Running an effective freelance business is a learning process. Designers who have gained extensive design experience as an employee will still have plenty to learn about the business aspect of freelancing. In this post we’ll look at 10 principles that I have learned from my own experience, and have observed to be true of other freelancers as well.
1. Happy Clients Will Lead to More Clients
One of the leading sources of business for most successful freelancers is referrals and word-of-mouth advertising. Whether it is your past clients, or friends and family, potential clients that have been referred to you will often come in to the situation with more trust for you and respect for your work than the average potential client that you find through other methods, such as someone who finds your portfolio through a search.
From my experience, referrals are often the most pleasant clients to work with, and they will also typically have the highest conversion rate from lead to client. If you hope to build a successful freelance business primarily through referrals, producing a high level of quality in your work is essential to encourage your clients to refer others. However, quality of work certainly isn’t the only factor. Clients usually will only recommend someone that they feel has treated them well and given them a positive overall experience. Customer service and communication are key for this reason.
2. Competing Based on Price is not a Viable Long-Term Strategy
As a freelance designer there is always plenty of competition. Potential clients could spend a little bit of time and find a number of other designers that could do essentially the same job. Because of this, freelancers need to have something about themselves and their work that separates them from the competition and encourages clients to choose them. It’s not unusual for freelancers to take the approach of competing with others by offering lower prices. However, in my opinion, this is not an effective long-term strategy.
While lower prices may help you to get a few jobs now, competing based on price can have several negative effects in the long run. First, clients and potential clients will view your work as inferior to other designers that are charging more. Not only that, but after under charging for a while you’ll also start to see your own abilities and services as being of less value, even if it is subconsciously. In addition, you’ll need to work a lot more to make the money you need to get by, plus it will put you in a bad situation if/when you want to raise prices down the road. If you’re competitive advantage is based on having low prices, and suddenly you raise your prices or others come in and undercut your prices, your advantage is blown.
What’s more effective in the long run is branding yourself to be an expert in a particular area, or establishing yourself as someone that people want to do business with because your work is different from other designers in some way (see Effective Differentiation for Freelancers at Freelance Switch). Of course, this will take time and is not as easy as just lowering your prices, but it’s the stronger long-term option. Once you’ve differentiated yourself from other designers in some way, clients will be less sensitive to price if you’re the one they want to do the job.
3. Open Communication is Critical Throughout the Life of a Project
Effective communication is one of the most important skills that a freelance designer should develop. Although creativity and technical skills are clearly important for the job, those abilities without effective communication skills will not be able to accomplish very much. The success of a client project depends on your ability to understand their needs and wants, and to communicate your approach to them. The client will always know their business much better then the designer, and the designer will know more about the technical aspects of the project. Ideally the two sides will work together to achieve the best results, which requires plenty of communication.
Communication goes both ways. Freelance designers need to be able to effectively state their own points and word things in a way that clients will understand, but they also need to be able to listen to clients and pick up on the things that they may not be explicitly stating.
Freelancers often face significant challenges in communication because of location and dealing with clients in other parts of the country or the world. Rather than meeting face-to-face, email and phone may be the only methods of communication possible, and in some situations communication over the phone may be difficult due to time zone differences. This makes the freelancer’s need for communication skills even more critical.
4. Time Invested at the Start of Projects Will Save Headaches Later
Have you ever jumped right in to a project only to realize later that you didn’t fully understand what the client wanted, and now the work has to be re-done? By dedicating time up front to get on the same page with the client, discuss their needs, talk about what they want from their website, and to generally get a good feel for the requirements of the project, you will be building a solid foundation for the project that will help you to prevent wasted time and to live up to the expectations of the client.
Not putting in the necessary time up front will often lead to less-than-spectacular results, and it will often wind up costing you more time in the long run if you have to go back and re-do some or all of your work. Depending on the client, you may have a difficult time getting them to understand the need for effective planning, but this is where your communication skills need to come into practice in order to convey to them how important these steps are.
5. Expenses that Improve Your Productivity or Quality of Work are Beneficial to Your Business
The natural reaction to expenses from most new freelancers involves resistance to just about anything that costs money. As a freelancer, your profitability will obviously result from your income minus your expenses, but expenses aren’t always a hindrance to increased profitability.
In order to maximize the amount of money that you make, you’ll need to first maximize your productivity and efficiency. There are plenty of tools, resources, and services that freelancers can invest in that will save them time on a daily or weekly basis, leaving more time for income generating work.
Most freelancers don’t enjoy dealing with the financial aspect of running a business. As a result, managing finances can take much more time and effort than necessary. This is a good example of where many freelancers could help their bottom line by being willing to spend a little bit of money that will save them some significant time (see 15 Online Financial Tools for Freelance Designers at Webdesigner Depot for a description of some options).
6. Long-Term Clients are Extremely Valuable
Most freelancers have to invest some effort into finding new clients. Whether your approach involves bidding at sites like Elance, searching design job boards, writing blog posts, updating your social networking profiles, or anything else you can do to increase your chances of being seen, you’re devoting valuable time to simply finding the work before you can even do it.
Long-term clients are extremely valuable because they allow you to do work that earns an income without dedicating time to constantly finding new work. These on-going gigs may be very involved, or it may only require periodic updates and changes, but either way it can save you some time. Even if you have a steady flow of leads coming through your online portfolio or some other source, it’s still going to take time to follow up with these people and find the ones who will ultimately become paying clients. With repeat clients all of this is avoided.
7. You Can’t be Great at Everything, so Focus on Being Very Good at Something Specific
There are so many aspects to web design and development that it is impossible for anyone to be an expert at everything. Since this is true, it’s more effective to differentiate yourself by aiming to be as good as possible at something specific. Maybe you want to position yourself as an expert at WordPress theme development, e-commerce design, logo design, or just about anything else. By establishing yourself as an expert in a particular area, you’ll be one of the first people that comes to mind when potential clients are looking for that type of work.
8. Freelancing is a Legitimate Business, and it Must be Treated with Respect
Although many freelancers have started out on a part-time basis, at some point they have decided to approach it as a business and to take it seriously. Freelancers who see their work as a hobby are unlikely to ever get the results that will justify full-time work from freelancing.
Regardless of whether you are a full-time or part-time freelancer, treating your work like a business involves making it a priority, blocking off time to work, having a budget for necessary expenses, and developing a plan for business sustainability and growth.
9. A Strong Network is One of the Most Valuable Assets a Freelancer Can Have
As a freelancer, networking is critical for building referrals, establishing your name and reputation, branding yourself, growing your business through outsourcing, and for getting help and assistance when needed. Ideally, a freelance designer’s network will consist of individuals with a variety of skills and experiences.
Since designers spend so much time online, the internet is a natural medium for networking with other professionals. Whether you’re using social networking sites like LinkedIn, spending your time blogging and interacting with other bloggers, using Twitter, or participating in forums, there are plenty of opportunities to connect with talented and influential people.
10. Effective Time Management Skills are a Must
Earlier we looked at the need for communication skills in addition to technical skills, but time management should also not be overlooked. Freelancers need to be able to manage their time well, because no one else is going to do it for them. As a freelancer, your productivity and profitability rests in your own hands. By being able to manage your time you will maximize what you can get out of your working hours. If you’re looking to make more money or work fewer hours, evaluate your time management skills to see if their is room for improvement.
By: Steven Snell on April 21st, 2009
courtesy – http://designm.ag