Starting a freelance business can be pretty rough
Just like starting a company, switching from a day job to the freelance world can be difficult and scary at the beginning. Plus, there’s an added problem: The fact that you’re on your own. While startups are the result of a collaboration between two or three partners, usually with different skills and responsibilities, as a freelancer, it’s just you and your computer. You’re the person in charge of accounting, sales, marketing, making coffee, and actually delivering projects to your clients.
As soon as you start working with your first clients, you’ll notice one thing: Companies tend to undervalue freelancers because they look at them from a position of power. An organization versus an individual. David vs Goliath. They don’t usually see it as a business-to-business relationship, and payments will look more like a salary to them, rather than a client-company relationship. This usually happens because companies don’t tend to understand the costs of being a freelancer. In their minds, being a freelancer is free, therefore all the money you make from them is pure profit.
Nothing could be further from the truth. We won’t dive into the costs of keeping a freelance business alive (rent, office space, devices, subscriptions…) or the actual costs of doing business (payment processing fees, hours spent on prospection, proposals, and negotiation), and I also wouldn’t recommend spending any time explaining all this to a potential client. Once your business takes shape, you’ll be able to have the luxury of turning down clients who think your services are too expensive.
Until then, you’ll need to find a way to put yourself in a position of power in front of your clients. How? By turning yourself into an agency.
You’re no longer John Doe the freelancer. You’re now JD Consulting. Delete the words “I” and “me” from your vocabulary. You will now talk about “we” and “us” in front of your clients. It might sound stupid, but you’ll be surprised to learn how common this is among successful people. A while back, Jason Fried, one of Basecamp’s founders and author of books like Remote: Office Not Required and It Doesn’t Have to be Crazy at Work revealed how he dealt with his insecurities when he was starting his first business.
When I was starting my first business, I remember using a totally large random number as my first invoice number to make it seem like I’d sent *a lot* of invoices before. Hands up if you were as insecure as I was when you started your first business.
— Jason Fried (@jasonfried) October 15, 2019
Sending a client an invoice with the number #0001 is a way of letting them know that they’re your first client, which could potentially mean you have no previous experience. It could also let your new customer know that they are your only business. This might seem irrelevant, but details like this can put you in a weak negotiating position for future contracts or assignments.
How to turn your freelance business into an agency
Let’s break down the process:
Create an agency website
Your new agency website should be very simple, and focused on attracting new leads. Your homepage should be clean with a short description of what your business does, client testimonials (more about this in a minute), and a contact form. Avoid creating an “about” page or create one about “our founder” where you can talk about yourself and your achievements.
Get reviews or testimonials
The easiest way to do this is by asking previous employers or clients for a short testimonial mentioning your new company name instead. If you don’t have any previous clients or employers willing to write anything nice about you, just don’t include a testimonials section; but never, ever create fake reviews or testimonials. They’re easy to spot and can demolish your (already small) reputation as an upcoming business.
Create company email addresses
You should have at least two different types of email addresses: a general one meant to receive information from prospects and contact forms (info@, contact@, etc) and professional ones (yourname@). I’d also recommend a couple other transactional email addresses such as suppport@, accounting/finance@, etc.
I created a fake employee called “Lisa” to make us seem bigger.
“Lisa” would be the one responding to sales enquiries and support tickets.
If only people had known they were dealing with the founder. 🤦♂️
— Gavin Hammar (@GavinHammar) October 15, 2019
How is this going to help me?
For starters, you’re no longer an application to review, but a potential company to do business with. The B2B world is surprisingly a lot less scary than the job market. But there are other benefits:
You can charge more and will receive less pushback
As we mentioned earlier, most company employees don’t understand that running a freelance business is actually expensive, so they’ll likely try to negotiate any proposal that they consider too high – probably using their own salaries as a benchmark. This is not as likely to happen when you’re pitching on behalf of your agency. Companies understand that other companies have to make enough money to keep their lights on: bills to pay, salaries to pay, etc — which are things you probably need to pay as a freelancer anyway! However, it’s easier to justify when you’re a company.
Gets you away from cutthroat freelancer marketplaces
Run away from places like Upwork where candidates are forced to keep undervaluing themselves in order to get jobs. You don’t want to play the discount game, which is why it’s crucial for you to build a brand based on quality from the very first day (and your pricing should show that). Once you land your first happy customers, you can always ask them for referrals, which will help you slowly grow a pool of loyal clients.
Helps when collecting payments or following up on pending invoices
We’ve all had customers that like to take their time paying invoices. Hopefully your business will grow to the point that you won’t have to work with clients like that, but up until then, it’s an issue you’re going to have to face from time to time. An easy way to deal with this can be by periodically following up from one of the transactional email addresses we mentioned earlier (support@, accounting@, etc) and, if that doesn’t work, you can always “step in” personally and reach out to the client directly: “Hey accounting mentioned that there’s a pending invoice…”. For more ideas on how to follow up on pending invoices, check out these examples.
You’re not alone in this
If you thought the tweet from Jason Fried was interesting, you’ll be pleasantly surprised to learn that other successful entrepreneurs like Tobi Lütke (Shopify’s founder and CEO) confessed to doing the same thing.
Shopify order numbers start at #1001 because of exactly that!
— Tobi Lütke (@tobi) October 15, 2019
“Let me get accounts receivable to get that invoice over to you”
— Henry Schuck (@HenryLSchuck) October 15, 2019
You’re faking things because you /think/ it matters to someone else. You’re worried about looking like an amateur, a beginner, etc. That’s insecurity. And that’s ok.
— Jason Fried (@jasonfried) October 15, 2019
Lots of *we*s when it was only me.
— Matt Secoske (@secos) October 15, 2019
We all start somewhere, and building a business is hard – but there are some tricks to make the freelance transition a little easier. Good luck!