How To Start A Freelance Service BusinessMar 19, 2023
Over the last 3 years, I have been a freelance graphic designer, marketer, art director, copywriter, and paid advertising specialist, among many other things. In that time I have successfully made over $100,000 dollars each year all while learning how to run a design agency, work with high-profile clients, and manage online campaigns garnering millions of impressions,
I put together this free guide to share what I have learned in that time and to help aspiring freelancers reach the 6 figure incomes they deserve.
This guide captures my wins, losses, and hard lessons learned along the way to making $100,000 a year as a freelancer. I will update this article periodically as I learn new tips and tricks.
For all future updates please subscribe for weekly updates and tips through my free newsletter The Solopeuner Playbook here.
Every great freelancer starts with the dream of making more money, getting more recognition, and gaining more freedom in their day-to-day life. But that is not what freelancing is about…
Being a freelance (fill in the blank) is about providing a service, point of view, or education to clients, companies, or fellow entrepreneurs in your own way.
Let me break this down…
When you work for an employer you are tied to the way they run their business. They have their own standard operating procedures, internal systems, and values that make their business run successfully or not so successfully.
Not all employees fit into these rigid systems, and neither did I. At many of the businesses I worked at before starting my own business I felt we were doing things wrong. That clients were getting the short end of the stick, and that my bosses were raking in the big bucks.
Sound entitled right?
We’ll I was as I had no clue how service businesses ran, how most people do not rise to the goals they have but rather fall to the systems they have in place. How when shit hits the fan, your top priority is to fulfill your service and do it to the best of your ability.
Your number one priority as a freelancer is to provide a great service, consulting around that service, and resources so your clients can be successful in their industry.
When you are no longer a cog in the machine, but rather the machine itself you are required to be the service provider, the educator, and the analytics reporter.
Everything you see on social media, about working on an island with a cocktail in one hand, and a laptop in your lap is not what 99% of freelancers do. Those influencers you see on social media are often selling you a lifestyle, that they only came into after several years of building a business, hiring a remote team, and automating their business allowing them to live that way. You can live that way too, but a lot of hard work is needed before reaching that point.
In your first year, you will not be on a beach sipping cocktails, but rather in the trenches with your clients getting shit done. You will be learning how to run a business, work with clients, and grow your online presence.
Take this time to learn as much as you can as you will learn more running your business than any salaried position will ever teach you due to the sheer amount of different hats you need to wear.
So how do you start freelancing? You start by defining your service offering.
Defining Your Service
Defining your service offering is the foundation of your business. We can create that foundation by answering the following questions.
- What services do you offer?
- How do you offer them?
- How much do you charge?
- What will you not offer even if your clients ask you to do it?
Let's start with what services you will offer.
When I first started my business I just offered graphic design services as that was my background. But as my business grew I added on web design, copywriting, photo editing, video editing, eCommerce, and paid ad services so I could better serve my clients.
You can pick any service under the sun to fulfill for clients but I recommend that it is remote, that it has a large client base, and that you can easily charge over $100/HR for your time.
If you have no clue where to start or what services you can provide check out Fiverr or Upwork to get a sense of what services clients are looking for, note how many people are looking for that service, and what they are willing to pay.
After you figure out what service you already know how to fulfill or will learn how to fulfill you need to answer how you will offer those services.
Do you offer those services in a package, are they invoiced individually, or do you work on a retainer format offering unlimited services per month for a fixed rate? Defining your offering in this way will help you when you sell your services to potential clients.
Placing all your services or an expanded service into a package deal, allows clients to get more work for a lower cost equaling more bang for their buck. While individually pricing out each service will make you more money, and allow clients to pick what they need and don't need from your service offerings.
There is power in either format when it comes to selling your services to potential clients, and will determine what kind of business owners would like to work with you. Service offerings can also be used as a differentiator between you and your competitors.
Next, we have the most important question how much do you charge? Every project is different, and every client has different needs, expectations, and timelines. So no two freelancers will charge the same amount.
To determine what to charge you must factor in the following:
- What is your experience level?
- How fast can you complete the service?
- How important is the service?
- What value does this service bring to your client?
Answering the following questions honestly will clue you into what you should charge for your services whether you are charging by the hour or a flat fee for projects. Below I have listed out some starting points and references for pricing.
Pricing By Experience Level:
- 0-6 months fulfilling the service $25 -$35 an hour
- 6 months to 1 year fulfilling the service $50-$65 an hour
- 1 year to 2 years fulfilling the service $75-$100 an hour
- 2-3 years fulfilling the service $150+ an hour
Pricing By flat fee project rates (Resources)
Pricing & Ethical Guidelines Handbook (The Graphic Artists Guild Handbook):
The Pricing & Ethical Guidelines Handbook with give you industry hourly pricing, and flat fee pricing for the following services: Graphics Design, Packaging Design, Advertising, Book Design, Photography/ Photo Editing, Web design, UX/UI Design, Concept Art, Illustration, Animation, Video Editing, CAD services, 3D Services, 3D Modeling. (They offer pricing guidelines on over 60+ creative services in their guidebook)
Professional Writers Alliance (Yearly State Of The Year Report)
This PDF reports the average per-project fees copywriters, Marketers, and SEO experts charged in 2022. Scroll to pages 35 to 40 for pricing on 80 different project types. Pricing and Flat Fees can be found for the following services: Web Content writing, Copywriting, Funnel creation, Email marketing, Web design copywriting, SEO, Blogging, Landing pages, Paid ad writing, Scripting, E-book, PPC campaigns, Social Media content. (Over 80 different project types covered)
For services that are not covered by these two resources, you can check to see what professionals are charging on Fiverr, Upwork, and networks such as thumbtack. Or find an organization that is connected to the industry your services fall under.
For example, graphic designers have the American Institute Of Graphic Arts (AIGA) which showcases yearly data gathered from working professionals in the design industry as a resource for members and new freelancers.
Now that we have pricing covered the last question we need to answer is what will you not offer even if your clients ask you to do it?
This will be different for every freelancer, but where do you draw a line in the sand and say I will not do (fill in the blank).
This is an important boundary to define as there will be clients who will push your boundaries and ask for services you don’t offer, by taking on services you do not want to do, or can't do you potentially risk getting stuck doing work you hate.
For example, I hate designing WordPress websites, and I hate copywriting for web design. At this point, I refuse to do them as they are not my core service offering, and they pull me away from other important projects that I like working on.
For me this is my line in the sand, and helps me define my boundaries with clients, and what work I am willing to pass up, contract out to another freelancer, or say no to when I am busy.
By answering these 4 questions you can create a foundation for your service offering and define what services you will and will not work on for potential clients.
Building A Business Plan
After we have defined our service offering we need to start creating a business plan. Without a clear plan of where you want to go in your business, you will not have a clear plan to grow, acquire clients, and systemize your workflow.
To start creating a business plan for your freelance business you need to define the following:
- What industries do I want to work with?
- Who is your ideal client?
- Where can I find these “Ideal Clients”?
- How much money do I need to make yearly?
- How do I grow my business?
For my own business, this is how I would break down these questions into a formulated business plan.
What industries do I want to work with?
I wanted to work with craft beverage, gourmet food, and lifestyle businesses working with them to expand their social media presence, monthly sales, and web presence.
I would ideally like to work with them on a monthly retainer basis, so I can have recurring income, and I would like to partner with them on multiple services so I am a critical part of their business.
This way I always have recurring work coming in and I do not have to worry about clients letting me go if they have a bad month, or there is a shift in the economy because I am a core partner of their business.
Who is your ideal client?
My ideal client would be business owners who have been in business for 2 to 5 years and whose business makes over $100,000 USD a year. These business owners would have to be highly knowledgeable in their products and business systems, open to risk, and willing to try new marketing approaches to expand their business.
I would not take on clients whose businesses are just starting out, make less than $100,000 USD a year, are risk-averse, and get in their own way when making business decisions regarding marketing.
Where can I find these “Ideal Clients”?
I can find these companies on Instagram, and Facebook. I can also find them at trade shows, large events, and grocery stores.
After finding them I can do research through their social media profiles and websites and validate if they are a good fit to reach out to and work with. I can also find related companies using Instagram’s recommendations, or looking at their direct competitors and seeing if they are a better fit to work with.
How much money do I need to make yearly? (This will be different for everyone)
I need to make 100K a year to pay my bills, grow my business, and live the lifestyle I want. This means every month I need to bring in $8,333.00 per month.
This would mean I would need the following number of projects or recurring clients each month:
9 to 8 $1,000 dollar clients or projects per month
4 to 5 $2,000 dollar clients or projects per month
3 $3,000 dollar clients or projects per month
Three clients per month would be the best choice for my business as it allows me to spend more time perfecting the work for each client, growing my relationships with them, and giving extra time to prospect for new clients.
How do I grow my business?
I can grow my business by gaining referrals from my clients for passive new leads coming in. Or I can post value-based content on Linkedin, and Instagram to passively bring in inquiries. This would work best for me as I do not like direct selling and don’t want to spend money on paid ads.
By answering these questions you will have the beginning of a business plan to start focusing your attention on acquiring clients, fulfilling services, and predictably scaling your business and income month over month.
A business plan can be built out to be more complex than these 5 questions, but these 5 can start as a basis for where you are currently and where you want to go with your freelance offerings.
By having a business plan you avoid moving forward blindly and setting yourself up for failure. To find the road to success for individual goals you have to create a roadmap first.
Positioning Yourself For Success.
Now that we have a basic business plan, and our service offering we can begin to brand and position your freelance business for success and higher income.
If you were to go get surgery for problems with your heart would you want to go to a general nurse practitioner who looks at everything from ear infections, to sore throats all day? Or would you rather want to go to a specialized cardiologist who only specializes in the exact problem you are facing?
Clients are the same way in that they are more likely to work with a freelancer that specializes in what they specifically need, as they can place more trust in them compared to a jack of all trades.
This is where you and every other freelancer need to position themselves to be the perfect solution for their clients. Define your offering to serve specific industries, and then specialize in specific projects to attract your ideal clients.
For myself, I chose branding for craft food and beverage clients, which is pretty niche. From there I created a website and portfolio that speaks directly to my ideal client's problems. If you need an example of how to do this and position yourself look at any large agency website and see who they serve and how.
Setting Up A Limited Liability Company (LLC)
Setting up a Limited liability company (LLC) is a must if you are going to be a freelancer as it provides legal protection against clients or other companies directly suing you. An LLC makes it so they can only go after your business and not your personal assets.
Along with legal protection, an LLC provides tax incentives and adds more legitimacy to your business, along with providing you an EIN number so you do not have to use your Social Security number on client forms.
Overall this is the most important legal step you need to take when starting your freelance business, and it is pretty simple. You can either set up an LLC yourself (I do not advise this) or you can hire a lawyer or service provider that is specialized in setting up LLCs.
For myself I used a service that made the process quick and painless, I have attached the link to the LLC setup service I used. Do not overthink setting up an LLC as it will protect you in the long run and help protect your business if you were to get sued for any reason.
LLC Setup Service I Used:
Finding Your Ideal Customer
Finding your ideal customer is easy once you have defined your services, and positioning in the market. By knowing who you serve, how you serve them, and why you serve them, you can easily find where they hang out.
I found my ideal customers on Instagram and Facebook as that is where most small food-focused brands marketed their products. I was able to look over their profiles and see what type of marketing they were doing and if they needed help.
You can do this as well by thinking about where the owners of the businesses you want to work with hang out online. Here is a quick list of where certain business owners hang out online.
Linkedin- Doctors, Lawyers, Accountants, Corporate Employees, Office Workers, Tech Workers, SAAS business owners, and Sales/Finance professionals
Instagram- Small Businesses, Food & Beverage Companies, Clothing Companies, Lifestyle Companies, Event Businesses, Restaurants, Moving Companies, and Service Businesses
Facebook- Contractors, Service Providers, Catering Businesses, Event Businesses, Wedding Businesses, Photographers, Construction Businesses, and Small Businesses
Youtube- Self-development Businesses, Tech Businesses, Affiliate Marketing Businesses, Creator Businesses, Education Businesses, and many more.
TikTok- For the time being I am not going to list anything here as TikTok is facing a potential Ban in the U.S. (March 2023)
Now you can find any of these businesses on any of these platforms, but the majority of these professionals are more active on one platform or the other. Use this list as a starting point, and use the recommendations tab on each platform to find specific businesses that are similar to companies you may be interested in working with and already know.
Building A Portfolio/ Creating A Website
Building a portfolio of your work is the most important part of acquiring new clients for your freelance business. If no one can see the services you provide, and the work you have previously done they will not hire you.
Building a portfolio website does not have to be challenging, for beginners I suggest using Squarespace as a starting point, as it is easy to use and templated meaning you just need to put your own content into the website.
If you are more advanced and have some design experience you can use a custom drag-and-drop builder like Wix or EditorX by Wix to build a no-code website easily. For my agency website npdesignco.com I built it on Editor X by Wix.
Both platforms are great for making portfolio websites and listing your services. They both have video courses that can teach you how to build a website or are easy enough that you can hire a web designer to build your website for you.
But before you start building out your website you need content.
If you have previous client work or projects from your day job you can use those on your portfolio website. If you have no prior work to show for the new service you are offering, start creating your own spec projects.
Create a client brief for yourself or use goodbrief.io to generate project briefs to work from. Create projects and case studies that are tailored to your ideal clients, and start posting them to your portfolio website. The goal of these projects is to show that you can complete the work and offer the services that are needed by your potential clients.
When starting out aim to have 3 to 4 projects on your website, as you gain more experience and clients you can add more. Try to never have more than 12 projects on your website as it will be too much for potential clients to look at. Your website should be treated as a greatest hits selection and only share your best work once you have gotten a few projects under your belt.
Once you have a portfolio website up and running you can begin to send traffic to your website so potential clients can read about your services and see your portfolio.
I would recommend starting on social media and posting on the platforms where your ideal clients hang out. Create a profile and start posting work you have created, how you can help your clients, and your viewpoints on your industry.
Connect with fellow freelancers, business owners, and companies you want to work with and be social. You can use Gary Vaynerchuk’s $1.80 method to start engaging with potential clients and start creating relationships.
Potential clients will only find you if you make yourself visible, and clients only like to work with people they know and trust! So make yourself known and trusted in your industry. Offer content and projects that solve the problems of your potential clients instead of content that does not help them.
If you are not the type of person who wants to be on social media but would rather work on cold leads you can either go to networking events or chamber of commerce events or just do cold approaches on businesses you would like to work with.
This path is harder and requires some sales experience as you will be pitching yourself to business owners who have never heard of you and may not need your services. Either way, it is a great opportunity to meet other business owners and find out who needs what, and why they need it in your local community.
When you are first starting out you need to market yourself as work will not fall in your lap. Your network is your net worth and knowing the right people at the right companies can get you miles ahead of just sitting around waiting for clients to come to your door.
Getting Your First Client
Getting your first client doesn't need to be hard.
If you market yourself correctly and on a frequent basis you will meet business owners who are in need of your services. Once you find them and they are interested in your services you need to vet them to make sure they are a good fit to work with.
My vetting process is as follows:
Step 1.) I ask the client what their budget is at the beginning of the process. If they do not have a number state how much a flat-rate project would cost. If it is an hourly project state your hourly rate. If the price works for them move on to the next step. If they try to bargain on the price or it is out of their budget move on to the next client.
Clients who cannot meet your prices or ask for a discount are not worth your time as they do not see the value you provide. They most likely will be a pain to work with as cheaper clients either don't know what they want, they are control freaks, or they expect a higher level of service than the price they are willing to pay. Don’t burn yourself on a bad client who is a bad fit.
Step 2.) Ask about the project timeline, and establish a working schedule for final deliverables. Establish when they need the project completed and if certain milestones need to be met on certain dates.
Step 3.) Provide a scope of work based on the price and the timeline. Define what your client will be getting for the price you are charging and define what the boundaries are with additional work. For myself, I set a fixed price for an agreed-upon scope of work, and then I provide an hourly rate for any work needed beyond the provided scope.
Step 4.) Ask any other questions you may have about the project and get all the information you need to get started.
Step 5.) Collect a deposit for the project (25% to 50% of the project's total cost) You should always collect a deposit before starting any project, clients who do not want to pay a deposit mostly likely will be a pain to work with, and often times will not pay you at the end of the project.
A deposit ensures that your time is covered and that the client has some skin in the game when you work with them. A deposit will also hold their spot in your schedule, never work with a potential client if they are unwilling to pay you a deposit as it shows they are not invested in working with you on a professional level.
Having a contract when working with a freelance client is essential for protecting both parties and ensuring a successful working relationship. Client contracts outline the scope of the project, including timelines, deliverables, and payment terms. This ensures that both the freelancer and the client are on the same page and can avoid misunderstandings or miscommunications that can lead to project delays, frustration, and ultimately, loss of business.
Freelance contracts also protect both parties by outlining their rights and responsibilities. This includes ownership of intellectual property, confidentiality agreements, and liability limitations. By having a clear agreement in place, both parties can avoid disputes or disagreements that may arise during the course of the project.
In addition to protecting both parties, freelance contracts help to establish a professional relationship between the freelancer and the client. By providing clear guidelines and expectations, freelancers can build trust with their clients and demonstrate their professionalism and expertise.
You should always have a lawyer look over a contract before use with clients or use premade contract templates for your industry, as language in a contract can be nuanced and have different legal meanings than what you write.
If you are just starting out you can use contract templates for your industry from legaltemplates.net. The contracts provided here start as a strong base but should be tailored specifically to your business and looked over by a lawyer or specialist who is trained in contract writing.
Client Communication/ Onboarding
After collecting a deposit and getting a signed contract from your client you can begin onboarding your client. Every freelancer has a different onboarding process, and you will have to define yours but here is the onboarding process I used when I first started.
Step 1.) Collect the deposit and signed contract from your client
Step 2.) Create a shared folder where both you and your client can access files or upload project assets. You can do this through google drive, dropbox, or a client management system.
Step 3.) Share your folder with your client and organize it with different folders for all the files, paperwork, and assets for the client's project
Step 4.) Set up your client communication channels, and add your client to them (Slack, Notion, Text, Email, Etc.) I have always just used email and have never had any problems.
Step 5.) Send an onboarding email to your client making sure they have access to all the files, and folders so they can upload project assets and notes.
This workflow is effective if you are using Gmail and google drive, as it will not cost you any extra unless you are buying extra storage on your google drive account. Use this workflow as a base and build off of it to work for your own freelance business or your industry as every service will require a different onboarding process.
Fulfilling the service you are providing should be pretty straightforward, complete the agreed-upon work with any revisions that are required within the scope of the project. Be polite, and attentive with your clients, and deliver work before the deadline.
Just being polite, attentive, and organized will get you miles ahead of your competitors. When I first started working with clients this is what I focused on and most of my clients became recurring clients who then referred other businesses to me.
When it comes to service delivery the small things count, and going the extra mile will have clients coming back over and over again. Don’t treat your clients like a paycheck, instead, invest in their business, their stories, and their client base to form a partnership with them.
Getting paid at the end of a project is the most important part of running your business. Once the project is completed it is time to send your client an invoice and payment terms.
You can create an online payable invoice using stripe, and you can use stripe as your payment processor to collect payments. You can alternatively use a built-in system in your website if your website platform offers it like EditorX by Wix does (this is what I use)
When creating your invoice make sure every service you are charging for is listed as a line item and is clearly explained in a sentence or two. Add your payment terms and conditions to the invoice and you are set to send it over and get paid.
If you vetted your clients properly in the beginning you should have no problem getting paid according to your payment terms. Once you are paid send over the final files and assets to your client. DO NOT send final files to your client before getting paid as you lose any leverage and give them free work if they choose to not pay.
In the event that your client doesn't pay or magically disappears, I recommend following up with them every 2 to 3 days after your invoice becomes overdue.
After 30 days of an invoice being overdue, I would recommend getting a lawyer involved and possibly bringing it to small claims court if your client owes you over $5,000 USD. Anything less is a waste of time to bring to court, and the process is different in every state. This is very rare if you properly vet your clients, so don't worry about not getting paid.
Getting Referrals/ Recurring Clients
In the first 3 years of my freelance business, I never had to go out of my way to find new clients. I grew my business from $0 to $100K all on referrals and recurring clients. Here is how I was able to do it:
- Compete on time and pricing to get your foot in the door with business owners that are well-connected.
- Create great working relationships with your clients and invest in their businesses with your expertise and guidance. You are being hired as a professional so provide all the value you can for clients.
- Don’t charge your clients for small things that take 5 to 10 minutes. It shows that you care about them and their business and that you will go the extra mile for them.
- Have your clients become dependent on you because you are so good at your job that they cannot run their business without you.
- Last, form working relationships with other agencies or service providers who do not fulfill the services you do. They will send clients to you for services they cannot fulfill or wish not to.
These principles led me to grow from 3 clients I found on my own to over 100+ clients over 3 years. 99% of my clients came from referrals which meant I did not have to spend time on marketing myself or cold approaching other businesses.
Do great work, and make great relationships with your clients and they will pay you back with recurring work and referrals 10 times over.
As a freelancer, it's essential to understand how to save taxes and minimize your tax liability. I highly recommend getting set up with an accountant and having them get you set up for paying taxes. This will be different in every state so go with a local accountant who knows your state's tax laws.
Here are some tips on doing your taxes as a freelancer:
Keep accurate records: The key to saving taxes is to keep accurate records of all your income and expenses. Use software like QuickBooks or FreshBooks to track all your financial transactions. At the end of the year provide all this information to your accountant.
Deduct business expenses: You can deduct business expenses such as rent, utilities, office supplies, and travel expenses from your taxable income. Make sure to keep receipts and records of all your business expenses in the event you are audited. List these expenses all out as single line items on a monthly basis for your accountant.
Maximize your retirement savings: As a freelancer, you have the option to open a Solo 401(k) or a Simplified Employee Pension (SEP) IRA. Both of these retirement plans allow you to make tax-deductible contributions, which can lower your taxable income.
Take advantage of the home office deduction: If you work from home, you can deduct a portion of your rent or mortgage payment, utilities, and other home-related expenses as a home office deduction.
Pay estimated taxes: As a freelancer, you are responsible for paying estimated taxes throughout the year. Failure to pay estimated taxes can result in penalties and interest charges at the end of the year. When getting set up with an accountant have them set up quarterly payments on your estimated income for the year so you do not get charged extra fees come April every year.
As a freelancer, you are charged both state and federal self-employment taxes, along with the normal taxes that your employer would normally pay. As a rule of thumb save 30% of everything you make and place that into a separate tax account to pay your quarterly tax bills. This will save you from unexpected tax bills come tax time.
Growing Your Freelance Business
Growing your freelance business starts with one client at a time and will require you to grow a network of business owners and companies that are in need of your services. If you follow everything in this guide you will not have to worry about growing your business as you will be getting referrals from existing clients.
You get as much as you put into your business, and if you are not growing your business that means you are not putting enough effort into finding clients or giving them great service. With how rocky the economy has been in the last few years there is a large number of businesses that need freelancers to help them fill positions or new business owners who cannot afford employees but can use freelancers.
Use this to your advantage, and go out there and network. As you meet new people you will get recommendations, and referrals, and can start to create partnerships. Growing your freelance business is all about getting in front of the right people and providing them with value!