There are a lot of people out there who have unique skills in an area who eventually go into freelance work. Freelancing can be a great way to make some extra money, but virtually every freelancer has daydreamed about the possibility of turning their freelance work into a fully-fledged business. Understand that the freelancer mindset is different from that of a business owner. The difference between freelancing and starting a business may seem like a semantic one, but the fact of the matter is that there are some important distinctions. A business owner needs to understand cash flow, revenues, profits, team management, and a bunch of other things. As a freelancer, you might be solely focused on when your next paycheck is coming and may even sign up for a platform that you have to pay a percentage to. The platform does the marketing for you and connects you with potential customers.
Going from freelancer to business owner requires more than just hiring employees (although hiring the right employees or contract workers will likely be an important part of the process - nobody is successful on their own). The following are the most important and actionable steps you should take when turning a freelance venture into a fully-fledged business:
Step One: Get tired of your current situation
Stop playing the blame game. It's so easy to see what someone else SHOULD be doing, but it's so much harder to recognize it in ourselves. Don't blame your boss or your job or your bills for giving you a life that you feel like you can't change. Recognize that if you have these feelings of apathy or not wanting to do better, then it is internal, not external. Take responsibility for what has happened in your life. This isn't to down play anything that you've gone through, but as humans we have the ability to not only be shaped by our environment, but create our environment. While difficult situations can prepare you for where you are going in life, they may not prepare you for where you are once you get there. So get tired of your current situation and align yourself with something greater than yourself.
Step Two: Ask yourself if you really want to do your freelance work full-time
Sometimes freelance work should be left as just that. Remember, this is a big difference between spending a few hours a week doing work for freelance clients -- it's another thing altogether to spend 40 to 60 hours (or more) per week doing the same type of work. By the same token, turning freelance work into a business adds lots of complications, including budgeting, finding new clients, and managing employees or other freelancers working for you.
It is different. You have to recognize that you are going into a different environment. You're going from doing something you're used to, to doing something new where it will take time to get comfortable. Bring tenacity from one phase of your business venture to another and build up that fortitude to handle issues that arise. But first make sure you are confident that you want to make a full-time gig out of your freelancing work before taking the leap.
Step Three: Start with an idea.
Think about what the next logical step in your business should be.
• Do you build websites for other people? Why not create a website platform that shows your various website designs so that a customer can just choose which layout they want?
• Are you a business consultant? Do you see some of the same type of issues amongst clients? Why not write a book on how someone can work through these common issues? Or why not create an online course where potential clients can learn your methods for themselves? You could provide worksheets or activities for the client to do in order to solidify the lesson that was just taught.
• Are you a freelance writer who does editing, ghost writing, transcriptions for audio/video? Maybe you want to focus on what one thing you do extremely well like story editing.
• Are you an audio/visual engineer? Specialize in some service, say podcast episode editing, create a brand around it, and develop a system. Allow a client to drop a file in shared dropbox folder, you take it, edit, and place it back in that folder.
When you have the idea, you still need to make sure you focus. You have to truly understand what service you are trying to offer and what transformation you want your clients to obtain after using your product. You will be required to offer a high value product. You might not necessarily get it right on the first time out of the gate, but as you get feedback, you can refine what you offer. Your goal should be more about how you can help your customers and not so much on how much you can potentially make.
Step Four: Standardize your service.
Focus on making your service as predictable as possible. If you research in a certain way, describe how. If you incorporate certain software tools to accomplish your goal, document what software and what you use if for. If you write in a certain way, create a template. Document everything and how you do things. You can incorporate things like images or screenshots later down the road once you have a document. This will allow you to be able to either train an employee or teammate to do something very successfully or even create a pdf/course/book that someone can buy and learn how to do something on their own.
Step Five: Become more selective about who your clients are
When freelancing isn't your primary source of income, it's fine to take a client that doesn't necessarily maximize your hourly rate. When transitioning to a business, however, the margins you have with each client become significantly more important. This means you need to start analyzing the returns on your time that each client offers you. This also means learning to say "no" when current or prospective clients ask you to do something that doesn't make sense from a business perspective.
Step Six: Save until you have at least 6 months of living expenses
You might be surprised by the expenses that arise once you become a business. Everything from payroll to office space (if you need it) will create overhead that you probably didn't have to deal with as a freelancer. This means that you need to have your personal finances in order -- with at least 6 months of living expenses saved -- so that you can focus on making your business as efficient and effective as possible, without worrying about maximizing this month's income at the expense of long-term viability. This is especially important if you intend to leave your full-time job to embark on this new venture of yours. Just remember that for many types of businesses (mostly online ones) you can start them on the side while continuing your full-time job.
Step Seven: Determine how you're going to multiply your return on your time
This is the aspect that separates the successful business owners from the rest. Sit down and make a plan which lays out how you will maximize your time. As a freelancer, you are probably getting paid in exchange for your time -- either directly or on a "per project" basis which effectively acts the same way. As a business owner, however, you cannot grow if you are limited by the number of hours you can directly work on a client's needs. Instead, you need to determine ways to amplify your effectiveness; this can be done through productivity software or simply refining your workflow. The other way you can increase the return on your time is to invest in other freelancers or employees that can take some of the burden off your shoulders while still benefiting from your expertise.
Step Eight: Pricing and billing.
Whether you use PayPal or Freshbooks, you will need to come up with a price for what the client gets for that price. You will have a set price for your products that are hopefully mentioned right from your website. If you have a consulting service, maybe have a client pay for the first month up front before you put them on the calendar. You can sell with a Paypal button or a "buy now" button from gum road or subscribe via Stripe.
Step Nine: Mastermind group.
Mastermind groups could help. If you haven’t heard of them, just type it into your favorite search engine. Start one on your own or join someone else's. These groups can get you connected with like-minded individuals and help you all as a group to grow in various areas. Members keep each other accountable for their actions, help each other solve business problems, and give a lot of moral support. A lot of successful individuals are (or have been) a part of one or more mastermind groups to help them become the person that they are.
This is why I am so excited to be starting a mastermind group in the future with select individuals so that there can be a nurturing of individuals and a growth in intellectual value. Having too many people (greater than 10) in the group, in my mind, can dilute the value that is gained from the overall group.
Step Ten: Choose to win.
So many aspiring entrepreneurs and even some entrepreneurs are so focused on trying not to lose that they do not focus on purely winning. And yes, there is a difference in the two mindsets. When you are focused on winning, you think differently about things that happen to you. You expect to do great. You expect that your product or service gets better; you demand it. You strive for excellence in all that you do and expect that from those you work around. You've changed your surroundings to create a winning culture for yourself. You've read books and invested in knowledge, which sharpens your mind. You've taken action to follow through on the advice and guides that you've internalized. You simply have chosen to win and that is what you need to truly be successful and not subconsciously limit yourself.
Ultimately, the key to taking your freelance work and turning it into a business is passion and a desire to see things through. If you are ready to make a real living out of your freelance work, use the ten steps above to start on the path to success!
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