Over the past few months I’ve been working on getting starting a freelance design business. It’s definitely been a learning experience (in a good way, mostly), and I thought I’d share some tips that I’ve come across.
Determining Business Structure
There are many structures, but the most common for freelances are Sole Proprietor and LLC. I had a hard time deciding between the two.
A Sole Proprietorship is an unincorporated business that you own by yourself. Basically you’re personally responsible for all of the business’ financial obligations and the money your business earns is taxed as your money. If you get sued, they can go after your personal belongings (such as house, car, computer, etc.) if you don’t have the money to pay a large settlement.
Setting up as an LLC (Limited Liability can help protect your personal assets since you’re not personally liable for the company. In that case if you get sued, they can only take property and assets held by the business, so that’s nice. However, you have to file your taxes separately for your business, and from what I hear, that’s a hassle.
I, for one, figured the chances of legal action are slim (maybe short-sighted on my part, who knows?) and went with an SP. I do all my accounting and taxes myself and don’t plan on hiring anyone in the near future, so thought for starters this would be the way to go. I even consulted with GDB’s own Preston D. Lee, and he made the good point that it’s much easier to upgrade from an SP to a more complex structure than in the opposite direction, if you change your mind down the road.
I highly recommend setting up a separate checking account for your business, as it makes it much easier to track your business spending and income. I’ve set up a business budget, and that includes paying myself the same amount every month. This helps to keep money in the business for other expenses, and to have some cushion (hopefully) to still pay myself in a slow month.
Bookkeeping: I set up an account with Wave Accounting (which is free!). So far it has been super easy to use, and it generates financial reports and whatnot for tax time. Some “real” bookkeeping software (like QuickBooks or similar) can be very complex for a non-financially-savvy individual. I don’t recommend spending a ton of time learning accounting, but definitely make sure it’s being done correctly and you’ll save a ton of effort come tax time. If you can find an inexpensive accountant to do your taxes, or at least set up an easy bookkeeping system for you, it may be worth the money.
Let’s say you’re a web designer, but someone approaches you to do a poster. Will you take on that project? Most of the time you might as well (if it’s a project you’re qualified for), since it’s always nice to have a bit of variety and round out your skills (and the money is always an incentive). However, if your print skills are shaky, you don’t want to risk hurting your reputation as stellar web designer by turning out a crappy poster. This person could be a potential web client and you want to look your best. Also, if you have a bunch of pressing assignments to get done and this random print job would be a distraction from your primary source of income, it’s ok to turn it down. Just be nice about it and explain that you’re too busy but would love to discuss future work.
Equipment and software
There always seem to be two sides to the equipment argument. I’ve run into this problem
You gotta have the best equipment available. There is a saying I learned at art school that goes something like, “You can make bad work with great tools, but you can’t make great work with bad tools.” I’ve found some truth in this, but nowadays for me it’s mostly about efficiency. If my computer takes FOREVER to rasterize an image or save a file, it can really increase my stress levels and keep me from working at the pace I’m comfortable with. It’s important to have the right equipment to do your job well and efficiently.
Get by with what you have. Sometimes you just don’t have the funds to get that new laptop, and while it’s annoying to have to look at your boring old 2005 MacBook, it still gets the job done just fine. As cool as CS5 is, it may not actually help you do your job better than CS3 ever did.
My feeling on this is to seriously evaluate your efficiency, your work habits, and ultimately your equipment needs. No need to buy a new Mac every year if you’re not noticing huge performance issues. And you may not even need to upgrade your software if you’re still able to exchange files with your clients with no headaches. If you have to start asking someone to convert CS5 files to CS2 for you every other day, it’s probably time to upgrade.
This is a tough one. You chose the freelance lifestyle because of the freedom, right? Well, there are a few things to consider here. For me, if I don’t have a set schedule of when I need to be working, then I find myself slacking off during the day and having to work long into the night to hit my deadlines.
Also, if you have to communicate with your clients a lot, make sure you’re available when they are. If this means dragging yourself out of bed before 3PM, it’s probably worth it (just try not to sound too hung over on the phone).
I find it hard to keep from getting distracted by things around the house as well. Focus on separating your work time from your non-work time, and both aspects of your life will be less stressful and better managed.
A question I hear a lot is, “How much would it cost for you to make a [insert random design product here]? Obviously that’s not much to go on, and I usually have to squeeze a lot more info out of the person before I can even start an estimate. One thing that helps is to have a set hourly rate. You don’t necessarily have to charge by the hour, but it’s a great starting point for determining a project fee or estimate. When starting a freelance design business, your desired rate may not always be agreed upon, but it’s a good benchmark for determining what you need to make in order to keep the business running.
Here’s a good rate calculator to help get started.
This is something I’m still working on. First you have to know your competition, which is difficult in the ever-expanding world wide interweb marketplace. Chances are a lot of your early work will be from people you know or people they know in the area, so it can’t hurt to check out what other local shops offer and charge for similar services. I’m personally not one for cold calling, and the majority of my business has come from people that I have some sort of connection with. Every now and then if I come across a website that needs some help I’ll send an email in their direction and see if I can get involved. I’m sure there are many way more effective ways of finding clients, and if you’ve got any, do let me know.
This is very helpful even if you never plan on applying for a loan or entering a business plan competition. I got a template from the SCORE website http://www.score.org/, and came across many questions I had never even thought to consider. The planning guide really helped me think through how I’m going to market myself, who I’m going to approach for work, and how to run my business efficiently, so I’m spending less time on administrative tasks and more time doing actual design work. Of course, it takes a lot of time to really think through and write your business plan, but this is time very well spent.
When you approach a client about working for them, they’ll most likely want to see your previous work. Whether it’s a book or a website (you should probably have a website by now—if you don’t, let me know and I’ll make you an awesome one), your actual portfolio is the first piece your potential client will see. Make sure it really represents who you are as a designer. That’s something I’ve struggled with. How do I brand myself? This may be something to consider while you’re working on your business plan. What sets you apart from your competition, how does your work reflect that? Try to make that clear.
Something to avoid while creating your portfolio is overdoing it. While you want it to be an attractive piece on its own, make sure your work is the center of attention. It’s a fine line to tread, but you don’t want your portfolio to distract your potential clients from the finer aspects of your other work.
How are you supposed to stay on task with out a boss breathing down your neck all day? The most beneficial strategy I’ve found is creating a MANAGEABLE to-do list. Break your big projects down into mini projects and assign due dates/times for them. It’s really hard to get cracking on that daunting “Build Website” task, so try adding smaller chunks of the project to your list instead. Maybe “Create Wireframes” would be one, and “Sketch out three possible layouts” would be another, and “Pick font families” a third. Set aside time to complete each task (leaving some room before your deadline for anything else you missed, of course). It’s always nice to have that satisfying feeling of accomplishment as you achieve your minor goals along the way.
Your turn to talk
Well, enough of my yappin’. What have you learned (maybe the hard way) about getting into freelancing? I know there are a lot of problems I haven’t had to face yet, or maybe you don’t agree with some of my suggestions or strategies. Let’s discuss!