Starting your own business is always hard. Everybody starts from the bottom. There has to be an idea of what to sell, to whom to sell, how to find them, and how much can they pay for it.
Freelancing is no different from other businesses in its essence.
In this short article, I will outline very simple principles and the way of thinking that will help you think through (and think over) a basic business plan of sorts without going too technical about it. This is a practical guide for anyone hoping to build a successful freelance business that reaches the global markets in particular, such as freelance sites and online platforms that seem to be growing every time I check.
It all starts with defining your expertise
The most important thing is to understand the nature of online freelancing. It’s an expert’s game when done right. Why? Because in any other game you would end up in very tough competition when you enter the global market.
You can only hope to be an expert in a field that you know extremely well. Don’t get me wrong, you don’t need a Ph.D. necessarily (although it really helps!) but you do need the ability of an expert.
Then, what’s an expert? The common nominator in any field is the ability to predict and estimate “how things will go” given the original statement of the problem to be solved. A cardiologist knows how long it will take to perform a bypass operation. An expert designer knows how long it will take to create a visual identity of a certain size of a website. An expert programmer will know how long it will take to create a bug-free program of a certain specification. An expert knows the steps toward the end result by heart.
The ability to see the certainties and separate them from uncertainties before taking any execution steps is how expertise shows to non-experts. Experts know what will happen before it actually happens. That gives a distinct advantage in any online freelance marketplace when competing with non-experts.
Let me explain why.
When you are thinking of starting a freelance business and choosing the starting point, what service to sell to whom, all you really need to think is what of those things, that you are good at doing in practice, you can also predict with a very high level of certainty.
Let’s now think this the other way around. We can cast aside the cardiologist as there seem to be very few of them or none doing freelance. 😉
You’re a designer with some work experience which you have gained when working in a team with other people in your 9-to-5 day job. You are fluent in executing the assignments given to you and you can contribute to the overall work of the whole team. You are a good designer.
Now, you turn to freelance. You find a potential client (eventually) who explains to you the aim of the project you are hoping to execute. It is now 100% up to you to promise what it will cost to the client in terms of money and time, both being finite resources of your client. A non-expert may promise a fast execution, but it might prove to be fatal to the client’s business if the timeline is stretched because of having too many design iterations, not getting the milestones completed in a way that the client is happy with, or because of any other uncertainty that might occur.
Now, you are a good programmer, fluent in a couple of programming languages, and capable of coding pretty much anything your cozy day job requires when done as a part of a good team.
Then you turn freelance. Typically, making promises to the first couple of clients tend to be slightly optimistic in terms of getting the scope right from the beginning, managing numerous bugs in the early stage code for which you used to have a tester to help with when you had your earlier job. For this reason, many developers “stay safe” and work only for other programmers, so that the communications, expectations, and the whole environment in total is more similar to working in that day job.
Working directly for the end-customer might turn out very hard when there have not been many chances to develop skills for drawing software specifications from non-technical clients or other skills that in the day job environment have been taken care of by others. Even quoting fixed-price jobs might turn out problematic.
An expert would be able to see the way through from the initial problem definition, so to say, all the way to the end result, and to define all the steps required to get there. That includes the parts that are uncertain in the beginning when the price tag would need to be set nonetheless.
In the online world, an expert might be even able to do that on the spot during the very first call with the client. That is expertise!
Expertise is about knowing what will happen by just examining the problem of the client.
The difference of your freelancing skills to the client
When you are doing freelancing online, one of the most important abilities is to take charge of everything that the client requires around the problem space, having the ability to go beyond the original assignment if needed and be predictable at every step of the process at the same time. This may sound rather simple in theory, but the practice of everyday freelance work is closer to the exact opposite.
One interesting observation that I’ve made while being knee-deep in the global freelancing markets is that one of the things that separate experts from non-experts are their quick response to complicated work assignments after 1-2 phone calls with the client.
There are two major aspects that I have noticed.
First, non-experts may rely on a strict process that is imposed on every project regardless of what the client is asking, such as checklists and interview sheets. Those are made to serve the purpose of defining a typical project. Experts, on the other hand, tend to rely on their ability to ask only the most relevant questions given the context of the discussion. And usually, only the relevant questions so nobody’s time is wasted on details too early on in the process.
Second, experts seem to tolerate negative business outcomes whereas non-experts might take them as “yet another gig I lost.” After scanning what the client is after, experts are comfortable with saying “this cannot be done” with the time and budget constraints described by the client or because of some other practical reason, e.g. remoteness of the work mode. I remember declining a good project right away I understood the work cannot be done efficiently remotely and the client had absolutely no slack for a travel budget. The project would have taken too much time from every party: the freelancer, the client, and the client’s customer.
Experts don’t mind not getting a gig that seems risky. This is mainly because of the knowledge of what executing a very risky project would do to the expert’s freelancing business. Losing the time for doing less than an expert’s work would be bad business. Non-experts, on the contrary, tend to go into the “I’ll do anything” mode which is particularly prone to misunderstandings, mistakes due to hurry, and other hassles that come with the fact that one has to stretch really far to meet the client’s requirements if even getting there at all. In the worst case, there are too many promises made to too many clients which makes the entire business implode.
From the expertise comes the offering
Now that it is clear what your expertise really is, the next question is what tangible things it can produce. Project work is the obvious high-level answer, but it is better to be much more specific in order to find a suitable clientele and a way to approach them. And there is a simple reason for this.
As I have interfaced with hundreds of other freelancers, it is always those non-experts who answer this question with circular logic, for example, “I develop WordPress sites to anyone who needs WordPress sites.” That part is probably obvious. When I query “what kind of WordPress sites do you develop that is better than the some other developers’ WordPress sites” as indeed there are thousands out there in the global markets, the usual reply is silence or something too naïve to be taken seriously, such as “my sites are better.”
And therein lies the problem!
The understanding of what problems you can solve more efficiently than most makes the biggest differentiating factor between experts and non-experts in terms of getting the offering and therefore the market right. It should be obvious that solving problems that any other person can also solve will never pay very much in any industry. A solution to a difficult problem produced in a predictable way (which means, within budget and timeframe), pays probably many times more.
It is purely about Game Theory.
What Game Theory?
Assuming the overall value of the entire market of any domain is $X, the number of competition by the players in the game defines the average payoff for each player, $X divided by the number of players.
The game of making WordPress sites may be huge in terms of market size, but so is the number of players. Therefore, every freelancer’s ideal state is to be a significant or even the dominating player in a small well-defined game rather than being out there competing with everyone who has even a small overlap with your own expertise.
It is a more efficient business to get good and very specific gigs with minimal effort rather than getting all kinds of gigs with a lot of effort each. Simple, right?
This means you can simply define the game you want to play! It is completely up to you, in theory.
In practice, what many seem to struggle with is the lack of good examples vs. the amount of not-so-good examples of how to make a decent but not great freelancing business. Something that keeps you above the surface for a year or two.
Most can figure this out just by watching what most other people with similar businesses do. People go and copy each other without ever finding their own game ending up offering the same as the others, in the same way as the others, to the same people as the others. Heavy competition. That leaves only one factor that can give a competitive advantage: price. And that is the game you should not be playing since there is only one obvious way it can go in the future – a constant competition with ever-lowering prices.
The main point here is to understand that you can quite freely define your own game first, then go out and find the market where that game is played. Skip playing the exact same game everyone else is already playing! Some would argue that you should always develop business for a certain known market, but guess what – we are now in the global freelancing economy where almost anyone with an internet connection can try to sell almost any service to almost anyone else.
There is no real reason for a freelancer to try to analyze and catch market trends and to develop a new offering for the biggest trends. Those things become important when you try to build a scaleable business for sure, but for a one-person business, I’d say the world is large enough as it is. For many of us career freelancers, just a couple of good projects a year might make a decent business.
Simply put, you are completely and 100% free to define your own game as long as it is built realistically ground up from your very own personal expertise.
Where might the clients be lurking?
Once your offering is getting clear, finding a way to reach the clients is almost like a formula that can be just applied to practice:
- Write down the problem that some people have and the solution you offer in a very efficient way.
- Imagine all other people in the world who can deliver a less efficient solution to the problem.
- Imagine those people who can offer an equally efficient solution to the problem.
- Imagine a dream client who needs the solution more than most. Typically, these are people whose business you can enable and not people who would only gain a slightly more convenient way to execute it.
- Research where those dream clients go to find the solutions they need.
Now, 1) is your core offering, a classic solution-to-a-problem kind of formulation. 2) is the competition you do not need to worry about as long as you can explain your difference to them. If that distinction is unclear, you will not be seen as an expert. 3) is your actual competition. The number of these people in the world dictates the average payoff in the market you are engaging in.
4) is your game: how to consistently find those clients who need more than what most can offer (2) and depend on what you can offer to make their businesses successful. Succeed in finding them and the game is yours! Fail and you should prepare for a pricing battle or get back to your safe day job. 5) is a simple and monotonous task if everything worked out in the previous steps, and even if it did not, this is a matter of putting in the necessary effort. This is particularly easy if you have been part of the client’s industry before as you already know most of the places where they look.
In other words, you can define the problem space you wish to engage in, you can define your solution, and you can define your clientele. All of your freelancing business is defined by yourself only!
The exception that proves the rule
To be honest, the above is not completely true in the sense that it is the only way to define your freelancing business. It is not.
I have many freelancer friends whose businesses start from the market need very much in a way it is written in all the books about business development. They do not have nor do they really need any particular skill that is very different from others.
That game is the local game played with the people in your immediate vicinity, typically in the physical space. It is quite easy for a certain type of people to start taking work tasks from their friends, ex-colleagues, and other contact and simply start doing work that saves the client’s time. That means having a local client base consisting of only those people who are already within a circle of trust. That’s a viable approach too!
I would only argue that it would never get as good as the global game. Yet, the logic is the same in its essence. All you need to be is the guy who is seen as the go-to person when facing certain well-defined problems. You only need to beat the competitors your clients get to be in contact with. Sometimes a long business relationship is the only factor between hiring you over another guy, and that is perfectly fine. Be that go-to guy and you will be viewed as an expert of sorts.
The only thing to mention here is that when you start with the market, you end up going with the market too. The main concern then is if you are selling something your clients need on a regular basis or something each client needs once during their own business development process. The latter option will put you in slight danger, since finding a new client through forming good business relationships in your physical vicinity may not happen overnight. There is a risk of starvation.
The global game played online is played fast and changes fast, which obviously produces the risk of getting outdated very quickly. That happened to me, so I shifted my core offering slightly. If the core skill is deep enough, it doesn’t take long to learn the next skill which is similar in some way.
What experts can charge?
If you play the local game and mainly sell to the people you already have some relationship with, your contracts are inevitably prone to negotiations. Timing may be a crucial part of an everyday freelance business since those clients who are interested in making their own businesses more efficient by paying lower rates will not hesitate to press your buttons, pull your strings, etc. and ask for lower prices when knowing the fact that you may not have many other options. The local game is almost always a game that follows the market price (please note: not always).
The global game is fundamentally different. Since your business does not depend on the number of people you already know, you will not need much time spent in getting a new client, it is just a matter of being there where your dream clients are. Just pick the ones you like best! Charge them proportionally to the level of enablement you offer to their businesses. Focus on enablement, not refinement, always.
A simple way to think of enablement is the process of expanding the complexity of the end result as well as the process that is required. Let’s examine the theoretical case of product development as a whole. In this example, it does not really matter what the product is, what industry we are examining, or what other specifics are involved. The base logic, in theory, is this:
- A freelancer capable of making a small part of the product as part of the client’s team gets paid the same as the client’s team member making other small parts of the product.
- A freelancer capable of making a complex part of the product that the client’s organization cannot make gets paid more than an average member of the client’s team.
- A freelancer capable of making the entire product gets paid the same as the client’s entire team. (Please note, this is where the real money is made!)
- A freelancer capable of making a better product than the client can produce or even imagine can name his or her price as making any comparison to the client’s own team is no longer meaningful.
That is all there is when thinking about pricing, at least in theory. In each case, the client gets a clear benefit of hiring a freelancer to get the job done. The benefits are the lack of overhead costs, the lack of office space and tool costs, the lack of almost all other costs that having a full-time employee produces. Then the only thing setting the freelancer apart from the in-house team is the level of completion of the final product that the client can sell.
The above way of thinking is a practical guide for any freelancer to assess the price range of the services offered. As long as the solution is delivered to the clients in a more efficient way than their other options provide (such as an in-house team), any rational person can do the math and see the opportunity of making the business more efficient, thus, more profitable.
Having expertise can pay off very nicely.
Start defining your own theory!
Now, it is your turn. What is the solution you can provide more efficiently than most? Who all needs that solution to enable their businesses? Who is your dream client? Where do your dream clients find their current solutions? What is the difference in efficiency between your solution and an average solution? What is the level of completion of your solution compared to what the client currently has?
If this thought exercise helped you to decide how to specialize as a freelancer, I would be honored to hear from you. I would be equally honored to hear about your freelancing experiences and the challenges you have faced relating to competition, expertise, and the search for good clients.
Define your own game!