How To Start A Freelance Business In 8 Easy Steps
Wondering how you can start a freelance business? It’s not for the faint-hearted, however, if you’re passionate, determined, and have a great idea, the odds of success increase dramatically.
It’s important to go in with your eyes wide open, and to learn from other people’s wisdom and mistakes. Here are our top tips to follow when looking to start a freelance business – some are common sense, and some are all about attitude. Keep these in mind from day 1, and you’ll have a better chance of being in business on day 1,000!
1. Find your niche
To be successful in your new venture, you’ll need customers who want what you’re selling! There are exceptions, but your best bet is to find a small set of customers who are your target market, rather than going for a broad audience.
For example, there are already lots of social media sites, and you probably can’t compete with Facebook. But if you launched a forum and online shop for bluegrass mandolin players, you could become the go-to site for every bluegrass mandolin player in the world!
By finding a niche, although your potential market is smaller, your product is more likely to suit their specific needs and in tun produce more sales. To learn more about this idea, read Seth Godin’s book Tribes – or just read his blog.
2. Build a moat
This is a basic business principle, but it’s a bit abstract. A moat represents how hard it is for others to steal your idea. If it would be relatively easy for someone else to start a business and steal your customers, your idea doesn’t have a moat.
Say you sold mandolin strings from your website, a bigger website might start selling the same strings for $1 less, stealing your customers. No moat.
However, if you were to sell online subscriptions to mandolin lessons, someone would have to spend years mastering the instrument to compete with you. There’s your moat!
3. Make a business plan
Once you have a great idea and a target audience, you need to make a business plan to see if your product is feasible. That means setting goals, then researching the market to check those goals are realistic. How big is the potential market? How many people might be willing to buy? How much would it cost to find those people? These are some of the questions you’ll want to answer.
Next, supply chain research. If you need supplies, or you’re a reseller, find out how much each unit will cost. Once you have your costs, including packaging and delivery, work out how much to charge. Don’t undersell yourself – it’s easier to discount than it is to increase prices!
Finally, make several goals. Start with a five-year goal, then break it down into one-year objectives and quarterly targets. From that, decide on the weekly and daily tasks you need to do in order to reach those targets. It’s okay if your goals change, but do your best to achieve what you’ve set out to achieve.
4. Get your books in order
No matter what you sell, you’ll need to keep record of invoices, expenses, and your tax obligations. Once you get started, you’re not going to have the time to reorganise your filing system, so get it right from the first day.
If you have the resources, you might want to hire a bookkeeper for a few hours a month. They can ease your administrative burden, manage your taxes, and offer experienced advice.
If you can’t afford a bookkeeper, consider online accounting software like Xero or QuickBooks. When it comes to filing your tax, having all your financial documents in one place helps make it as painless as possible.
5. Avoid major costs
Running your own business, you’ll eventually need to audit your expenses and cut costs. It’s best to do it from day 1.
The biggest thing you can save on is real estate. Avoid renting your own office if you can, as rent is one of the biggest expenses for a business. Consider working from home or in a co-working space instead.
Another other big cost you can reduce is transport. Instead of using your car for business, or buying one if you’re car-free, try getting around using public transport and GoGet. Public transport is cheaper than owning a car, but GoGet can help when you do need to drive.
6. Build a great team
You’ll eventually need to hire employees, assuming all goes well. It’s the people who make small businesses, and having the right person in the job can either make or break your business, so take recruitment seriously! If you’re just starting your freelance business, be careful hiring friends and family – great friends don’t always make great employees, and your new relationship might spoil your old one.
If you’re not sure about someone you’ve hired, or you don’t have time for a long recruiting process, consider starting employees on a 6-month contract. It might be more expensive, but you’ll have more flexibility if things don’t work out.
7. Embrace failure
It’s a cliché, but it’s okay to fail. If you miss a goal or go out of business, don’t be disheartened. Learn from your mistakes and start a new venture, try your original vision a little differently, or get a job and take another swing in a year or two.
Some of the world’s most successful businesses started in failure. That doesn’t mean failure is good (despite what some people say), but you should never think of failure as the end.
8. Get started!
Our last tip is for you, the person reading this article and wanting to start their freelance business. Get moving! Don’t let excuses stop you from doing something you’re passionate about. If you plan ahead, the odds of landing on your feet are pretty good.
No matter what happens, keep your chin up and keep at it. Starting a business isn’t easy, but the rewards are well worth the work and the risk. Good luck!