Freelancing can be an extremely lucrative career option. According to an Upwork study, there are more than
Pick a pricing model
The first step in setting up a successful freelance business is to pick the right price for your services. It is not uncommon for workers to charge an hourly rate for their service. The reason this is so popular is because it is convenient for freelance workers who are switching from traditional jobs to know their baseline income and charge a corresponding hourly fee. But this is risky for several reasons. Firstly, freelancers have higher outgoing expenses in the form of hardware purchase, electricity and other administrative expenses that a regular 9-5 worker may not have. It is important to know your costs and pick an hourly fee that will suitably compensate you over and above these expenses.
But while hourly rates are convenient for the freelancer, they may be confusing for your client who may have no idea how productive you are with your job. From a client’s perspective, it is important to know how much their project will tentatively cost. A fixed per-project fee works better than an hourly rate. Evaluate the pros and cons of these different pricing models and pick one that fits your business requirements.
Set up a sales pipeline
As a freelancer, you are responsible for finding new clients for your business. While outbound marketing techniques like sales calls and advertisements are effective in a traditional business setup, these strategies also consume a lot of time and financial resources; both of which are scarce in the case of a freelancer. Inbound marketing tools like
Partner with other freelancers/agencies
As a freelancer, you are competing against established agencies and businesses that have larger budgets to expend on customer acquisition. So while a sales pipeline is important for the long term, they may not always be adequate. One way to counter the challenges faced by you as a one-person business is by partnering with other freelancers and agencies who offer complementary products or services. For instance, a freelance web developer may partner with a web designer. This can be productive for two reasons. Firstly, it helps both freelancers grow their businesses by referring clients to each other. More importantly, the two freelancers can, together, make a stronger pitch to a client looking for holistic services. Clients prefer to hire a freelancer or agency who can take care of all their needs. By offering multiple services under the same roof, these freelancers stand a better chance at client acquisition.
Do not engage in a price war
For someone who is just starting out with their freelancing business, you may feel tempted to bid low in order to secure a project. But this strategy is harmful for your business. When you bid low, you put yourself in a price war against other freelancers. This cuts down on the margins for all freelancers in the pool. But more importantly, this strategy only helps you in securing projects from price-sensitive clients who are also typically more demanding. In essence, when you engage in a price war, you are not only bringing your income down to unsustainable levels, you do not leave yourself many resources to acquire more clients.
But securing clients as a new entrant to the market can be a chicken-and-egg problem. Clients do not trust freelancers with no experience. One way to address this is by seeking internships with reputed businesses in the industry. This gives you legitimate experience from reputed firms that may be leveraged for securing new clients. Another way to do this is offer pro-bono work for high value clients. Again, this helps you secure experience from highly established businesses which is worth a lot more than a low priced project from a small price-sensitive client.
Hire trusted third party vendors
As a one-person business, you are required to perform a lot of administrative tasks that take you away from your money making projects. Hiring trusted third party vendors to execute these tasks cost money and as a bootstrapped business owner, you may deem it necessary to cut costs and continue performing those tasks yourselves. But this has a huge opportunity cost. The only way for a freelancer business to succeed is through continuous growth and for this to happen, you must spend as much time as possible on marketing and servicing your clients. Other tasks like managing your accounts, or generating client reports may be taught to a third party who can do these jobs for you.
Freelancing can seem extremely profitable from the outset. However, growing a successful career out of this requires a lot of perseverance and effort. Investing your time in client relationships, pricing your product or service right and executing your projects on time go a long way in building a brand and a successful freelancing business.