How to Start a New Freelance Business in 5 Easy Steps

How do you start a freelance business?

I’ve spent a good part of my life as a freelancer of one sort or another.

I was a freelance writer for several newspapers and magazines. Then I ran a business for a while where I combined writing with design, creating newsletters, brochures, and such-like. This was back in the pre-internet days.

When the internet came along, I added web design to my portfolio.

When the economy melted down in 2009, I was catapulted back into freelance writing – against my will.

I lost a job I thought was safe.

After years of self employment, I’d gotten tired of feeling like I had to constantly be selling myself, so I had chosen to go to work for someone else. I wanted a break.

This job turned out to be really good, with the best boss I ever had. He’s a lawyer, and he specialized in monitoring compliance. That means, he made sure that companies were doing business in the ways they were legally and ethically supposed to.

In this case, the company was a multinational bank. We watched what they did in their consumer lending department.

We figured our jobs were safe, because the bank was under orders from the Federal Trade Commission to maintain this compliance program.

On March 9, 2009, I walked into the office and found the entire team sitting in stunned silence.

I had come in late that morning after a doctor’s appointment, so I’d missed the phone call from our company’s liaison at the big corporation we did most of our work for. “Sorry,” she told my boss. “The bank just shut down all of their US consumer lending operations. The compliance program is shut down, effective immediately.”

During the next year, I applied for more than 200 positions, and got an interview. One. Then a friend got me hired on as a temp in a call center, and after three months of that I was more than ready to go back to freelancing.

So I hung out my virtual shingle with little or no preparation, other than my previous experience.

I absolutely don’t recommend doing it this way.

My podcast co-host, Kitty, started freelancing while she was still in college. Here’s what she explained in our podcast episode about making the leap from a job to freelancing:

After I graduated, I was really thrown out into the world of freelance writing, and it was honestly quite stressful even though I got a lot of value out of it.

I took a variety of strange jobs that summer, ranging from content farms to a contract to ghost-write a 30,000 word novella.

But most of the jobs I took, or those that provided the best source of steady income, were in the middle, where I reached out to editors and pitched ideas and got paid $100-200 for each submission.

A bunch of the organizations I’m still writing for were connections I made during that summer in 2014.

So on the one hand, you have people like me who just close our eyes, hold our noses, and jump off the cliff. On the other hand are the supremely patient and well organized folks who start freelancing as a side hustle while continuing to go to work every day.

They stockpile their freelance earnings to tide them over possible rough patches after they switch to full-time freelancing. Then, when they’re earning enough as freelancers to justify it, they leave their jobs. Sometimes that takes six months, and sometimes it takes six years.

I admire people who can do it that way.

But whether you’re a leaper or a planner, here are five things you can do to shorten the timespan to profitability and ongoing success.

1. Don’t Hang Out At The Bottom of the Barrel

When I decided to embrace freelancing, I signed up as a writer with a company called Demand Media.

In the parlance of the day, they were a content farm. They paid writers low wages to create keyword-stuffed copy that would rank well in search. They sold lots of advertising, which was how they made their money. Their business tanked after a couple of major Google algorithm shifts that penalized low-quality content.

As a writer, the pay was lousy, sometimes less than minimum wage when I factored in all my time. But I wrote for them deliberately as a way to refresh my writing skills, add some discipline to my crazy work life, and boost my confidence.

After a few months, they had served their purpose in my life and I moved on.

Those content mills are a thing of the past, but there’s always a bottom of the barrel. That position today is held by companies like Upwork that offer work to freelancers.

They act as a clearinghouse – and charge freelancers a hefty 20% fee – for providing the place for freelancers and hiring companies to find each other. If you look for work on one of these sites, you’re competing with anyone who wants to call himself a freelancer with wildly varying levels of experience and ability.

The companies using Upwork probably don’t have a good way to judge the freelancer’s abilities, so they look at the price.

You end up competing against people in India, or Romania, or other very low-income parts of the world. I’ve seen people willing to write a 500-word blog post for $8. A recent posting wants an intermediate skill-level writer with SEO experience to write blog posts for $30.

Seriously? I’m sure as hell not going to write 500 words for $8, or even for $30.

There is one time – and only one – when you should ever consider doing something like that. If you have zero experience and you’re willing to do a little bit of writing in exchange for something to put in your portfolio and a testimonial.

In other words, if you want to join Upwork to get an easy few assignments, that’s fine. But set a limit for yourself, and then turn to better, more lucrative assignments.

When the only way to stand out from the crowd is by offering a lower price, that’s a race to the bottom that you cannot win.

2. Stand Out from the Crowd by Specializing

Think of it like this. If you’re one of a million freelance writers, it’s nearly impossible to stand out. But if you’re one of a few hundred – or a few dozen – freelance writers for a certain industry, or who specializes in a particular type of writing, it’s much easier for prospects to find you.

When you specialize or find your niche, you can craft a targeted marketing message, and you can be found by a prospect who’s looking for your services. So that’s the biggest and most important step.

When I got back into freelancing in 2010, I didn’t have any area of specialty. Over time, I narrowed my focus by identifying myself with WordPress. That’s when prospects started coming to me instead of me always having to pitch to them.

Specializing, or finding your own unique niche, is vital. It’s also an entire topic in itself.

Now, I come from a background in freelance writing and website design, but I recognize that some of you might be graphic designers, programmers, photographers, videographers – there are lots of skills that lend themselves to freelancing. Whatever your field, you’ll need to find a way – besides rates – to differentiate yourself from your competition.

When choosing your niche, go for something that you’re interested in. Yes, there’s a lot of money for financial writers, but if finance bores you to tears, you’ll hate getting up every morning, and honestly, you can’t do your best work that way. So choose something you enjoy, that will keep you interested.

3. Develop Confidence and Kick Imposter Syndrome to the Curb

Before you can earn the big bucks, you need to develop some confidence.

Confidence is a tricky beast. You can feel supremely confident in one area of your life, and be totally lacking in confidence in another. It’s not uncommon to feel confident about your work, but lack confidence in telling prospective clients what you can do for them.

The flip side of confidence is something we’re all familiar with, because everybody suffers from it. It’s the dreaded imposter syndrome.

It’s that nasty little voice in your head that says, “I’m not good enough.” “Why would anyone listen to me?” “Why would anyone hire me to do XYZ?” “I don’t know enough.”

Surprisingly, the more successful someone is, the more likely they are to deal with imposter syndrome!

Here’s what Kitty does to vanquish those feelings.

• Remember what you’ve already accomplished in that field. If you’re just starting out or building a base for yourself, maybe you won’t have any accomplishments to reflect on yet, but you can still consider all the unique skills and qualities you bring to the table.
  
  “I’m really terrible at selling myself,” she stated, “and I always feel a little fake about that kind of sales/networking stuff, but I can take confidence in the fact that I’m a good writer, and that I’ve received a lot of external validation over the years on that front. So even when a particular job makes me nervous, I can just focus on doing my best. Getting my head into it always helps.”
  
• Remember that you’re not alone. These feelings may be the result of culturally imposed pressure, or expectations to live up to high standards, or expectations. Your fear is probably not an indicator of absolute truth.

4. Figure out what you’re worth

This is always tough, especially when you’re new to freelancing. When you’re starting out, your rates will be lower than someone with an established clientele because you haven’t established yourself yet as the go-to person for whatever it is that you do.

Sometimes you need to experiment, and this is a good reason not to quit your day job right away.

For example, when I started my WordPress Building Blocks site, I initially charged only $25 to set up a WordPress site. For that silly price, I gave my clients a full, working site with a good homepage, navigation menus, sidebars, footers. . . I didn’t stint.

As I did the work I kept track of how much time it took, and after doing five or six of these, I set up a real pricing structure, with a couple of well defined packages to choose from. Since then, my rule of thumb is to raise my rates when I get too busy.

This is a good strategy when you have something you can package. If you’re a writer, you could put together a package where you write two blog posts and one e-letter per month for a set amount, or a certain number of social media posts, or whatever works with your industry or specialty. That doesn’t mean you’re limiting yourself to only working on those types of projects, because you can always add a completely custom “package” to the offering.

Remember that you can always raise or lower your rates later. Look for guidance from other freelancers in indicating what kind of price tiers are typical in the industry.

I strongly recommend that you not charge by the hour. Yes, you should absolutely know how much time a project will take, and you should keep track of the time you spend.

In order to attract clients who value what you offer, though, you need to take the focus of the time you spend, because that is not where your value is. So charge by the project.

This has another advantage. Let’s say your project fee would be $600, but your client’s budget is only $500. If you’re charging by the project, you could say, well, I could do it for $500 but it would only include A, B, and C, not D. That way, it’s not all or nothing. The client can still get something valuable that will help his business, and you earn $500.

5. Find clients willing to pay you what you deserve

So you’ve figured out an area of specialization, you’ve learned how to improve your confidence and push imposter syndrome down, you’ve come up with some pricing. Now how do you attract the clients who understand the value of what you do and are willing to pay that price?

There are many different strategies for finding clients, again, depending on the service you’re offering and your specialty or niche.

Like specializing, this is a topic that could easily fill several podcast episodes, so let’s zero in on the “willing to pay you what you deserve” part of the equation.

Do they regularly spend money for the service you provide? If you’re a copywriter or graphic designer, do they advertise? And if they advertise, do they advertise in the types of publications that require someone of your caliber?

Do they send marketing emails or place PPC ads on social media?

If you’re a programmer, find out if they spend money to hire freelancers.

Is the project they’re likely to hire you for something that obviously generates income for the company?

The closer you are to the money, the more likely the client will value your contribution and pay you accordingly. Writing a sales page pays more than writing a blog post. Writing a PPC ad pays better than writing a social media post.

What’s the purpose of the project? Is it to directly add to the company’s bottom line, or is it to improve their public reputation or awareness, attract more visitors to their website, or some other, less quantifiable, purpose.

AWAI puts out an excellent guide for copywriters if that’s your thing. It’s called the State of the Industry Report on Copywriter Rates.

Next Steps

• Once you’ve identified your specialty area and who you want to serve, find out where prospective clients hang out. Join appropriate groups on LinkedIn, Facebook, or other forums.
• Join groups with other people who do what you’re doing, as a way to get support, information, and sometimes even referral business. You want to find groups that are supportive and encouraging – if members disparage one another and tear each other down, don’t stick around. They are not your tribe! Those groups with your peers can also help you with pricing your services.

When you follow these five steps, you’ll be well on your way to living the life of freedom that you’ve been dreaming of.

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