Jumpstarting a new freelance business

Q: I recently got laid off from my programming job, but the company hired me back as a contractor for 15 hours per week. I love the freedom freelancing brings me, but 15 hours isn’t enough to live on. I’ve tried eLance and GetAFreelancer, but haven’t won a job yet — even bidding $25/hour for my efforts, which is far below what I was making when I was employed. What do I do?

How do you jump-start a new freelance business?

1. Forget bidding against the global market.

If you live in an emerging economy, the bidding sites are perfect, because the clients from mature economies are happy to pay you double what anyone local would be able to pay you. But if you want to build your business and live in a mature economy, forget the bidding sites and focus on developing your business with clients closer to home.

2. Create a Web Site.

Even if your marketing strategy doesn’t involve using the Internet to drive sales, you need a web site to lend your freelance business instant credibility. I’ve seen this in many other industries: when you cold-call a customer on the phone, the first question they have if they’re at all interested in what you’re saying is “Can I take a look at your web site?”

If you are technical, you can create it yourself, but I recommend getting advice from a marketing person and a web designer to make sure your site messages and look aren’t working against you. Hire each for an hour or two and you’ll likely find their advice is worth much more than you pay them.

3. Raise Your Rates.

You have no customers and you raise your rates… Sounds scary, huh? As I’ve mentioned elsewhere, the rates you set are part of your client marketing messages. Do you want to be the lowest-cost provider of services or the high-quality provider? Hint: the high-quality provider works less and gets paid more. What rate should you set? That depends on your local prevailing rates for the types of services you offer. If you’re not sure what local rates should be, call a rival micro-consulting firm that offers similar services and ask them what their rates are. Then set your rates accordingly.

4. Offer a Limited Time Discount.

This tip is really part of #3. Once you’ve set a higher rate for your services, turn around and offer a discount for any new client that starts a project in the next three months. The discount needs to be in the 15-25% range and needs to last only as long as the client’s first project. This might tip a few straddling clients over to your side of the fence.

I never recommend cutting rates during a meeting with new clients unless you are offering that discount to all clients at the same time. You never want to set a price and then negotiate downward from there, because it sends too many wrong messages to your clients.

5. Get Clients to Call You.

Sounds so thoroughly daunting: get the client to call you. How do you do that?

If you’re in a small community, networking is the best approach. Join and participate in several business, social, religious organizations and make sure everyone there knows what you can do to help their businesses grow or save money. Small communities are all about everyone knowing everyone else, so your best bet is to get plugged into the existing community networks.

If you’re in a larger city, networking will only take you so far, so then you want to look at advertising and driving potential customers to your web site. I’ve found the best return on investment is targeted pay-per-click ads, small business online forums, and free/inexpensive service directories that are organized by service and location (e.g., FreelanceLocalTech). Be prepared to spend $200 – $300 per month on marketing your services.

The above tips assume that you have at least enough money in the bank to support yourself for 6 months without any income and to spend the necessary money to market your services. If you don’t have that kind of money in the bank, you should consider talking to a local recruiting firm (or three) about getting a short-term (3-month, 6-month) contract to help build your reserves while you get your business’ marketing efforts in order.

We have other tips on FreelanceLocalBlog for helping your marketing efforts, so check those out as well.