What You Need To Know Before Freelancing
This post is part of the Professional Independence Project series.
At one time or another, nearly every person has one of the following thoughts while bored working as a salaried or hourly employee, frustratingly interacting with a business as a customer, or dreaming of a better future:
- “If this business were mine, I would do things so much differently.”
- “Why doesn’t someone figure out a way to do this better?”
- “I am really good at ‘x,’ I bet I would be a success if I opened up a business to do it.”
What You Need To Know Before Freelancing
For some people, it is little more than a fleeting thought. However, for others, it becomes the impetus to actually launch a freelance business to make those thoughts above a reality. For those wannabe entrepreneurs and freelance business owners, the path to success will rarely be smooth at glass – but it can be made less of a roller-coaster ride if this one essential insight is recognized before launching the business: You are not just an expert, you are a business owner.
Many freelancers make the mistake of thinking that because they are excellent at a particular skill or craft; that they can easily be in a business providing that. To be sure, having expertise in a discipline or a highly developed proficiency may be necessary – but it is not sufficient to run a successful freelance business. For some freelance businesses, it may not even be the most important component of success.
Being A Business Owner
The output of the business (product, service, expertise, etc.) is the most tangible aspect of the business. It is what the freelancer often is most focused on providing and it is what the customer sees or touches. But, it is NOT the business. A business owner has to assume responsibility for the following:
Leadership – Running a business, even one where the “work” is done on the kitchen table, in a garage, or a spare bedroom, requires creating a business vision, strategy, and mission.
Caveat: Understanding what makes your business unique is necessary and drives all other decisions.
Sales – The business owner has to understand what “need” the freelance business meets for customers and prospects. It is not unusual for freelancers to see clearly how or why their offering is the “best” or should be chosen by others. However, there needs to be a very clear articulated understanding of what business or personal issues the freelancer can solve and be able to present that explanation in a way that leads to a purchase.
Caveat: The business is about what the freelancer provides to the customer, and not how much the customer can provide to the freelancer.
Marketing – Identifying potential targets to pursue (by industry/geography/demographic/etc.) to maximize success and then changing the messaging as necessary to demonstrate understanding of the customers’ needs and how the freelancer can provide a better option than other competitors.
Caveat: The more specific the freelancer can be in identifying suitable targets and aligning the message(s) provided to that target to demonstrate the freelancer can offer value, the better chance the business has to succeed. The best product or service will fail if no one knows about it or recognizes how it provides an improvement for the prospect/customer.
Finance – Too many freelancers/entrepreneurs suffer from their eyes glazing over in boredom or confusion when it comes to the talk of money. Often, the freelancer is enamored with the product or service delivery and does not realize that an understanding of financial metrics, money, and cash management is of paramount importance.
Caveat: Revenue and Profit, while important, takes a backseat in criticality to cash flow. Expenses occur on a regular basis and require a predictable and steady stream of cash for a business to be sustainable. Even a profitable business can fail if the business cannot meet regular expenses incurred while payment to the business is still outstanding.
Production – Managing the process used to create the product or service must be reliably consistent or the business risks incurring costs associated with errors/do-overs/raw material shortages or overages/quality variation/etc.
Caveat: The freelancer’s business is often subject to high variability due to the lack of methods or procedures to govern how products or services are created. Standards have to be established to ensure consistency.
Management – The Freelancer may perceive that s/he is a lone wolf and is running the business without others. Whether or not there are employees or sub-contractors, there is still a huge need for management skills of others.
Caveat: A successful Freelancer will choose a team to work with (Accountant, Attorney, Website Designer, and others) and will need to manage the personalities, expertise of team members, and ensure that the vision and strategy of the business is maintained.
Freelancing is more than just being the best at ‘x.’
Want to take control of your career?
If you want to take control of your career, check out our fall series, the Professional Independence Project. Throughout the month of October, we will be sharing expert advice and insight on how you can build a successful career you love.