Freelancing offers the freedom to choose your own clients and set your own hours. If that sounds appealing, you’re not alone. The freelancing industry is growing. In 2023, 64 million Americans were freelancers, representing 38% of the U.S. workforce. According to Statista, the freelance workforce is expected to reach 90.1 million by 2028.
The benefits of a freelance career are exciting. Yet freelancing also comes with challenges, such as struggling to find clients and making sure you get paid on time. Building your career as a freelancer requires smart strategy and hard work. Here’s how to start a freelance business and set yourself up for long-term success.
What Is a Freelance Business?
As a freelancer, you work as an independent contractor providing skills and services to clients. You are considered self-employed rather than an employee of a company. Freelancers typically work on a per-job basis, with projects ranging from one-time to regular work. Freelancers are also responsible for paying self-employment taxes.
Many freelancers bring the skills and expertise they gained from traditional employment into their freelancing careers. But in contrast to traditional careers, starting a freelance business requires freelancers to acquire clients, set their own rates and send invoices for their work.
Luckily for those interested in freelancing, career opportunities span every industry, from marketing and graphic design to consulting and technology. If the idea of being your own boss and managing your own business appeals to you, you might just be cut out to be a freelancer.
Starting a Freelance Business: Assessing Your Skills and Market
Before starting a freelance business, identify your strengths and the services you can offer potential clients. In addition, evaluate the skills you lack. Where can you benefit from further education? Are there tasks you’re less skilled or knowledgeable in that someone else could complete?
Once you’ve defined your skills and offerings, it’s time to find your audience. Conduct competitor research. Explore freelance platforms (such as Upwork), social media platforms (like LinkedIn) and market data (from sources like Google Trends) to gain a deeper understanding of your niche.
Freelancing for Beginners: Building a Solid Foundation
Every freelancer needs a consistent place to work. It doesn’t matter whether it’s a home office or a coworking space. What’s important is that it supports focus and productivity. Next, invest in tools for your freelance business, such as a reliable laptop, project management software (like Trello), communication tools (like Slack) and invoicing systems (like Wave). Also, consider setting up a scheduling program such as Calendly. This offers an easy way to let others book appointments directly.
It’s also equally important to establish a work routine and set boundaries to stay accountable and on track with deadlines.
Exploring Opportunities for the Best Freelance Business Ideas
Various freelance opportunities exist across different industries. The highest-paid industries are tech, marketing, creative, business and financial, per Upwork. Within these industries, Upwork names the top five highest-paid careers as:
- Media buyer
- Public relations manager
- Business consultant
- Cybersecurity developer
- Financial consultant
The best freelance business ideas involve picking a niche that aligns with your expertise, interest and market demand. While rates vary depending on the industry and your skill level, there are dozens of freelance ideas to consider.
As you’re contemplating your freelance niche, seek mentors and talk to people who have made similar career moves. Consider buying them a cup of coffee or even asking for an hour of their time for a virtual call. Even a quick 15-minute phone call can lead to great insight. It’s a small investment in startup research.
Developing a Business Plan to Become a Successful Freelancer
A good business plan includes financial goals and marketing strategies. It lays the foundation for growth. Key considerations when learning how to start a freelance business include:
- Define your services and offerings: What skills, products or services do you want to turn into a marketable service? Clearly define what you’re providing.
- Determine your target market: What types of clients would be a good fit for your freelance services? Do they have a shared problem you can help them with? Research freelance finder websites like Upwork to see wanted ads and discover what clients seek.
- Set realistic goals: Create SMART goals (specific, measurable, achievable, relevant and time-bound) to help you build a business plan.
- Set a pricing strategy: Research pay in your niche. Set realistic financial targets and track progress. A freelance rate calculator is a helpful tool, but review and revise your rates regularly.
- Market your business to get clients: Create a website and online portfolio to promote your business as a freelancer. Showcase your best work with links to your social platforms. Be active on social accounts to build brand awareness and increase visibility.
Making Money as a Freelancer: Pricing and Services
When it comes to making money as a freelancer, pricing is one of the trickiest parts. You want to be fairly compensated and set competitive rates, but you also don’t want to set high rates that scare off clients.
The key is to start with industry research. Find out what industry averages are in your location. Then, factor in your experience, value and income goals. You’ll also need to choose a pricing model. For example, do you want to charge by the hour, by the project or by the value delivered?
Consider service packages to meet clients’ needs and budgets. If you’re a writer, this might include a package of four blog posts with two rounds of edits for a set price. Additionally, upselling by adding additional value to your services, such as suggesting social media posts to go with those blogs, can help you increase income over time.
Managing Finances, Budgeting and Invoicing
In addition to setting rates, freelancers also need to consider how they will manage their finances, including creating a budget and an invoicing process. Be aware that while some clients pay quickly and on time, others do not. This can make budgeting freelance payments a challenge. Start by setting a monthly budget based on your living expenses. Set aside extra money to cover late-paying clients or slower months. To make income and expense tracking and tax prep easier, separate personal and business finances.
Tools like QuickBooks, Wave or Bonsai can help you handle invoices, payment tracking, taxes and budgeting. Also, create an invoicing schedule and follow up promptly if payments are late. Save 25%–30% of your income for taxes and pay quarterly if required.
Marketing Your Freelance Business and Building a Client Base
Your business is more likely to grow with visibility. Start building a client base by increasing your professional online presence. Create a professional website and online portfolio showcasing your best work. Include a bio, contact information and any testimonials or client success stories.
Utilize social media, like LinkedIn and social media industry groups and forums. Attend networking events and virtual conferences. These are excellent places to meet peers, mentors and potential clients that can help your business grow.
Legal Considerations: Contracts and Regulations
It’s important to use written agreements that clearly outline your scope of work, deadlines, payment terms and ownership rights, at the very least. A well-drafted contract helps manage expectations and protects you in the event of disputes.
In some cases, you may also need a business license, freelance insurance or a DBA (Doing Business As) registration, depending on your location and services. In addition, remember to keep accurate records for tax reporting and deductions. You may have to pay quarterly taxes. For more information on taxes, check out the top frequently asked questions regarding estimated taxes.
Growth Strategies for Scaling Your Freelance Business
As your business grows, so will your portfolio. Regularly reassess your rates to reflect your value. You can also expand services by branching out or bundling. A freelance writer might dip into editing or SEO, while a graphic designer might bundle packages for web design. Either way, you can add value to your offerings and potential revenue for your clients.
When the demand for your work exceeds your capabilities, hire a subcontractor or build a team and delegate tasks. Additional time allows you to learn new skills and network at relevant industry events.
Start a Successful Freelance Business
Freelancing for beginners may seem challenging, but it can be very rewarding. Though there are challenges, following the practical tips above can help you get started. Remember to first define your niche and skill set. Then, set fair yet competitive rates for your offerings, market your business online and in person, and stay on top of your finances. With the right tools and resources, you can build a long-lasting freelance career and the life you want.
Photo by Yaroslav Astakhov/Shutterstock.
