforms. You don’t have to post 20 times a day, but you do need to be active enough that people regularly see updates from you.
- Target specific customers with search engine optimization (SEO). SEO, in general, is important, and local SEO, in particular, is vital for businesses looking to attract customers in a specific area.
- Study any competitors your business has, particularly the best ones. This can provide guidance on how to best implement SEO, which social media platforms you should focus your efforts on, and which customers your competitors are going after. You can also use this as an opportunity to set your business apart by zigging where your competitors zag.
When building your online presence, be sure to reiterate your selling points.
For instance, if you have a very unique partnership with another business, posting about that can be a way to show off your partnership to potential clients. If you absolutely nailed a project and the client is comfortable with you showing it off, then do so.
3) Consider the Financial Implications
Your specific financial picture will vary depending on how much savings you have to lean on, how much your business projects to earn per month, and what expenses you have. However, you should make sure you have enough savings to sustain your new business through any early rough patches.
Stats have shown, only half of the small businesses will survive 5 years or more and approximately one-third will survive more than 10 years If you truly want to turn your freelance career into a sustainable business, you must know how and where to spend your money.
For example, before you launch a project, you need to estimate the cost of all the individual activities involved and the timeline to complete. After you have the details, add all the estimates cost together to have a complete picture. Then ask yourself, are you willing to take this risk?
Additionally, you may also need to figure out if your payment structures need to change.
For example, Entrepeneur.com contributor Michael Luchies started out with a business model of charging clients by the article, but he found more success after switching to monthly packages. Even though his number of clients dropped, the new setup was better for his business.
4) Keep Taxes in Mind
If your transition from occasional freelancing into full-time business-running goes well, it’s likely that you’ll begin to pull in more money. That’s great news—but it also means your tax responsibilities will go up.
Your specific tax liabilities will depend on what type of business you operate as. (There is more information on different types of business entities in the next section of this article.)
The takeaway point is this: Research how much you will owe in taxes and take steps to meet these obligations. You will also want to research which expenses you can deduct from your taxable income.
If you have the budget for it, a tax accountant can be a great help, and if not, you should at least consider investing in tax-filing software to make this process easier.
5) Consider Making It Official
You may also want to make your new business official by setting it up as a legal entity. This can have several benefits. For example, as Priyanka Prakash explains on Fundera.com, legally registering a business can provide protection for your personal assets by separating your personal and business identities. For example, if someone sues your business, your personal assets won’t be on the hook. Two options for this include limited liability companies (LLCs) and corporations.
Prakash also highlights additional advantages to legally registering your business.
For one, it can make your business more attractive to lenders and investors, because LLCs and corporations have lower rates of defaulting on loans. Operating as a corporation or LLC can also open up partnership opportunities with larger companies.
Once you decide to register your business, there are several steps to take, according to Prakash:
- Prepare and file formation papers.
- Obtain an Employer Identification Number from the IRS.
- Open a bank account for your business.
- Obtain insurance for your business.
- Begin making tax payments.
- Adhere to any applicable state laws.
Those are just the broad strokes of the steps of setting up your business as a legal entity. Be sure to research each one to make sure all of your paperwork is in order and your needs are covered.
6) Network Constantly
According to The Balance contributor Jen Hubley Luckwaldt, networking is a huge part of making it as a freelancer. Luckwaldt advises that networking is important both to prevent isolation—because you won’t have traditional coworkers—and to build up a client base. She recommends using social media to boost engagement, make and maintain connections.
If you have created an online presence for your freelance business, like what I’ve mentioned earlier, it’s the time to utilize it. Besides showcasing the previous work you’ve done, you can share or mention others’ work in your website.
Setting up a blog section for networking purposes is the cheapest way you can begin with.
Here are some tips where you can grow your network with a blog:
- When you write a topic, you can mention and link to others that are related. You can feature their advice and tips in your blog post. When your post is published, let them know that you have included them in your article.
- You can invite someone you know to write an article on your blog. Most likely they will say yes to your invitation. Not only you can get new content from a different perspective, but you can also build a deeper relationship with the person.
- You can hire someone to do an interview post with the “expert” you know. From there, you can learn so much about the person and their business. It may sparks ideas where you can collaborate with them in the future.
Besides, professional associations are another great way to stay on top of news in your industry and expand your network.
Other avenues for networking include in-person events and volunteering in your community.
No matter your method of networking, be ready to talk about your business with an elevator pitch and provide your contact information, for which business cards can be helpful.
Chances are that if you’re a freelancer, you already like what you’re doing.
Turning your freelance career into a business can be a way to make your part-time gig your full-time dream job.
To make it a reality, identify what you’re good at and build an online presence to show off your skills, accomplishments, and resources. Keep your tax payments, insurance policies, and paperwork in order and in good standing, and be sure to continually network to build valuable connections.