How to Turn Your Freelance Gig Into a Million-Dollar Business
10 tips to help you think big and profit more
This article was originally published on RemoteJobs.com.
Most freelancers didn’t go to business school. They don’t have a background in accounting or legal. Most of them learned how to design or code from articles, tutorials, or courses on the Internet. Many didn’t graduate from college. Others never even applied.
When you become a freelancer, you focus on finding, signing, and fulfilling gigs, leaving little time for business development, marketing or even learning how to run a business aside from the parts you understand.
Now don’t get me wrong.
Doing great work by itself is difficult, noteworthy and requires constant improvement. But to truly advance your career, you have to move past keeping your head above water, meeting high demands and delivering on always-changing deadlines. To reach “money-making machine” status, you have to get out of a scarcity mindset and implement a system of finding leads, closing deals, and fulfilling projects in the most efficient manner.
Freelancing can be extremely rewarding long-term, but it does come with tons of risk, financially, physically, and mentally. You must be able to balance your work with the need to care for yourself and the relationships you deem important in your life. Without balance, you’ll eventually reach burnout, and once you’re there, things can break down quickly.
While I have heard of freelancers making north of $300,000 per year, I have also seen many fail and have to re-enter the workforce. The ones with a certain set of traits tend to stick because they possess skills and abilities that set them up for long-term success.
Below, I’ve outlined ten of the most important things to consider when diving into full-time self-employment.
1. Always be building a personal and professional network.
The best thing you can do to invest in yourself is to invest in other people. Meet others in your industry and in the industry you want to break into. Foster those relationships over time. Be a friend. Offer advice. The best work sources we’ve gotten have come from longtime friendships with people. At Lift, Brad and I have always focused on building great relationships and it has helped our company generate high revenue. In fact, one relationship established nearly 10 years ago helped us secure millions of dollars in revenue across multiple new clients. They say it’s all about who you know. I can’t stress it enough: know more people. The connection is just the first step. The second ingredient in the formula is below.
2. Be great at what you do.
This is kind of a no-brainer, right? Well, not exactly. Over the years, I’ve met a lot of freelancers. Some good, some great, and others who want to take shortcuts to success. But one thing I’ve learned is there is no shortcut. There are no easy roads.
If you want to build amazing websites, expect to spend a long time building crappy ones before you’re able to build decent ones. After that, expect to build decent ones for a little while before you build incredible ones. It takes time, practice, experience, and education to master it. Put in the hours of practice, but also make sure you’re getting your education from the best sources. Work for free for a little while until you have a portfolio.
3. Constantly share what you’re working on with everyone in your network.
Getting bigger, better clients means putting your work out there and getting a nibble. Not everyone is going to have a network that includes decision-makers at the companies you want to work with. Odds are, there are companies out there looking for what you offer. If you share insights into your process and create case studies for projects showing your impact on certain industries, prospects will soon follow.
4. Over-communicate everything to everyone you work with.
One of the most important things you can do is talk to your clients and prospects more frequently than your competition. If you can prove that you are more invested in the client’s success than any other possible vendor, odds are they are going to pick you. Why? Because trust is formed when you communicate, set expectations, and actually meet them. A trusted vendor gets first consideration over untrusted ones.
I’ll let you in on a little secret: most freelancers suck at communication and setting/meeting expectations. You can beat them in this aspect even if your final work product isn’t as good as others. Solve your client’s problems, communicate well, and you’ll set yourself up to make more money.
5. Craft amazing proposals like it is your job.
Because, really, it is. Your proposals should identify your client’s problems, risks, opportunities, and propose a solution or series of phases coherently and succinctly. It should look beautiful and read like a well-edited story. Tell the client a story about their path to success with you on board.
In terms of pricing, start out too low and you may throw red flags to a client, signaling you don’t quite know what this type of project actually costs. Start out too high and you may get a serious case of sticker shock if the client isn’t used to seeing proposals from outside vendors. Make sure you know whether your prospects have worked with a web vendor before, as this provides perspective for their potential engagement with you.
For pricing, some people like value pricing while others fall back on hourly/weekly rates. Either one is fine. A mixture of the two is fine. It’s your business, pick the pricing model you feel makes you the most money. Whatever you land on, be consistent. The terms need to be outlined in your proposals and agreed upon by your client in writing. Show them this isn’t your first rodeo.
At Lift, we have won many projects because of our proposal format and its readability. We’re never the biggest agency, the lowest price, or have the best portfolio (though it’s pretty darn good), but the way we listen to the client and create a feasible action plan makes us a finalist for just about every deal we fight for.
6. Learn how to recognize a bad client — before you bid on the project.
This is pretty hard at first, but easier once you’ve worked with one or two and understand what the warning signs are. You probably don’t want a client who has no idea what your work product typically costs. If they think the right “neighborhood” is less than standard market rates, they’re not worth signing on as a client. You want clients that cover significant portions of your paycheck, not just weekend spending money. Also, if their only experience with a vendor is through Fiverr, 99designs, or Elance, it’s probably best to move on.
Consider crafting an on-boarding process for your clients. By qualifying your leads well, you can weed out bad, unprepared, or low-paying clients before they become a problem. We have a form on our website that asks for a bit more information on a project before a prospective client can even contact us. The form includes a budget field with a set of price ranges. You’ll notice the ranges that exist on that form don’t go below a certain amount. This gives prospects a bit more information about our typical project minimum before they even click “submit.” I know it sounds scary to “turn down” work before you even know what it is, but it helps communicate to prospective clients the size of project you’re good with.
7. Always factor in opportunity cost.
Opportunity cost is best defined as the work you missed out on because you took on something that may have been less desirable. Being forced to decline great projects happens from time-to-time and there’s not much you can do about it. You’re not a psychic. FOMO, otherwise known as Fear Of Missing Out, makes you feel like you should take a project even when it doesn’t really jive with the type of project you’re good at or what you enjoy working on.
To avoid this, create a list of ideals: budget, timeline, company type, project type, team size, client familiarity with digital projects, number of client contacts involved, etc. Use your criteria to qualify and score each and every project lead you get. If you establish five rules for taking on a project, and you get a project in that meets four out of five, take the project. If it only scores two out of five, look at the risks of the project and ensure you have a plan in place to negate them.
Remember, every moment wasted on a bad project is one you’ll never get back on a good one.
8. Hire a lawyer.
OK, so this is kind of a no-brainer but a lot of freelancers will say they don’t have the funds to hire legal counsel. In my opinion, this is one thing you need to figure out. You have to legally protect yourself otherwise you’ll end up in bad contracts with bad payment terms or no real leverage. There are some good example agreements for some types of work but, just like you shouldn’t copy and paste code verbatim from Stack Overflow, don’t copy/paste contracts as is. Always get a lawyer to draw them up or at least review/customize the ones you’re starting from.
Don’t fail to negotiate a fair deal with a client just because you don’t want to bother them, waste money on legal reviews, or delay the start of a project. Invest in writing/signing good contracts just as much as you invest in learning new things about your primary craft, if not more.
9. Hire an accountant.
You don’t want to be in the business of doing your own taxes. Why? It wastes time you could be spending on marketing, invoicing, doing work, or otherwise doing things you actually enjoy. As a rule, when it starts to make financial sense (which I argue is immediately), delegate everything you don’t want to do to someone who does it better. In the case of an accountant, it almost always a smart financial move to hire someone else (unless you or your spouse is a CPA). A good accountant will save you money and help you structure your business in a way that limits your tax burden.
10. Hold/age your money.
One of the biggest issues with the freelance mentality is spending money from next month’s budget when you don’t need to. Earning a big payday at the end of a project feels great, but remember, that may be the only decent paycheck you see for the next two months. Aging your money effectively means spending as little as possible to pay as many guaranteed expenses as far in advance as you possibly can.
Map out your project billings in order to see a runway for how long you can survive on the money that has been paid or promised to you recently and into the future. At Lift, we use an app called Harvest Forecast to see our team’s utilization and plan projects accordingly. The app shows us which team members are over- or under-booked and when we need to start ramping up sales to keep our pipeline full or hire new people to keep up with increased demand.
Don’t forecast exact amounts or anticipate that things will stay the same for the next 6 months but instead be realistic and operate under the assumption that your income isn’t going to exponentially increase next month and your expenses won’t dramatically decrease. Expect them to stay the same or get worse. And when things end up getting better, be reasonable. Don’t spend the extra money. Save it.
According to a survey by Bankrate.com, 76% of Americans live paycheck-to-paycheck. If your goals include breaking free from that stranglehold, ensure that you live within your means and constantly create margin. When you add margin to your budget and age your money, you can take on better projects and wait for the right clients a little longer.
One app I love is Personal Capital. It analyzes all your debts, assets, income, and expenses to track your Net Worth. It is extremely beneficial to see where your money is going and how your financial decisions impact you positively or negatively.
Conclusion
When you dig out of a scarcity mindset, you think clearer, act smarter, and feel more confident. Constantly reacting to urgent needs puts everything on the back burner except the one thing that has to get done right now. It’s ok to have things that come up, but it should be the exception, not the norm. Create a plan for your freelance business, stick to it, and make the necessary adjustments to protect yourself from common pitfalls.
Resources
Creative Truth: Start & Build a Profitable Design Business
Scarcity: Why Having Too Little Means So Much
Superfriendly’s Service Agreement
