7 Tips to Turn Your Freelance Hobby into a Business
Despite a depressed economy, the United States freelance industry is booming. According to a recent Upwork survey, the share of professionals who freelance full-time is at 36 percent, up 8 points from 2019. Of those who quit a full-time job, 75 percent say they earn as much or more than their previous full-time employment. For gig-economy hopefuls trying to turn their side hustle into a freelance business, try these seven tips
1. Set Clear Goals
Be clear on why you personally want to freelance full-time: Do you need a more flexible schedule? Are you tired of office politics and commuting? Determine how much you need to earn to meet your daily needs, and map your findings against your plan.
2. Organize Your Finances
Let’s say you’ve started earning a steady side income but aren’t sure when to commit to a full-time freelance business. How do you know when it’s time to quit your day job? Before making any decision, take the following preparatory steps:
- Keep your job until you’ve saved six months’ worth of advance income.
- Wait until your freelance billings are 75 percent of what you earn full-time.
- If possible, pay off all debt before leaving your job.
3. Do the Paperwork
Going full-time freelance means you’ll become your own business manager, accountant and advisor! You’ll need to get comfortable with handling the small details. For starters, begin with the following initiatives:
- Form a corporation: For smaller businesses, a limited liability corporation (LLC) is easy to establish and maintain. It allows you to project a professional image and protects your assets in the unlikely event of legal challenges.
- Open a separate bank account: This simple step makes it easier to track your income and expenses over time.
- Get an EIN, an employer identification number: This works as a social security number for your business and will be required for all official documentation.
4. Become a Specialist
Ryan Robinson, content marketing expert, recommends finding a profitable niche upfront. If you’re a graphic designer with Adobe Illustrator or Photoshop expertise, choose a specialty that complements your skill set, like infographic or display ad design. Clients will pay a premium for your abilities, and you’ll avoid the common trap of competing for projects as a low bidder.
5. Set Prices
To succeed as a freelancer, you’ll need to earn more per hour than your previous income provided. Your new self-made salary needs to cover line items like overhead expenses, taxes and health insurance. (Self-employed tax rates are often significantly higher than those of a salaried employer).
Once you determine how much you need to earn, use the following formula to calculate your required hourly rate: divide your target annual salary by the number of hours you’ll work in a year. For example, a $60,000 salary target divided by 2000 (or 50 weeks x 40 hours) results in $30 per hour. If your work is project-based, track your time to ensure you’re hitting your income goals.
6. Show Your Work
Even a new freelancer needs a strong portfolio to attract clients. Be sure to include examples of paid projects, pro-bono work and talent-focused work examples to review.
To showcase your portfolio, freelance experts recommend building a website as soon as possible. This enables you to:
- Showcase your work
- Present a professional image
- Post client testimonials
- Communicate services offered and pricing to clients
7. Find the Right Clients
Even as a beginner, you should always choose your clients with care. Seek out companies with realistic expectations that pay well and will allow you to build your portfolio. Create a clear image of your target client and develop a marketing strategy to attract that specific audience to your services. Not sure where to start? Here are a few basic tips:
- Network with relatives, former co-workers and classmates.
- Use job boards like LinkedIn, Upwork, Glassdoor and industry-specific sites to find relevant companies.
- Write blog posts on topics relevant to potential clients. This establishes you as a subject matter expert and draws readers to your linked content.
- Create a business profile on social media and join relevant industry groups through LinkedIn, Twitter or Facebook. Follow the pages of current and potential clients, forming connections through liking and commenting on posts. Grow your network via targeted engagements like industry Twitter Chats.
Stay the Course
While the journey of starting a freelance business will be full of ups and downs, your job is to learn from each experience, adapting and evolving your approach over time. Don’t be too overwhelmed at first; focus on what you need to accomplish, one day at a time, and have confidence in your preparation! The success will come soon enough.
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