So You Want To Be A Freelancer

What’s the difference between running your own home-based 
business and freelancing? (tick, tick, tick …) Give up? Me 
too. If you want to work for yourself from home and have a 
special talent or skill that you think others would be prepared 
to pay for on an hourly or per-project basis, why not stop 
thinking in terms of the traditional “home business” paradigm 
and start thinking in terms of freelancing instead? 

WHAT IS A FREELANCER? 

Quite simply, a freelancer is an independent contractor who 
earns his or her living by contracting for projects on a project 
by project basis. A freelancer is not an employee of anyone 
and so he or she must actively seek out work, negotiate the 
terms and conditions of the project (the contract) and complete 
the work to the satisfaction of the client. Once the project is 
complete, the freelancer seeks out and enters into another 
contract for another project. 

Alternatively, the freelancer may have obligations under a 
number of different contracts with different clients at the one 
time. 

Another variation involves the freelancer producing work and then 
seeking buyers for that work. A freelance writer of magazine 
articles, for example, would fall into this category. 

WHO HIRES A FREELANCER? 

Those who hire freelancers are as diverse as freelancers 
themselves. In some cases, companies will hire freelancers 
to complete a short-term project as an alternative to hiring 
a new employee. This is often the case where the work in 
question is spasmodic or ad hoc and the company cannot 
justify hiring an employee for such work. Companies also 
hire freelancers to help smooth out the peaks and troughs 
in workload. Again, where there is a temporary oversupply 
of work, the company will hire the freelancer on a short-term 
basis to help cope with the backlog. 

In other cases, companies hire freelancers for their special 
expertise in a certain area. A company may want to create 
a new website, for example. Hiring a freelance website 
designer for such a project makes more sense than hiring 
a website designer as an employee since once the website 
is complete, the function will no longer be required. 

Magazine and newspaper editors also hire freelancers or, 
more precisely, buy rights to freelancers’ work. A freelancer 
in this type of situation may write a piece and submit it to 
a number of different editors in the hope that his or her work 
will be “picked up” by that editor and published, in return for 
which the freelancer receives payment. By its nature, such 
an approach is speculative since the freelancer can’t be sure 
that anyone will actually buy the work. Of course, once the 
freelancer has been published, it is relatively easier to get the 
editor to buy the freelancer’s work in the future and, as the 
freelancer’s reputation grows, so too do the opportunities for 
future business. 

WHAT QUALIFICATIONS DOES A FREELANCER NEED? 

To be financially successful, a freelancer obviously needs 
marketable skills. A freelancer therefore needs the same 
qualifications, skills and talents as someone who had been 
hired as an employee to do the job would need. In other words, 
if you are seeking work as a freelance website designer, you 
must possess the same skills and qualifications that a full-time 
employee website designer would possess. 

IS A FREELANCER RUNNING A BUSINESS? 

In short, yes. If you do not have an employer, if you have to 
source your own work and negotiate your own terms, if you 
have to chase payment, if you have to pay your own taxes 
(i.e. no one is withholding them from your check), you are, in 
essence, self-employed. Ergo, you are running your own 
business. 

There are a number of consequences you need to think about. 
The first is taxation. You need to set aside from every payment 
you receive an amount sufficient to cover your state and federal 
taxes on the income you receive. Likewise, you need to keep 
proper books and records so you can claim the deductions and 
expenses to which you are entitled as a self-employed person. 

As a freelancer, like any independent contractor, you will also 
be expected to provide your own equipment and supplies. If 
you are a website designer, you need to have your own computer, 
software and other tools of the trade. The party hiring you will 
not provide this stuff for you. Similarly, if you are a freelance 
editor, you will be expected to have all the reference materials 
and style books, word processing programs and other sundry 
items any editor would need to do the job. 

From a legal point of view, you should also give some thought 
to the legal entity of your business. Will you be a sole 
proprietor or will you incorporate? If you incorporate, will you 
choose S-corporation status? There are important tax 
consequences of each of these alternatives so be sure to get 
advice from your accountant before starting and then talk 
to your lawyer about incorporation. 

Think also about what licenses you may need as well as 
insurance (health, life and liability depending on the nature 
of the work). 

WHERE DOES A FREELANCER FIND WORK? 

OK, onto the nitty gritty. You’ve decided to start work as a 
freelance website designer. You have the appropriate 
qualifications, training, experience and equipment and you’ve 
consulted your accountant to determine the most tax-effective 
business structure and your lawyer to set up your new company 
and advise you in relation to issues such as business licenses 
and fictitious business names. You’re ready to hang out your 
shingle. Now what? 

= Approach Your Warm Market 

Start with who you know. Where did you get your website 
design experience? If it was with an employer, consider 
whether that employer may not be a source of business for 
you. That will obviously depend on the circumstances under 
which you parted company but if you left on good terms and 
didn’t burn any bridges on your way out, by all means contact 
your former employer and let him or her know that you are now 
in business for yourself and ready, willing and able to take on 
new projects. If possible, get a reference or testimonial too. 
That will come in handy when it comes to touting for new 
business from strangers. 

Next, turn to your network of business associates you developed 
while working for your former employer. Note, we’re NOT talking 
about clients of your former employer, rather your own network 
of colleagues. Contact them and let them know about your 
new venture and your availability for project work. 

Be extremely cautious about approaching clients of your former 
employer if your current business puts you in even indirect 
competition with that employer. In fact you may be contractually 
constrained from approaching former clients if you signed a non- 
compete covenant in your employment contract, for example. 

= Create Brochure/Resume 

Go to the time and expense at this stage to prepare some 
sort of resume of your experience and services. Get this 
professionally printed as a brochure and send it, together with 
your business card, to your former employer and colleagues 
as a follow-up to your conversation. By giving them something 
tangible about you, it is more likely that you will come to 
mind when next they have a need for your services. If you’ve 
already provided them with your brochure/resume, when the 
time comes, the person concerned will think “hey, Joe’s doing 
this sort of thing now. Where’s that information he sent? Oh, 
here it is. I’ll give him a call and see if it’s something he 
might be able to do for us.” 

= Approach Your Cold Market 

Once you’ve approached your so-called “warm market”, it’s 
time to start on the cold. Start by gathering up a list of 
businesses in your local area or industry that you think would 
have use of your services. Prepare a letter of introduction and 
send it, together with your business card, to your list of 
prospects. Your letter of introduction should make it very 
clear why you are writing. Identify yourself and the specific 
skills that may appeal to the reader and why. 

Follow up in a week with a telephone call to make sure the 
materials arrived safely. If the other person is approachable, 
try and strike up a conversation about what you could do for the 
business. Otherwise, thank the person for their time, ask them 
to keep you in mind for future work and calendar to contact them 
again in 30 days’ time. 

Continue to work your market like this. Remember, persistence 
pays off. Don’t be discouraged if you receive little warmth or 
interest in response to your approaches to your cold market. 
It takes time and persistence. Just don’t take it personally. 
A good way to approach it is to tackle a fixed number per day. 
Start out by making a list of, say, 300 businesses you want 
to approach. Develop your list from the Yellow Pages, local library 
and the web to start with. Calendar to approach 10 businesses 
a day for the next 30 days. That means ten calls a day, followed 
by 10 letters of introduction (together with a copy of your 
brochure/resume and business card) and a follow up phone 
call a week later. 

Where there is interest, you may be able to schedule a 
meeting. Where there is no interest, schedule for a further 
follow up call in 30 days. If there is still no interest, schedule for a 
further call in 90 days. Or maybe you would prefer to do something 
else to stay in contact. A good way is to publish a newsletter for 
your clients and colleagues. Make it relevant to the recipient and 
it’s a good way of keeping your name in front of your prospects. A 
quarterly newsletter is probably frequent enough. Send it, with 
another of your business cards, to your list and, over time, you will 
see that it will start paying off in the form of business. 

= Samples 

Another idea to think about is to produce a set of samples of your 
work; a portfolio if you will. Make 8.5 x 11 copies of your work and 
keep them in an artist’s portfolio for presentations when you’re 
able to arrange face to face meetings with potential clients. 

= Advertising and Promotion 

Next comes advertising. If you’re a website designer, possibly your 
best advertisement is your own website. But don’t stop there. 
Advertise in the publications your target market reads. 

Another good way to generate business is to join associations and 
groups affiliated with your industry. Chambers of Commerce 
are a good place to make handy contacts. 

You will probably find that in the early stages of your freelance 
career you spend more time marketing yourself and your 
services than you spend actually working. There’s a financial 
cost to that, of course. How do you finance your marketing if 
you don’t have any money coming in? For this reason, the 
early days will be lean and mean. Make sure you have the 
financial wherewithall to survive this period. 

HOW DOES A FREELANCER MAKE MONEY? 

You will only make money as a freelancer if you charge more 
that it costs you to do the work in terms of your time, expenses 
and materials. Factor in a profit component to every job you quote 
for and make sure that that profit component is in ADDITION to 
an allowance for your time. For more on pricing your services, 
see “Pricing Yourself To Get and Stay In Business”, at 
http://www.ahbbo.com/pricing.html . 

Some freelancers charge by the hour and others by the project. 
In reality, you will probably use a combination of both methods 
depending on the nature of the job and the client. 

You can get an idea of current market rates by surveying your 
competitors. Don’t be obvious about it though; competitors are, 
naturally enough, reluctant to divulge information about their 
businesses to their competitors. So you’ll probably need to 
employ a bit of subterfuge here by posing as a potential 
customer, for example. In fact, it’s in your legal interests 
that your competition doesn’t give you pricing information if it 
knows you’re a competitor. Such conduct can be construed 
as price fixing which can land both of you in extremely hot 
water. So, keep it safe and use circuitous methods of 
obtaining pricing information from competitors. 

PROTECTING YOURSELF 

A question often asked by freelancers is “do I need a contract?”. 
Well, to start with, once you’ve negotiated a deal with a new 
client you have a contract. The question is whether it’s oral or 
in writing. An oral contact is just as enforceable as a written one 
but the problem becomes one of proof. How do you prove the 
terms of your contract if all you have is one person’s word against 
another’s? For this reason, a written contract is always a good 
idea. It needn’t be anything too elaborate. In fact, even an 
exchange of letters will do. Just be sure to include the basic 
terms: 

= Describe the job 

What must you do to perform the contract? Be as specific as 
possible here and try not to be open-ended. “Create a website 
for client” is too vague. What would you do if the client came back 
after you’d finished and said, “but there’s no shopping cart, there’s 
no feedback form?” and you hadn’t quoted your time for these 
things in striking the price? Better to say, “Create website 
at client’s direction consisting of (a) home page; (b) products and 
services page; (c) order page; (d) shopping cart and (e) feedback 
form”. By requiring the client to be very specific about what it is 
they want from their website, how they want it to look etc. you 
can go a long way to avoiding misunderstandings caused by 
vagueness. 

= Set the price 

State in unequivocal terms the price you are to receive for the 
job. This can be either a project cost such as $5,000 or an 
hourly rate such as “$150 hour or part thereof; minimum of 
ten (10) hours” or whatever. 

= State time for performance 

Performance means not only when you will complete your part 
of the bargain (i.e. delivering the completed website to the client) 
but when the client must complete his or hers (i.e. by paying you). 
FROM THE COAL FACE 

Here’s what real-life freelancers have to say about the freelance 
life … 

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