Early on in starting out on your own, you’ll want to make alliances and choose suppliers for those services or products that you don’t offer yourself.

A word from the wise: be very careful when choosing a supplier. Using a third-party product or service for a client project is akin to offering a raving endorsement about them, so it’s important to consider your options before making your decision.

As your freelance business grows, you will find yourself using a multitude of suppliers. You’ll find that whole areas of your business rely on them, and they in turn will benefit from the business that you bring them.

You’ll need a domain name registrar, a hosting company, an office stationery supplier, a printer for business cards or other printed matter, and possibly an accountant or lawyer—or both. There will no doubt be other suppliers along the way. And then, of course, there’s the large question of outsourcing—as we’ll see, it’s a false economy to spend time struggling to fulfil the complex requirements of thorough bookkeeping, to use a common example. There are experts to do it quickly and easily while you devote your time to the work at which you excel and that makes you money.

Spend any amount of time on web-based forums frequented by freelancers and you’ll inevitably find discussion threads regarding freelance tales of woe—freelancers losing all of their data as a result of using the cheapest hosting company they could find, or having suppliers directly contact all of their clients, offering to undercut their best deals.

Note: Lessons Learned
Don’t leave backups to your hosting provider. Regularly back up client sites, just in case—this may save you in the future!

If you’re going to resell third-party services or products, ensure that you have a written contract stating what is acceptable and what isn’t. The last thing you want is for your hosting company to go directly to your client base and offer them a great deal to cut you out of the picture.

Do some online research, and read up on the experiences other freelancers have had with the suppliers you have under consideration. Forums such as Web Hosting Talk (see the Reseller Forum) and the SitePoint Forums (see the Web Hosting Forums) have plenty of posts pertaining to which hosting companies treat their resellers well, and which don’t.

The same approach applies to most suppliers you’ll require—there are domain name registrar reviews, printing company reviews, and plenty of other sites and forums to be found.

Once you have chosen a supplier, I encourage you to build a real rapport with them—a great relationship with a supplier can be worth a fortune in a time of crisis, or when you need something done absolutely drop-everything now.

Asking for Advice

One of the disadvantages of a freelance life is working in isolation. You won’t have a team around you, and at times you may feel as though you’re the last person on earth.

This is even more obvious when you realize you probably don’t have someone to give advice. Sure, your partner or family can help to a degree, but they can’t answer questions about your chosen profession in any great detail, unless web expertise runs in the family.

Look through your contacts, and see if you know someone who would be able or willing to play an informal mentoring role. You may be surprised as you look through your contacts on social networking sites or in your address book as to who could give you a hand; it’s often even more surprising how willing people are to be helpful.

Look for freelance or web industry groups that have meet-ups. There are groups like Refresh, Port80, BarCamp, web design meetups, and more, where you can mingle with like-minded freelancers to share stories and ask for advice.

If there are no obvious candidates among your contacts and no local groups, make contacts through discussion forums and your extended networks, or even consider starting your own group. A buddy system between other freelancers, or with a mentor who’s been doing the freelance or small business gig for a couple of years, can provide an invaluable sounding board and information source.

When setting yourself up as a business, you should consider the implications of different business structures. If you intend to take on staff within the first few years, you may wish to set up a corporation. If you plan to remain a solo worker, having everything set up as a sole proprietorship may be the best solution.

Having said this, consider speaking to an accountant and possibly a lawyer to seek advice about your particular scenario. You could also speak to local business bureaux (such as SCORE) or associations. They’ll take into account your current personal and financial situation, as well as your legal jurisdiction. Requirements for different business and company registrations will vary depending upon your location.

Each different structure can have a considerable impact on your taxation benefits, your licensing and governmental costs, and your ability to grow the business in the future.

The main differences between a limited liability company (an LLC) and a sole proprietor arrangement reside in the varying levels of possible taxation benefits, legal protection, ability to obtain finance, and your legal requirements.

Setting up an LLC structure has both advantages and disadvantages. The advantages include:

• greater legal protection—If a client sues the company, only company assets can be seized to pay any judgement, not your own car or house.
• greater ability to obtain credit—Many financial institutions and lenders have a preference for a company, rather than an individual, for business finance.
• tax benefits—In some states and locations, a company receives more taxation benefits than a person.

This option isn’t entirely free of disadvantages, of course. An LLC costs money to set up, and there are ongoing company-related fees. Also, financial reporting is usually more involved than for an individual.

Being in a sole proprietor structure has its fair share of benefits, mostly to do with cost. When compared with an LLC, there’s less financial reporting for most situations, fewer start-up administration costs, and not as many licensing or business costs.

There are disadvantages though, which are easily recognizable as the other side of the LLC advantages:

• zero legal protection—If a client should sue you, the court can order that your assets be taken to pay any legal judgment.
• less access to credit—Business loans are likely to be harder to get for a sole proprietor than for an LLC.
• tax burdens—You may be taxed more than if you were a company.

Ideally, whatever structure you create now will mean that you aren’t paying more than you need to in fees and costs, yet allow you to be flexible enough to accommodate change as your business and your direction evolve.

It’s also a very good idea, regardless of your structure, to open a bank account for your freelance business that is separate from you as an individual. This way, you can pay yourself as if you were an employee, and allow a small nest egg to grow in the business account for those quieter months.

This account will also be used to pay all of your running costs, making the bookkeeping side of your new venture easier to manage.

Speak to as many other freelancers and small business owners as well, and ask them how they set up their own structure—people will soon tell you the pros and cons of their decisions, and this can save you a fortune in reorganization in the future.

Being a freelancer is really hard but it’s all about mindset. My advice? Be positive and positive things will come. Tell everyone you know about your business. Use tools like Twitter to network and get your name out there. Don’t wait for work to come to you - go to it.

About Melissa
Krissy is a freelance writer who began working in the web industry in 1995. She started Wordish.com in 2006 and specialises in creating engaging and dynamic web content.

About this Post
This post is one of a series, written by various people within the web industry. They are responses to my request for a maximum of 50 words on the topic of tips for freelance success. You can use the 50 words category to see all the answers so far.

We’ll talk more about branding yourself in a later chapter; however, it’s very important that you carefully consider the business name you plan to use, when first kicking off your freelance career. There are two typical approaches: use your personal name, or create an entirely new trading name.

Let’s look at these options in more detail.

Using Your Own Name

Using your own name is a fantastic way to build a personal brand. Taking this option depends on what your vision of the future looks like—if you plan to hire staff at a later date, you may want to avoid using your own full name, but there are still options available even if you do; for example, Burke Design & Development; Miles Burke & Co. On the other hand, if you have every intention of remaining a one-person show, giving yourself a name like “XYZ Corporation” can be considered misleading, as it won’t take long for your clients to realize that you’re a solo worker.

Note: Anything’s Possible!
Many people start off never expecting to take on staff. Don’t rule this out, unless you feel strongly against it. I once couldn’t picture myself hiring employees … and at the time of writing I have 16!

This theory assumes your name is unique enough to be memorable, and that it’s easy for your clients to pronounce. If your name is Bob Smith, you may find that it’s too common for business registration and other registrations, such as domain names or intellectual property.

To recap, the advantages of using your personal name include:

• it builds a reputation around you
• it’s normally easier to recall, since clients already know your name
• it can avoid misleading clients if you plan to stay solo
• it looks far more personal and (depending on the uniqueness of your name) can make you easier to find on the Web

Disadvantages of using your own name include:

• it limits you in terms of hiring staff and possibly even selling the business, if you reach that point someday
• it can make it harder to rank on search engines if your name is very common
• it may be hard to pronounce if your name is very uncommon

Using a Fictitious Name

Irrespective of the business structure, having a business name unrelated to your personal name has a number of considerations that need taking into account.

A business name which when read phonetically is still pronounced correctly is perfect. Pfizer could be a challenge; Sigma is fairly unambiguous. Don’t get too clever with creating crazy business names—most people would regret having to answer the phone with the greeting “Smelly Shoe Design” before long.

Having your main service as part of the name makes sense as well, although be warned against making it too specific. For example, perhaps you’re a designer whose short-term plans are to design web sites only. You’ll need to consider whether you plan to expand into other forms of design in the future. Having a name like “XYZ Web Design” when you’re pitching for a logo design project may not help you beat your competition, so beware of suggesting that you’re only capable of providing one service.

A good business name should be easy to recall, evocative, pronouncable, and unique. You’ll want to register the domain name, so run a WHOIS on your shortlist to rule out those already registered. Don’t just consider your own country extension—register as many extensions (including the top-level domains, .com and .net) as possible.

Warning: Unexpected Domain Names
Take a step back and look at your domain name carefully! There’s been more than one business that has come up with a great trade name and bought the (in)appropriate domain name to match:

• Experts Exchange: expertsexchange.com
• Powergen Italia: powergenitalia.com
• Therapist Finder: therapistfinder.com

The advantages of creating a new name for your business are:

• It keeps your personal and business lives further separated.
• It allows infinite choice of business name.
• It allows you to tailor the name according to domain name availability.
• It’s easier to sell your business or client base in the future.

Disadvantages of using a custom name include:

• You’ll need to exert some energy to get a new name to stick.
• You could have issues finding one that you feel comfortable with and fits you well.
• It’s not an easy process to change the name later on.

If you do decide to use a created name, start by creating a shortlist of options, and then create a spreadsheet. Populate the first column by doing a WHOIS search and finding which domain names are still available (both geographic and top-level).

Then, fire up your favorite search engine and search for those business names. What are the results? You wouldn’t be the first start-up to make it this far, only to find another product or business using the same name. It’s better to do this research now, rather than when the business cards have been printed … Try predictable misspellings of the words, too—often a business name may be only one letter different from another, so make sure you check first!

Thirdly, consult your local trademark database and see if there are any trademarks of which you need to be aware. Even very similar words may be worth avoiding.

You should also speak to some friends and colleagues. Ask them what they think of each name in your refined shortlist, and narrow this list down even further. It’s better to do this face to face to observe an immediate reaction, rather than by email or phone, where they may have a longer time to consider it—you want their gut response.

Finally, go with your instinct. After all, it’s your creation, and you have to like it. If, after hours and hours of soul-searching, you just aren’t happy with your choice, try again or consider using your own name.

Example 2. Bam Creative
When considering my own business name, I had a multitude of options. I liked the idea of incorporating my name in the business identity; however, I did want to leave my options open in case I ever hired staff.

Although my name (Miles Burke) is fairly unusual, the domain name milesburke.com was taken at the time, and I didn’t want to tie it in so closely to me in any case.

My initials are MB or MAB in full, and I didn’t believe these really stood out. However, when you reverse them, you end up with BAM, which I felt suggested impact. I knew that Bam was a very popular word, though, so I assumed there was no chance of getting those domains using it by itself.

Although most of my work at the time was web site design and development, I was occasionally brought in on corporate identity design or consulting projects. I’d already decided that I planned to stick to creative work, so I ended up choosing the business name Bam Creative.

This allows my business to work on anything from web sites to logos and anything else that can be broadly considered creative, and still be true to the name. The word Bam is generic enough for most people never to make the connection that it’s someone’s initials, and certainly not the reverse of someone’s initials!

Funnily enough, I did manage to register the domain bam.com.au, but I had no chance of getting any top-level domains (.com, .net or .org). Luckily, I got the full bam creative business name versions of these.

Keep a buffer of cash on hand. When that big client doesn’t pay on time, it helps to have something to fall back on.
Hire an accountant. The peace of mind is worth it.
Be nice to EVERYone. You never know who your next client will be.
Network, network, network!

About Melissa
Melissa Ek is a designer (web & print) based in Austin, TX. She can’t believe she’s been freelancing for nearly TEN years!

About this Post
This post is one of a series, written by various people within the web industry. They are responses to my request for a maximum of 50 words on the topic of tips for freelance success. You can use the 50 words category to see all the answers so far.

An important element of this big planning phase you’ll need to do before (or while!) you’re making your move to freelance is to start preparing yourself for some of the expenses you’ll be faced with over the first few months.

Now, I’d like to say there won’t be any costs, but that’s simply not true. However, I can say that shopping around for the best deals, looking for opportunities to swap services with suppliers, and staggering your expenses will certainly alleviate the sting of spending money when all you want to do at this stage is earn a little.

There are immediate costs, depending on your current situation, and then there are costs that you can delay for a while. The best method of allowing for these costs is to create a list, prioritize what you need in which order (based on your current situation), and then expect the higher end of the price range. That way, when those costs work out to be cheaper than anticipated, it’s a bonus for your bottom line.

“Must have” costs include:

* business card printing
* domain name registration
* web site hosting
* telephone costs
* hardware
* software licensing
* legal or licensing costs

“Should have” costs include:

* insurance for office contents
* income insurance or business continuity insurance (if you’re able to be covered)
* office equipment (desk, chair, light, filing cabinets, printer, and so on)

Ideally, you would cover these costs at the same time as the must-haves, but the reality is most people won’t be able to take such a budget hit in their first month of freelancing, so they can be slightly delayed.

Tip: Thrifty Bargain Hunting!
Don’t forget how much cheaper it is to seek out second-hand office furniture and equipment—you can find bargains through the likes of eBay, your local trading post, or used furniture stores. You can set yourself up with perfectly functional trappings at a fraction of the cost of all-new, shiny furniture.

“Nice to have” costs include items such as:

* new hardware
* dedicated servers
* magazine subscriptions
* industry association memberships

These would be great if you have the capital, but they can easily be delayed if circumstances dictate.

Through good planning and careful attention to your cash flow, these costs won’t have as much impact as they may seem to have now. We’ll go through finances in more detail in the next chapter.

Note: Leasing versus Buying
When it comes to any high-investment equipment you might need, leasing is a well-known method of improving your cash flow by paying a far smaller amount per month over the life of the lease.

Although the end result is that you pay more for the equipment than if you bought it outright, the benefits of having more cash on hand can be an excellent compromise. You’ll often be surprised at the small difference in final figures, and realize the benefit of being able to hand the equipment back or upgrade it at the end of the lease term.

Be unique!  Have that special something that will prompt your client talk about you to others. While you may be unable to compete with other freelancers or businesses on knowledge, price, etc., you need to have that special something that makes them want YOU. Even if your work isn’t spectacular, you’ll be spectacular to work with.

About Cindy
Cindy is visual designer & information architect who got into designing with web standards in Ottawa, Canada 8 years ago & currently has Attitude e-media in Mandurah, Western Australia. Our mantra is “build websites with the respect that the Web deserves”.

About this Post
This post is one of a series, written by various people within the web industry. They are responses to my request for a maximum of 50 words on the topic of tips for freelance success. You can use the 50 words category to see all the answers so far.

All this talk of business-planning documents and SWOT analyses may be making your head spin, and you’re forgiven if you find yourself glossing over them in your rush to make a tangible start on your own business. However, I strongly suggest that you take a moment to write down some simple goals and then define some milestones.

Goal-setting helps filter all of the thousands of thoughts and ideas you have into a list that’s far more manageable. High achievers in every field from sports to business consistently suggest that goal-setting is an invaluable part of the process. Goals can help you define your objectives, help you to understand what’s important to you, motivate you towards achievement, and build your self-confidence.

I find goal-setting is most helpful in distinguishing what’s important and what’s irrelevant. This helps me concentrate on what really is crucial to me, and gives me the freedom to spend less time on the rest.

Many people use the acronym SMART when creating goals, as well as for other project management methods. SMART stands for:

• Specific: is the description of the goal precise?
• Measurable: do you explain how you will measure results?
• Attainable: is it possible to achieve, with some effort?
• Realistic: do you have the power to control the results?
• Timely: do you have a deadline for the goal?

The reasoning behind SMART holds that a vague goal is an almost useless goal. As an example, say I needed to win more projects; I could define a goal as, “Get more web site projects.” Sure, this is better than nothing, but how much more inspiring would it be if I changed it to say, “Win five more web site projects this quarter.”

See the difference? I’ve been specific (I want to win more projects); I’ve been measurable (I want five more in the next three months); my goal is attainable (who couldn’t win five projects in three months?); my goal is realistic (I know I can deliver five projects within that time); and it’s timely (it has a three-month deadline).

Setting a great goal should challenge and stimulate you. If I downsized my goal to winning one project in the next two months, I’d be more likely to slack off. It also needs to be realistic, though, so some impossible expectation of getting ten projects in three months would set up almost certain failure. It’s a good idea to limit yourself to just a handful of short-term and medium-term goals—writing an exhaustive list of everything you would like to complete prior to your death is a sure way to demotivate yourself.

Tip: Goal-setting Help
You may have heard of the popular Web 2.0 application, 43 Things. This site presents a great example of goal-setting at work—try listing your goals on 43 Things, or simply use a text file or whiteboard, and see how you go!

Now, when we think of milestones, we normally recall a large web project we’ve been involved in. Think of a milestone as a landmark towards your longer-term goals.

A typical milestone is to realize a situation where you’re earning more than your current salary within a year of going solo. There are some smaller milestones you can place along the way to see how you’re shaping up.

The first milestone would be having the ability to pay yourself enough to survive on. Let’s say that’s about half of what you earn today. Set a milestone based upon how long you believe it should take to reach this point—it may be a month, or perhaps three months, depending on your situation.

Now, let’s consider your return on investment, which is initially to reclaim all of those start-up costs involved in your transition to freelance life. These vary, of course, from person to person, but you should have an idea of how long this would take.

The third milestone is that of bringing home the same salary as you currently earn. Will this take six months, or nine months, or even longer?

Write down your milestones and refer to them over the coming months—you’ll be surprised how quickly you reach them, exceed them, and find yourself setting more goals for future success!

Spend at least two to three hours a week on networking and relationship building. The relationships you make may not pay off immediately, but you never know when someone will pop up with a job or referral. Join LinkedIn, get involved locally, and always be willing to collaborate on jobs.

About Bob
Bob Sawyer is the owner and head bottle washer of Pixels and Code, a web development shop in Atlanta, Georgia. He has freelanced on and off for about eighteen years.

About this Post
This post is one of a series, written by various people within the web industry. They are responses to my request for a maximum of 50 words on the topic of tips for freelance success. You can use the 50 words category to see all the answers so far.

The planning term SWOT first appeared in the 1960s. A SWOT analysis is really just a simple strategic planning method that helps evaluate projects and businesses. It’s based around a four-square grid, shown in Figure 1, “The SWOT grid explained”, which covers Strengths, Weaknesses, Opportunities, and Threats. I’ve used it a number of times to help me make decisions around new products or service offerings under consideration, and it works just as well for business models.

Example 1. Business Planning Questions

summary

* What is the initial concept?
* What is your current situation?
* What will your key success factors be?
* What are your longer-term vision and goals?

market analysis

* What does the current market look like?
* What is your target market?
* What are the characteristics of your perfect client?
* What do your target clients require?

competitive overview

* What does your industry look like?
* Are there many competitors?
* Who are your five closest competitors?
* What products or services do they offer?
* What opportunities do you have to be unique? (Can you fill a niche or be different from your competitors in some way?)
* What are the risks and threats?

sales and marketing

* How will you attract clients?
* How can potential clients find you?
* What marketing activities would you consider?

plan of action

* What do you need to do in order to kick things off?
* What should you do in the medium term?
* What are some longer-term plans?

Figure 1. The SWOT grid explained

To start your own SWOT analysis, list all of your strengths and weaknesses—these can be thought of as the internal elements, over which which you have some degree of control. Continue by identifying all of the opportunities and threats that you can—these are generally external forces, such as competitors and the industry at large. Then, look for ways to use your strengths, improve on your weaknesses, exploit the opportunities available to you, and fend off the threats.

A SWOT analysis certainly doesn’t need to be as long-winded as it may sound; I have found some of the most useful SWOT analyses are those that fit onto a single page. By way of example, let’s look at our very own Jacob and Emily.

Jacob has put together the beginnings of a SWOT, which looks like this:

Emily, on the other hand, has put together a SWOT that is more like this:

These examples are only a few lines long, but you can easily extend them to a page or more. The concept is really a succinct and useful method of establishing your pros and cons.