How to Set Up Your Freelance Business for the Long Haul

by Steven Snell

May 4, 2010 in Business/Freelance

When starting a freelance design business the natural primary concern is how to find clients and to start getting paying work. While this is necessary in order to achieve success as a freelancer, there are a lot of other details that need to be considered as well. How quickly you’re able to get those first paying clients will actually have less impact on your long-term success than the amount of time and attention you dedicate to setting up your business on a proper foundation.

In this post we’ll look at the early stages of a freelance design business and what aspects can have a significant long-term impact. Focusing on these important issues from the start will help you to save time and headaches down the road, and your business will be more solid because of it.

1. Know Your Goals and Priorities

Not every freelance designer wants the same thing out of their career. Some may want to simply do a little part-time freelancing as a creative outlet that gives them time away from their full-time career. Some may want to use a short stint as a freelancer to build up their portfolio and profile in order to help land a job with a design agency or as an in-house designer. Others may want to freelance full-time for the foreseeable future, maybe even with the possibility of expanding and hiring some employees at a later date.

The goals that you have will impact how you go about marketing your business, and even how you set it up. If your goal is to use freelancing as a gateway to full-time employment, the long-term aspect is probably not a major concern. For the purposes of this article we’ll be focusing on those who want to establish a career as a freelancer and those who want to eventually transition from freelancing into an agency by hiring others.

One example of how your goals and priorities would impact your approach is in regards to your name. If you’re attempting to build your profile within the industry you’ll most likely want to operate simply using your own name, as this will help to build name recognition and to brand yourself as a leading designer. However, if you’re hoping to hire other designers down the road or even sell your business at some point, you’ll probably want to operate under a business name. Any work you do to brand your business or build up a reputation will have a greater impact on the long-term health of your business this way.

2. Have Savings Set Aside to Fall Back On

Even for talented and experienced designers, there is always some risk involved with making a move to full-time freelance work. In order to minimize the financial risk to you and your family and to reduce the amount of stress and pressure that you’ll be feeling right away, it’s best to have some money set aside to live on while you’re getting your business established. With no cushion to fall back on you may not be able to invest the time and money at the start of your freelance business that is required. If you’re forced to make money right away you will need to place most of your focus on getting clients and that may prevent you from doing some of the other necessary things that we’ll talk about in this post.

3. Register Your Business

Depending on where you live and how you will be operating your business, you may need to register your business or file some paperwork. If you’re choosing to incorporate or form an LLC this would of course take some effort on your part. Check with your local government to see what needs to be filed, if anything, to make sure that you are operating legally and in the right manner.

4. Hire an Accountant

Taxes and accounting are not a strength for most designers, and even if they are, you’d probably be better off by paying someone to do this for you and to use your time for what you do best. Accountants can be pricey, but when you consider the amount of time that it can save you and the fact that you’ll have a professional who is working to put you in the best situation possible, it is well worth the cost.

Ideally, you’ll want to find an accountant who has a lot of experience with those who are self-employed, and maybe even with other freelancers. Someone who understands your business and the laws as they relate to you will be able to do the best job for you.

5. Open a Business Bank Account

One of the major financial challenges for freelancers involves managing your personal finances and business finances separately. It’s a good idea to open a separate bank account specifically for your business income and expenses (if you’ve incorporated or formed an LLC you will need to). This can help to avoid the downfalls associated with assuming that all of the money is yours personally and forgetting about upcoming expenses that will be due.

With a business account and a personal account you can easily have a clear separation of your money and you’ll be able to more effectively manage both your personal and business finances. One practice that can help is to pay yourself a set amount from your business account to your personal account at specific intervals (like every 2 weeks), just like you would receive with full-time employment.

6. Have Legal Documents Prepared

Running a freelance business will require some legal documents like contracts to be signed by you and your clients, as well as other documents like non-disclosure agreements. You can either hire an attorney to draft the documents that you will need frequently, or you can find some examples available online that you can use. The AIGA provides a standard form of agreement for design services that can be customized and used for free. Creative Public is a membership site that provides contracts, legal forms, and pricing guides for the creative industry.

7. Start Working on Items for Your Portfolio

Your portfolio site will be one of the most important marketing materials and it will also serve as the face of your business that typically makes the first impression on potential clients. It’s important to have a portfolio site that is attractive and user-friendly, as well as to have high-quality work that is being shown in the portfolio. At the start of your work it’s critical that you have some work to show to would-be clients to demonstrate what you are capable of. Many designers use personal projects, work for friends or family, pro bono work for non-profits, or work from a previous job as the basis for their initial portfolio.

If you haven’t worked as a designer before or if you don’t have any work that you feel represents your best work, make an effort to find some opportunities to build up your portfolio. Reach out to some friends and professional contacts to ask for referrals. Many designers start out by doing some work for free or for deeply discounted rates simply for the purpose of building up a portfolio that will attract some attention.

8. Establish Policies and Procedures

Most freelancers learn pretty quickly that it is necessary to have some policies and procedures, but it’s helpful if you can consider these things ahead of time before any problems have arisen. Here are examples of a few issues that you’ll want to consider:

  • How much will you be charging clients up front?
  • When will you expect final payment to be made?
  • How will you handle revisions when clients want something to be changed?
  • Will you outsource any of the work (example, PSD to HTML services)
  • What will be involved in your intake process?
  • How will you determine your prices?
  • Will you offer package-based pricing or provide quotes for all projects on a case-by-case basis?

9. Take the Time to Design a Quality Portfolio Site

Once you have some work to include in your portfolio you should work on designing a portfolio site that will do an effective job of promoting your services and encouraging inquiries from potential clients. Since the portfolio site is such a critical aspect of your business, take the necessary time to make sure that it is done well and that it accurately reflects you and your quality of work.

For inspiration see our showcases of portfolio sites:

10. Focus on Creating Success for Your Clients

Long-term success as a designer will require that you keep your clients happy and work towards developing a significant flow of referrals. While quality of design and the general appearance of the sites that you create is important, what is far more important is that your clients get results because of your work. Focus on designing and building websites that will enhance the business of your clients and you will not lack for work.

A successful website must meet the goals of the client. That may be to sell products (e-commerce), to attract leads through the website, to increase traffic, or any other goal that the client may have.

11. Start to Build a Professional Network

Every web designer that has achieved long-term success is well-connected with others in the industry and with those who provide related services. Building your network will occur naturally over time but you can get started now by being proactive in meeting other designers and other professionals. I recently wrote a post 10 Steps to a Stronger Professional Network that provides some tips and guidelines for designers who are looking to get more active in networking.

12. Set Up Social Networking Profiles

Social networking sites like Twitter, Facebook and LinkedIn are great for getting to know other designers and branching out. If you haven’t already, take the time to set up some social media profiles and start interacting on a regular basis. Social networking can lead to connections with other creatives, inquiries from potential clients, traffic to your portfolio site or blog, and another means of showcasing your work to a larger audience.

13. Ask Clients for Feedback on the Experience

As you complete some client projects, make it a priority to get their feedback on the experience of working with you. Hopefully this will help you to identify some things that clients like as well as some areas that you could improve upon. Not only does this help you to improve your process of working with clients, but it also shows clients that you are concerned with doing the best job that you can for them, and they’ll be more likely to hire you again or to refer others to you. Over time you can use the feedback that you’ve gotten to refine your processes to the point that you are doing a more effective job for your clients.

14. Re-Invest in Your Business

Running a freelance business require some financial investment and there will be expenses. While these expenses will usually be small in comparison to running other types of businesses, there is still a need to be willing to re-invest some of your revenue into the business. This may include spending some money on marketing, software and hardware, online apps (such as invoicing and time tracking), and maybe even outsourcing. If you’re concerned with your long-term success as a freelancer, make it a priority to re-invest a certain portion of your income.

15. Set Aside Time for Learning on a Continual Basis

Being a web designer and staying on top of industry changes and trends requires that you keep learning, growing and adapting your skill set. Technology and the internet change so quickly that there will always be a need to be developing and improving yourself and your capabilities. While many projects will allow you to learn and improve your skills while working for the client, it may not be enough and it may not allow you to learn some of the things that you need to learn.

It’s a good idea to set aside some time each week, or at least each month, where you can concentrate on learning something new or improving on some existing skill. Maybe you’ll want to follow some online tutorials, read a book, work on a personal project of some kind, or simply examine the work of other designers in detail. There are a lot of ways to learn and we all have different preferences, but the important thing is that you keep developing and growing. Without setting aside time specifically for this purpose it’s easy to get caught up with client projects and neglect the learning.

What’s Your Experience?

If you have any tips for new freelancers or anything that you would like to share from your experience, please leave a comment.

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About Steven Snell

Stephen Snell is the owner and editor of Vandelay Design.Connect with Stephen on google+

  • Stephen Wilson

    May 4th

    Excellent list. I think it’s important to set time aside every month for admin work i.e. keeping on top of your finances, making sure you’ve received payment for jobs – no money no business! Oh, and enjoy it… working for yourself should be a pleasure not a chore! Thanks again, Steve

  • Joe Valdez

    May 4th

    Great Article!
    It really points out things a freelancer needs to do, you pretty much covered all the basis. As a freelancer myself I can appreciate the guidance, especially for newcomers entering the business.

  • Marcell Purham

    May 4th

    Many people often give up but I think if they follow these steps they will be on a road to happiness. Great post!

  • cleawalford

    May 4th

    yes, thanks for the great post!

  • Erik Kubitschek

    May 4th

    I actually have everything listed with one exception and I believe it to be the most important, hiring an accountant. Nice post.

  • Kaspar

    May 5th

    Great read :)

  • Logo Design

    May 5th

    I think one of the most difficult things about being a freelancer is that it tends to be feast or famine, you need to plan accordingly so that you have a constant stream of steady work.

  • Home Design

    May 5th

    I can appreciate the guidance, especially for newcomers entering the business…you need to plan accordingly so that you have a constant stream of steady work…keeping on top of your finances, making sure you’ve received payment for jobs.

  • Jay Logan

    May 5th

    Nice article. Another important requirement is having contracts which clearly outline the tasks you have agreed to complete. This is mainly more for web developers. But from experience, clients don’t fully understand the amount of time or effort it takes to do thing and they may feel that some “bonus features” should be thrown into the project at no additional cost.

  • Rachel

    May 5th

    Great article..really nice post..

  • Ken Reynolds

    May 6th

    Excellent post, it’s an imposing thing to start a company from nothing, but the suggestions in that list certainly breaks it down a bit. The problem is that it’s very hard to sort all of those things out at once, so it’s likely to be a more gradual process.

    The one piece of advice I think I should offer is this. Never stop promoting your services, or marketing yourself, even if you are busy. Once the work begins to dry up it’s too late to begin promotion again if you want to stop the income drying up.

    Freelancing is fun, but like all good things you have to work hard for the privilage.

  • Webjohn01

    May 8th

    Hello Steven!

    What a great advices, keep on inspiring other designers/developers.

    Keep up the good work.

    More thanks!

  • Jae Xavier

    May 11th

    15. Set Aside Time for Learning on a Continual Basis

    This is where most freelancers fail.

    Most freelancers I used to contract overflow work to were not keeping up to date with the latest design trends, techniques, and new features in production pipeline management. They were asking me how would I do this and that…

    “Hey buddy, I’m paying you to solve it.”

  • Sumeet Chawla

    May 17th

    Excellent suggestions! not only for a freelancer but also for a startup web development company :)

  • Anupam Sen

    Jun 29th

    Your blog helped me a lot

  • adsl fpt

    Jan 23rd

    Building a new freelance company isn’t complicated, but the hardest thing is keep your business alive :)

  • Niicaux

    Mar 4th

    Indeed a great article. Much welcomed and appreciated.
    Nic

  • John Robinson

    Mar 5th

    Great article and pretty much exactly the way I’ve done it so far. I can’t stress how important part 2 is. Until you get established it’ll save you many a sleepless night and really ease the pressure. Thanks for a really great article. It’ll be very helpful for anyone starting out.

  • John Robinson

    Mar 5th

    Great article and pretty much exactly the way I’ve done it so far. I can’t stress how important part 2 is. Until you get established it’ll save you many a sleepless night and really ease the pressure. Thanks for a really great article. It’ll be very helpful for anyone starting out.

  • Tran Kien

    Apr 2nd

    Very very valuable post !
    It gave me a clear map with definite directions to be succeed in my business in future. I bookmarked your post to read again next times.
    Thank alot for your great work!

    Tran

  • Tin cong nghe

    Apr 19th

    In my opinion,”Start to Build a Professional Network” is quitely most important factor among 15 principles that influence the success of an online business/start-up. As you said:”Every web designer that has achieved long-term success is well-connected with others in the industry and with those who provide related services”. Yes, the online venture needs the supports/attributes of others in the same field.
    Thank alot for your great post ^_^

  • Lindsay

    Jun 29th

    I really appreciate this post. I’m just starting to research what I will need to be a freelance web designer. It’s a scary thing to actually start thinking about as a reality.

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