With remote work on the rise, more people than ever want to become a freelancer and start freelancing. With the desire for remote and location-independent work on the rise, starting a freelance business has become an attractive prospect for making a living.
Thankfully, it’s easier to become a freelancer than ever before. More than 57 million Americans freelanced in 2019, and the trend continues to grow with more than 50% of Gen Z opting to start freelancing.
Not only is it more popular to become a freelancer than ever before, but companies are getting more and more comfortable hiring freelancers rather than full-time employees.
A lot of jobs can be done remotely, and companies don’t need to provide the same financial or healthcare benefits to freelancers as they do full time employees.
So maybe it’s time for YOU to become self-employed and start a freelancing business.
Let’s talk about how you can start a freelance business yourself very quickly with very little money up front.
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Freelancing part time or as a side hustle is a great place to start. When there is less pressure to generate income immediately, you can be more thoughtful with the type of work you do and the clients you do it for.
For this reason, it’s actually a great idea to start a freelancing business before you think you need to. Freelancing is often built from trust and client relationships, and those relationships take time to form.
So if you start freelancing part time or on the side, you give yourself time to create the crucial relationships you’d need to make a full-time living freelancing.
If you’re set on jumping into the deep end and become a freelancer full time that’s great! It’s never been a better time to be your own boss.
If that’s your goal, you’ll want to calculate how much you need to earn to cover your living expenses. And I mean all of your living expenses, including taxes, health insurance, and even retirement.
This is your freelancing income destination!
If you do have immediate bills to pay or even debt, you need to have a handle on that income goal so you don’t dig into a deeper hole.
You may not be able to hit that number in month one, but knowing what your income goal is will help you get there as quickly as possible.
Whether you’re set to become a freelancer full time or on the side, your business will be built around the unique skills you have to offer. Those skills are your greatest asset.
So step one is identifying the different skills you’ve built over the years that other people may not have and want to pay YOU to use.
Start with a simple spreadsheet. In the first column, start listing each individual skill you can think of.
It’ll be easiest to start with all of the skills that you’ve already been paid to leverage. It doesn’t matter if the job was full time or part time, as long as you were being paid.
If an employer was willing to pay you to do that work, chances are that you’re pretty good at it! That’s a skill you can likely leverage to start a freelance business.
Think about your last several jobs: what were you being paid to do for those companies?
Don’t hold back – it may be customer service, graphic design, photography, or financial modeling.
If those roles required creativity or use of a specific software, it’s even more likely that someone would be willing to pay YOU rather than take the time to learn that skill themselves.
Some common software examples would be Adobe Photoshop, Figma, Sketch, Microsoft PowerPoint, Microsoft Excel, and so on.
When you’re thinking about your previous jobs, don’t limit yourself to the job description or main responsibilities.
In most full time jobs, employees find themselves doing things that weren’t originally in their job description.
For example, if you were responsible for running a company’s social media accounts, you probably picked up some writing skills too.
So instead of only thinking about your social media skills, you may also be suited for copywriting or marketing work.
Add every specific skill to the list – the more skills you can name, the better.
Your skills aren’t limited to just what you’ve been paid to do. Go beyond the things you’ve already gotten paid for to things you’ve taught yourself, or even your hobbies.
What do you spend time doing just because you like doing it? Think about everything.
For example, if you collect stamps, you’re probably a strong researcher, organized, and you may even be good at negotiating!
If you’ve taught yourself how to design graphics in Canva, that counts too.
Again, at this stage, the more skills you can list, the better.
Once you have a list of all the skills you’ve been paid to use, taught yourself, and use as a hobby, now we can start to narrow down that list.
First, prioritize the list by which skills you WANT to get paid for the most.
You can create a new column in your spreadsheet and rank them in order, starting with number one.
It’s good to be aspirational here. If it were up to you (and it is), what would you want to be paid to do each and every day?
Next, you want to do a little bit of research.
When it comes to freelancing, having competition is a GOOD thing. If there aren’t other freelancers already getting paid for the work you’ve decided you want to do, chances are there isn’t much money to be made there.
Look through sites like Upwork or Fiverr and search for freelancers using the top five skills you’ve identified.
In another column, take note of the high and low ends of what other freelancers are getting paid per hour or per project.
If no one is earning a quality income using your preferred skill, check out the second, or the third, and so on until you’ve found a skill that people are being paid real money for and that you’re excited to start a freelance business around.
Once you’ve identified the skills that will be the most profitable and enjoyable for you, it’s time to think about who is going to pay you to use them.
A lot of freelancers fail to be thoughtful and aspirational here.
They start freelancing and get so afraid of selling that they’ll take any client offering them any amount of money to do anything.
Don’t be like those freelancers!
Think about the skills you’ve chosen to start a freelance business with. Who needs that type of assistance? And who would you WANT to work with who needs that type of help?
Examples include small businesses, nonprofits, restaurants…
Don’t overthink this.
Start with stream-of-consciousness – who do you want to work with? Open up a blank document or notebook and start writing.
Now it’s time to get more specific with your ideal clients and break out of categories.
“Small business owners” may be a start, but let’s go deeper than that.
“Small business owners” may be authors or dentists. And “restaurants” may be vegan restaurants or family-owned restaurants.
These descriptions are still pretty categorical. Now, we want to get into their heads.
What are the problems they are facing? What is their story?
Maybe the family-owned restaurant has a hard time telling their story in a way that talks about the family history.
Maybe it’s an ecommerce business that needs a more beautiful website.
Or maybe they’re authors who are too busy to run their own social media.
You want to be so specific that you can actually visualize that person in your mind. It may help to think about a person or company you’re already familiar with, and base the description from what you already know about them.
This is called a client avatar.
Trader Joe’s describes their ideal customer as an “unemployed college professor who drives a very, very used Volvo.”
That’s vivid, right?
You should be just as specific about YOUR client avatar.
And, if you think that your target clients have a couple different avatars, describe each of them individually.
I’ve named my client avatars Jenni and Matt, based upon two of my actual clients who I believe represent a lot of other freelancers like them.
Once you’ve defined your target client and you feel like you understand them, it’s time for a quick gut check.
For this avatar to be worth serving, a couple things need to be true. Ask yourself:
If not, you may need to go back to the drawing board.
Sometimes, the people we want to help most can’t afford our help or don’t even realize they need it. A lot of people find that they want to work with nonprofits or startup companies, but those clients often don’t have much of a budget to work with.
You may be able to convince someone that they need your help – but it’s a lot harder to start a freelance business by working with people who already KNOW they need help.
And to be honest, there are plenty of people who already WANT help that it’s not worth spending the time and effort to convince someone who doesn’t.
If you believe your target clients know they need help and are able to afford it, let’s move forward!
Now that you have the theoretical descriptions of your client avatars, let’s get real.
If you could work with any person or company in the world that fit the avatars you’ve described, who would you choose?
Create a new spreadsheet of your dream clients.
You may think it’s silly to include names of famous companies like Disney or celebrities like LeBron James, but write them down.
Anything is possible – but only if you believe in yourself and work towards it.
Don’t stop writing your list until you hit at least 50 dream clients. And if you’re really serious, write down 100.
The first step to actually working with your dream clients is recognizing that you want to work with them. Then, over time, you can build the reputation and relationships that help you get there.
Selecting your skills was just step one of starting a freelance business – next you’ll need to sell them.
How would you actually use those skills for someone else?
What is the service you provide with those skills?
It’s a fine line, but it’s an important distinction.
Writing is a skill and email copywriting is a service.
Coding is a skill and creating custom mobile apps is a service.
In order to sell your skills, you need to think of them as a service.
Let’s take this a step further. Even better than selling a service is selling a solution.
Telling a small business owner that they can hire you for copywriting isn’t very compelling.
The business owner may be left thinking, “What does that mean? Why do I want copywriting?”
When you just share the service you perform, it leaves it up to the client to imagine how that can apply to them.
Now let’s frame it as a solution:
“I can help you write better sales emails.”
And if we take it a step even further:
“I can help you write better sales emails that convert to more customers.”
Now that is something I’d be willing to pay for. I know exactly what you’re promising, and it’s solving a problem I have: I want more customers!
People pay for solutions. They pay for outcomes.
The more clear you make the outcome of working with you, the more successful you’ll be in selling your services.
Think about the service you want to offer and the client persona you’re offering it to.
What problems do they want solved? What outcomes are they looking for?
There are a ton of articles, podcasts, and interviews about sales or negotiation tactics.
But people generally only hire because they want one of three things:
And arguably, getting more customers is also towards the goal of increasing profits.
So when you’re having a conversation with a potential client, you just need to:
If a potential client believes you can do that for them, they will hire you. It’s basic business sense.
If you’re not showing how working with you can increase their profits or status, you’re leaving it up to them to connect the dots.
Sometimes they will, but usually they won’t.
So connect the dots for them.
Show the client how paying you for this work will lead to more money in their pockets.
It may not pay off immediately, and if it doesn’t then you should help them understand how long it will take for them to see that return on their investment — either by increasing revenue or decreasing costs.
If you can show how $1 today becomes $2 tomorrow, you’ll never run out of paid work.
For our example, our freelancer has decided they want to start a freelance business using their skills in marketing, copywriting, and social media.
They’ve identified their ideal clients are creators like me: people who are great at making podcasts, courses, articles, etc.
The biggest problems for those creators are centered around time. Creators don’t have enough time to do all the things that I know I should be doing – including being active on social media.
And because I’m not very active on social media, I’m not growing my presence as quickly as I could.
So a solution our freelancer could provide is social media management. If they offered to grow my social media presence by posting content for me each month, that’s a compelling solution leveraging their skills.
Social media management is a service, but it can be positioned as a solution for someone who is too busy to manage their own social channels.
Now that you’ve defined the service you provide and the client you provide it for, you’ll need to decide how you’ll charge for your services.
There are a lot of pricing strategies for your freelance business, and a lot of nuances in which strategy you choose.
But at a basic level, there are four common methods of pricing for a freelance business:
Hourly: A standard rate for each hour worked for the client. Hourly pricing is used for both ongoing and short-term projects, and requires the freelancer to track their hours.
Retainer: A flat, monthly fee. Usually this is based on an hourly rate and a prediction of hours spent on a monthly basis. Retainers are used primarily for ongoing projects.
Fixed project fee: A one-time fee based upon the agreed upon scope of work and project deliverables. Fixed project fees are used primarily for short-term projects.
Value-based pricing fee: Similar to a fixed project fee, but based on the value of the work to the client, not the amount of work done by the service provider. This has the highest potential upside, but is the hardest to sell to the client.
Let’s return to our previous example of a marketer providing social media management for content creators. That service is probably an ongoing project and so either hourly or a monthly retainer is appropriate.
Freelancers tend to like retainer clients for their freelance business because they provide some level of predictability and income stability.
Ultimately, regardless of the pricing strategy you choose, the numbers are totally up to you.
I recommend choosing a number that:
Competing on price is a race to the bottom and will burn you out if you make a name as being the “cheapest” option. Instead, find a number on the middle or high end of market rates for similar services that makes you excited to do the project.
You can compare market rates for services by looking at other freelance businesses on Upwork and the rates they charge.
One of the best pieces of pricing advice I’ve ever received is to “think of the number that makes you a little uncomfortable to ask for, and then raise that by 40%.”
To really put a bow on your service package, wrap all your decisions into what I call your client formula.
Your client formula is the core of your freelance business, and it looks like this:
I help [person x] solve [problem y] for [price z]
In this formula:
I know it’s weird to mix math and creativity, but hear me out.
Let’s take our marketer example. Their formula may look like:
I help content creators grow their social presence for $2,000 per month.
In the past, I built WordPress websites for entrepreneurs. My client formula was:
I help entrepreneurs bring their business online for $5,000
There’s a bonus to this: by creating this formula, you also create the perfect Elevator Speech for your freelance business with the phrase “I help [person x] solve [problem y].”
Your Elevator Speech is a short, memorable way for you to answer the question, “What do you do?”
“I help content creators grow their social media presence”
“I help entrepreneurs bring their business online”
And when you add the price, you have a full set of assumptions to go out and test for your freelance business.
It’s just like testing a hypothesis in science class.
You need to:
Assume you’re a videographer and you believe that [independent Realtors] would pay [$500] for [a video about themselves].
Your client formula sounds like:
I help independent Realtors showcase their personality to clients for $500
But what happens if you can’t seem to sell any independent Realtors on a video for $500?
When you’re not getting paying gigs or purchases, it’s easy to think that your experiment, as a whole, is a failure.
But you need to remember that there are THREE variables here.
So if you aren’t getting independent Realtors to pay $500 for a video about themselves, all we really know is that one part of the experiment is off.
It could be that a team of Realtors would pay that price for that service.
Or maybe independent Realtors would love to invest in a video, but they wouldn’t pay more than $400.
And maybe you shouldn’t be targeting Realtors at all – maybe accounting firms would pay $800!
You can experiment with all of those variables. But the first step is defining your formula.
Now let’s talk about how to legally start your freelance business.
You could delay this step, but I recommend doing it sooner rather than later to make tax planning easy from the start.
“Start a freelance business” sounds intense – but it’s not. Technically, starting a freelance business is as easy as incorporating a legal entity.
**This is a good time to mention that I’m not a lawyer, and this isn’t legal advice!**
The first step to filing your business is choosing a name. It can be anything you want – it can include your own name, or it could not. It could be a made up word, or it could not.
It’s totally up to you. Ultimately, I chose “Freelancing School” because all of the content is related to freelancing, and I wanted to show that learning was part of the business.
I could have just as easily used my own name, like “Jay Clouse Creative” or a hybrid like “Jay Teaches Freelancing.”
Nothing you choose is permanent, but changing it is a bit of a pain. So while you shouldn’t let this step be a roadblock when you start your freelance business, it’s something to take seriously.
It’s also used for legal purposes much more than for marketing purposes.
If you file an LLC called “John Doe Creative,” and later decide you want to call the company “Doe Designs,” you can operate under the brand name “Doe Designs” but still have your company incorporated as “John Doe Creative.” You will just see the former name on things like your bank account, invoices, and so on.
And if you really want to change the legal name, you can either file a new entity or open what is called a Trade Name or DBA (Doing Business As).
Before you officially start your freelance business with the name you’ve chosen, you need to perform a basic name search to ensure it’s not already in use.
Just as you wouldn’t want other businesses using your name, you can’t use someone else’s. If you have a name that is so similar to another business that it causes consumer confusion, you may be infringing on a trademark.
You can avoid all that risk and headache from the beginning by performing a name search through your Secretary of State website. If your name is taken, or there are similar names already in use, you’ll want to choose something else to start your freelance business.
There are different ways to incorporate when you start a freelance business, and you may have heard the abbreviations “LLC, C-Corp, S-Corp,” and so on.
Most independent freelancers are best suited for an LLC (Limited Liability Corporation) when they start a freelance business. But if you’re an independent freelancer earning more than $175,000, it may be worth exploring an S-Corp.
An LLC operates much the same way as being a sole proprietor (which has no legal business entity) but the major benefit is legal protection for your personal assets.
You file an LLC directly with your secretary of state. It’s a very straightforward process that may even force the name search we were just talking about to ensure that the name you’ve chosen for your LLC is not already being used.
Most states allow you to file an LLC online in just a few minutes. To check if you can file your LLC online, and for links of where to do so for each US State, check out the spreadsheet here.
If you can’t file an LLC online, you will need to file them with your local government directly. In either case, the whole process will cost you under $200 to start a freelance business in most states.