If you're passionate about offering your skills and services independently, starting a freelance business could be an exciting venture for you. This guide will walk you through the steps of initiating and operating a successful freelance business, including the advantages and challenges involved in starting a business, how to go about creating a business website and how to generate revenue in the freelance industry.
What is a freelance business?
A freelance business is a service-oriented business that provides various skills and services to clients. Freelancers typically offer services such as:
Specialized skills and expertise in a particular field
Project-based work and deliverables
Flexibility in working arrangements, often on a contractual or temporary basis
Why start a freelance business?
The freelance industry is witnessing substantial growth with a projected compound annual growth rate of 15.3% through 2027. This presents a lucrative opportunity for starting a freelance business, as demand rises for specialized skills across various industries and businesses seek out freelance professionals for specific projects.
How to start a freelance business in 6 steps
01. Create a business plan
Develop a comprehensive business plan that covers important aspects of your business planning such as your target market, executive summary, marketing strategy and financial projections. This plan acts as a guide for your business and effectively communicates your vision to potential investors during funding efforts. It should also include other important details such as the type of business you plan to start and your choice of a business name.
Here’s a freelance business plan template to get you started:
Freelance business plan template
Executive Summary
Business Name: [Your Freelance Business Name]
Business Structure: [Sole Proprietorship/Partnership/LLC/Corporation]
Location: [City, State]
Founding Date: [Month, Year]
Founders/Owners: [Names]
Mission Statement: [Concise statement of the business’s purpose]
Business Description
Overview: Briefly describe your freelance business and key services.
Unique Selling Proposition (USP): Clearly define what sets your freelancing services apart.
Target Market: Identify your primary clients and market segment.
Services and Offerings
List and describe the services you offer, emphasizing your skills and expertise.
Market Analysis
Industry Overview: Provide an overview of the freelance industry.
Competitor Analysis: Identify key competitors and analyze their strengths and weaknesses.
Target Audience: Define your target client profile and their preferences.
Marketing and Sales Strategy
Marketing Plan: Outline your strategies for promoting your freelance services.
Pricing Strategy: Detail your pricing structure and any promotional pricing.
Sales Tactics: Describe how you will attract clients and secure projects.
Operational Plan
Work Setup: Describe your workspace and necessary equipment.
Tools and Software: List essential tools and software for your freelance work.
Workflow: Outline your work processes and project management approach.
Financial Plan
Income Projections: Provide realistic income projections for the first 3-5 years.
Operating Costs: Outline ongoing expenses, including software subscriptions, marketing and taxes.
Funding Proposal
Funding Purpose: Clearly state how any funds will be utilized (if seeking external funding).
Risk Analysis
Identify potential risks and challenges and develop strategies to mitigate them.
Conclusion
Summarize key points and highlight the potential success of your freelance business.
Note: This template serves as a general guide. Adjust and expand sections based on your specific business model and goals.
02. Select a business structure
When setting up your freelance business, it's important to choose an appropriate business entity or structure. Options include sole proprietorship, partnership, limited liability company (LLC) or corporation. Each structure comes with its own set of advantages and disadvantages, so select the one that aligns with your business goals.
Learn more: How to start an LLC
03. Obtain business financing or capital
Freelancing generally has lower startup costs compared to other businesses. However, consider your initial expenses, such as setting up a home office, purchasing equipment and marketing your services. Explore options like personal savings, small business loans, or grants to cover these costs.
04. Set up accounting and bookkeeping systems
Establish robust accounting and bookkeeping systems to track income, expenses and taxes. Use accounting software to streamline financial management.
05. Source specific freelance equipment
Acquire the necessary equipment for your freelance business, ranging from computer and relevant software to communication tools, based on the services you plan to offer. Some more specific examples of this include:
Computer and relevant software/tools for your specific skill set
Project management tools
Communication tools (email, video conferencing)
Marketing materials (portfolio, business cards, website)
06. Register your freelance business
Register your freelance business in compliance with local regulations, determine if you need any licenses or permits to operate in your area and consider obtaining professionally liability insurance coverage.
Learn more: How to register a business, How to get a business license
Tips for managing your freelance business for profitability
Once you’ve got your freelance business off the ground, you’ll need to understand how to properly run and manage it so it’s profitable. Here are some general tips on how to achieve that.
Research your industry and gain a deep understanding of the freelance industry, including market competition, target demographics and financial requirements. Consider gaining experience by working with established freelancers or agencies.
Develop a robust marketing strategy from the beginning to proactively promote your freelance business. Create a professional website to showcase your portfolio and attract clients.
Offer outstanding customer service from project initiation to completion. Positive client experiences can lead to repeat business and referrals.
Freelance businesses to inspire (all built on Wix)
A family owned creative company that specializes in video production.
Creative services agency for small businesses looking to enhance their brand and online presence.
An art director, motion designer and illustrator specializing in music videos, live visuals and commissioned art pieces.
Learn more: Best freelance website builders
Benefits of starting a freelance business
Operating a freelance business allows you to be your own boss, set your own hours and make independent decisions. At the same time the demand for freelance services is consistently high, particularly in areas where businesses seek specialized skills.
Challenges of running a freelance business
Freelancing requires diverse skills in areas such as design, project management and client communication. Coordinating projects, managing client expectations and ensuring timely delivery can be challenging. Workload and income can vary, requiring effective budgeting and financial management. The freelance industry is competitive, requiring a unique value proposition and effective marketing to stand out.
How profitable is a freelance business?
The profitability of a freelance business depends on factors such as skill expertise, market demand, pricing strategies and efficiency. Streamlining processes and delivering high-quality services can contribute to higher profitability.
How to build a freelance portfolio for your business
A freelance portfolio is essential for any freelancer and if you're starting a business it's something to prioritize. Your portfolio should feature your strongest projects that showcase your skills, experience and problem-solving abilities. Include the needs of each client, the approach you took, any challenges face and how they were overcome. It's important to include testimonials from satisfied clients, to add social proof and strengthen the overall impact of your portfolio.
To build your online portfolio you'll need to decide to use a stand-alone portfolio website or integrate your portfolio into your existing website. Choose a website builder that is easy to use and comes with robust infrastructure, such as security and performance.
Regularly add your latest work to maintain a dynamic portfolio and showcase your continued development.