There are a ton of different reasons people choose to freelance. Sometimes it’s born of necessity: you decide you need to take jobs on the side of your regular gig for extra money, or you’re suddenly unemployed. It makes sense to use your existing skills to start a freelance career in either of those cases.

Others take a more calculated step into the world of freelancing. Maybe you’ve had enough of the corporate world, or maybe you’ve been freelancing all along. You’ll have more flexibility, more control over your own life (both work and personal) and more choice over the kind of work you take on.

There are pitfalls, too; many freelancers like the idea of taking afternoons off on occasion to pursue their hobbies, only to find that they end up working 80-hour weeks just to make ends meet or keep up with all the work coming their way. Others struggle to find enough work, or they have issues with setting prices so that they can make a sufficient living.

Regardless of the reasons, there are a lot of details that go into setting up a successful freelance business. And this guide will aim ot cover all of them.

Setting up your workspace

While some freelancers will rent a commercial office space, most are likely going to start their freelance careers from home. That means setting up a work environment that’s efficient and distraction-free.

If you live alone, you may opt to just work from your kitchen table or a desk in the corner of your living room, at least to begin with. In either location, you can minimize distractions because you are in sole control of your living space. But if you live with others, whether that be a significant other, a family, or roommates, you’ll need a more private space. Try to find a dedicated space, preferably with a door that closes, so you can shut out distractions and more firmly establish “work hours”.

If you do have to carve out space in another room, it’s handy to invest in either an armoire or a secretary-style desk so that you can close it up at the end of the day and shut out your work life (at least a little bit).

Finding work

Before you start looking for work, make sure that you have laid the groundwork. That means an idea of how you’re going to charge for your services, a stellar online portfolio showcasing your best work, and a professional mindset.

Figuring out what to charge

What to charge is often one of the most difficult parts of starting any new freelance business. Charge too much and you may not get any clients (or those you do get may feel like they’ve been ripped off if the work doesn’t live up to their expectations of value). If you don’t charge enough, then you may find you have a hard time earning enough money. You may also find that you get every bargain-hunting client out there. And the issue with clients who value price over all else is that they’re rarely satisfied or easy to work with.

The good news is that everyone struggles with figuring out how much to charge. There’s no set way to establish rates, and it’s a mixture of how much you need to earn and how much the market will bear, as well as your own value.

If you’re a new designer with only a handful of projects under your belt, you’re not going to be able to charge as much as someone who’s been working in the industry for 20 years with a number of high-profile clients. The first question you have to decide on is what kind of rate structure you want to have. Do you want to charge a flat, per-project fee, or would you rather charge by the hour? Do you want to have set package prices or quote each project individually?

Even if you decide to charge a flat rate for each project, you’ll still probably base that price on an average hourly rate. So how, exactly, do you figure that rate?

First of all, you need to figure out your expenses. That means business expenses, to begin with, but also personal expenses. You need to know how much money you need to earn on a weekly or monthly basis to make ends meet. Once you have an idea of the minimum amount you need to make, then you’ll need to figure out how many billable hours you’re likely to have in a week or month. Remember that unlike a “regular job”, you’re unlikely to be able to bill for 40 hours a week (unless you’re actually working a lot more than 40 hours in a week). There are administrative tasks you’ll need to do that you can’t bill for, as well as things like learning new skills and keeping up with industry trends.

Don’t forget, too, that you’ll need to pay taxes out of your earnings, and sometimes you’ll need to pay a higher rate than you would if you were employed by someone else (depending on where you do business). And you’ll need to cover things like health insurance and other benefits that are often covered by an employer.

One important thing that a lot of designers overlook is a certain percentage of profit. If you ever want to grow your business, or just have extra money, then you’ll need to factor profit into your rates.

As an example, let’s say you need $3600 per month after taxes to cover your business and minimum personal expenses. Your tax rate is 30%, and you want a profit of 10% of your pre-tax (gross) income. That means your monthly gross needs to be $6,000. For simplicity’s sake, we’ll figure your weekly income needs based on 4 weeks in a month. That means your weekly income should be $1500. If you figure 20 billable hours per week, that means your hourly rate should be $75. Now, let’s say that you don’t think your chosen market will handle $75/hour. What if you only think it can handle $50/hour? That just means you need to work more hours in a given week to make your minimum income requirements. And the opposite is true if you feel like you’re selling yourself short at $75/hour and want to charge $100/hour instead. You may need to experiment with your hourly rate before you find the sweet spot where you can make enough to make ends meet while also attracting enough quality clients.

As far as a per-project rate goes, the best way to establish those prices is to take your hourly rate and then multiply it by the number of hours you estimate a project will take. Be careful with this, though, as you’ll want to factor in a buffer in case you run into problems or your client is particularly difficult to work with. Let’s say you estimate a basic website with a custom theme running on a CMS will take you 8 hours to complete, including client meetings and the like. At your $75/hour rate, that means you’ll charge a flat fee of $600. But if you factor in a potential 2 hour buffer, then you’ll charge $750 instead. In some cases, you may find that you spend more than 10 hours on a project like this, and in that case you’ll have a lower hourly rate. But in other cases you may only spend 6 hours intead of 10. In those instances, you may opt to offer a discount to the client if you’re so inclined, or to simply hold on to the difference to offset the more time-consuming projects. Either one is fine. Remember: your client had no problem agreeing to the flat rate, and they’re paying for value, not for a certain number of hours.

More complex projects are almost certainly going to be better billed hourly, because there are more variables involved. Be sure to build in a bit of room in your estimate to compensate for this. A client who gets a bill for less than expected is going to be much happier than a client who gets a bill for 20% more than they planned for. And happier clients refer others!

One incredibly valuable resource for finding a starting point for what to charge is Coroflot’s Design Salary Guide. Just choose the position title that you’re working under and you’ll get typical salaried and freelance rates, and can even break those down further by geographic area. For example, a freelance Creative Director working in Massachusetts has an average hourly rate of $101.

To brand or not to brand

You may have noticed a trend in the past few years of individuals creating their own brand, often complete with logos and other brand identity elements. Not every designer is jumping on this bandwagon, though.

Branding yourself is generally a good idea, though. Creating a logo (often incorporating your name or initials), and picking a consistent image to use across the various platforms where you market your business helps to reinforce your image and your professionalism. They set you apart as a serious business, rather than a hobbyist.

How to find clients

So now that you have a great portfolio, you’ve thought about your brand, and you know how much you plan to charge, you need to actually find some clients. There are tons of sources for finding paying clients, and which ones you decide to tap into are going to depend on how comfortable you are with various marketing techniques. One key thing to remember, though, is that you should be doing something to attract new clients on a daily basis. That’s right, every single day you should be doing something to promote yourself or reach out to new clients.

Here are a few ways to find some clients:

Freelance websites

While many portfolio sites offer job boards and the like, you should also check out sites like Elance, Freelancer, oDesk, and Guru. You can list yourself on these sites, or browse and bid on jobs employers have listed. Just be aware that you may be competing with many low-cost competitors from areas with very low costs of living.

Social media

Freelance job sites aren’t the only places to find work online. You should also tap into your social networks on sites like LinkedIn, Twitter, Facebook, and elsewhere. Let your networks know you’re available for work, and ask them to refer others to you for bids.

Real life networking

You know people in real life. There are likely business groups in your area, whether it be specific professional groups or things like chambers of commerce. Be sure to let all of your personal and professional contacts in real life that you’ve gone freelance, and that you’re taking on new work.

Make sure you keep business cards with you so that you can give them to anyone you might encounter who would be interested in working with you. Putting a sample of your work on the back of the card can greatly improve its impact.

Write articles

Writing articles is a great way to get your name out there as an expert. In addition to potentially bringing you business from those who read your articles, you’ll also be able to reference these articles on your website or portfolio, further enhancing your credibility. Make sure that any article you write includes a byline with links to your portfolio and any professional social media accounts.

Find partners

Strategic partnerships can be a great way to pick up new clients from businesses with complementary services and products to yours. For example, you might consider partnering with a local printing press if you design things like business cards and brochures for them to recommend your design services to their printing clients, while you’ll recommend their printing services to your clients.

One word of caution when it comes to strategic partnerships, though: be sure that the business you’re partnering with has an impeccable reputation and that you respect the way they do business. The last thing you want to be associated with is a business who has a less-than-stellar reputation, as that will quickly become associated with you, rightly or wrongly.

Give something away

Pretty much everyone likes to get free things, as long as they’re useful. Consider giving away something like a free website theme (a basic one-page theme can be a good option), print templates, icons, or something else that will attract potential clients. White papers that can help improve your prospective clients’ businesses or newsletters with topical content are also popular.

Asking for an email address or other contact information in exchange is a great way to stay in touch with potential clients. Just be sure you make it clear how you’ll use that information to maximize the chance they’ll provide it.

Talk to non-profits

Non-profits can be a great way to get new business. Offering to do free or deeply discounted work for a non-profit accomplishes a couple of things. First of all, it’s likely to be a tax write-off in many cases (check with an accountant to be sure).

Second of all, while the non-profit might not have much of a budget to pay you, their board members are most likely involved in other businesses, who have budgets for things like design. Getting in good with the non-profit gives you an in with these other businesses, not to mention those they can refer you to.

As you can tell from above, the good news is that there are plenty of sources out there for rounding up some paying clients. The bad news is that getting from identifying where the potential clients are to actually getting them to hire you isn’t straightforward. You’ll need to compete with other designers on quality, price (you won’t necessarily need the lowest fee, but if you’re charging twice as much as the others you’ll have a much harder time landing the client), and professionalism.

Your portfolio

A strong portfolio is one of the single most important elements to a successful freelance career. Any potential client is going to want to see the work you’ve already completed so that they can have some assurance that you know what you’re doing.

Your portfolio should include a few things:

Your best work. This should be a given. Don’t include projects you’re not proud of.

Examples that show the diversity of the work you’re capable of.

Your contact information. Make sure that it’s easy for a potential client to contact you from any part of your portfolio.

You might be wondering what to do if you don’t have a huge body of good work to include in your portfolio. After all, if you’re just starting out, or if you’ve only worked in the corporate world before, you might not have much work, period.

It’s perfectly fine, when you’re starting out (or even after you’re established), to include things like mockups, template and theme designs, and redesign concepts you might have for existing sites (just be clear that that’s what they are). Template and theme designs, in particular, can be a great way to get started, as you can potentially sell them to supplement your income (or even as your primary source of income with the right amount of skill and luck).

There are tons of great sites out there that offer free or low cost portfolio hosting for creatives. This can be a great option if you want to get up and running quickly, without having to spend time designing your own unique portfolio site. These sites can often help you get more work, too, as clients may look through portfolio sites like Behance to find creatives to hire.

Here are a few of the best portfolio hosts you might want to consider:

Behance and ProSite

One of Behance‘s greatest assets is that they’re part of Adobe’s Creative Cloud service. That means it’s incredibly easy to upload in-progress or completed work directly from your CC applications. Behance also includes resources for employers looking to find talent, as well as a job board. Behance also offers ProSite, which lets you create a professional portfolio site separate from, but integrated directly with, your Behance portfolio. The services are included with your Adobe Creative Cloud subscription.

Carbonmade

Carbonmade hosts more than 770,000 portfolios, making it one of the largest offerings out there. It’s simple to use, hassle-free, and doesn’t require any HTML knowledge. It also includes a talent pool section for those who are hiring creatives. You can host five projects (and 35 images) for free, or up to 50 projects (including 500 images and 10 videos) for $12/month.

Dunked

Dunked has more than 75,000 users, and lets you create fully repsonsive, retina-ready portfolios with ease. It offers both simple editing options and more advanced HTML and CSS editing. You can use your own domain name, and there’s no visible branding on your portfolio, so no one will know it’s a Dunked site, and you can embed content from sites like Vimeo, YouTube, SoundCloud, Flickr, and 500px. There are three plans available, starting at just $6/month when paid yearly.

Coroflot

Coroflot focuses more heavily on connecting creatives with employers than many other portfolio sites. They offer free, unlimited storage of your work, statistics about how many people are viewing, following, and favoriting your work, and personalization options.

Regardless of where your portfolio is hosted, be sure that it’s professional and updated regularly.

Working with clients

Working with clients is a key part of the success of any freelancer. Happy clients refer more work to you. Unhappy clients don’t (and may do damage to your reputation by talking negatively about you or your work).

Pitch your ideas

The freelancer-client relationship really begins with the idea pitch. By this point, you should have already gotten a brief from the client on what they’re looking for, and you’re now presenting them with your specific ideas.

Be sure that you establish your expertise at this stage, while also really listening to what the client is telling you. Establishing good communication is key if you want the rest of the process to go smoothly.

Make sure you’re on the same page

Make sure that any potential misunderstandings are cleared up right away. If you’re unclear on anything your client has said, ask questions until you know exactly what it is they mean. It’s better to ask a lot of questions up front and get the job done right rather than assume things and end up totally off base from what the client expected.

Get an ironclad contract

A contract is vital when working with any client, regardless of how large or small the job is. First of all, a contract spells out exactly what is expected of each party. This alone can prevent many potential problems down the road. It’s also useful if you end up needing to send an account to a collections agency or take a client to court over unpaid fees. Without a contract, you’ll have a very hard time proving what the terms of a job were.

Your contract doesn’t necessarily need to be drafted by a lawyer, but you may want to at least have one look it over. There are plenty of templates online for basing your own contract on, many open source and available for free.

But every contract should include the following:

The name of the designer and the client

The title of the project

The starting date of the project

The deadline for the project

Any important milestones (with dates or other terms) that are expected along the way

The payment terms, including what’s due upfront (you should always get a deposit, regardless of who the client is)

Whether any interim payments are expected before the final project is completed

Specific scope of the project (be as detailed as you feel necessary)

Signatures from both parties

It can be useful to include a brief summary of the terms on the actual signature page, which includes key milestones, payment amounts (and when they’re due), and deadlines.

Here are a handful of freelance design contract templates and sample clauses to get you started:

Be flexible but don’t be a pushover

It’s vital to maintain flexibility during a project. But at the same time, if a client is consistently making changes to the scope or timeline of a project, you’ll have to learn to be firm. In the past, if you were working for someone else in a corporate setting, you may not have had this choice. Or in an agency you may have had a project manager on the front lines dealing with clients and their requests.

When you’re freelancing, you’ll have to be the one to tell your client that either something isn’t possible or that they will need to pay extra for it and/or adjust the overall project timeline. If an extra fee is involved or deadlines are pushed back, be sure to get it in writing as an addendum to the original contract.

Working remotely with clients

A few years ago, most freelance designers worked with clients primarily in their own geographic area. But technology has advanced and now there’s no reason you can’t work with clients from all corners of the globe.

You can use programs like Skype for video conferencing, online collaboration tools like those included with Adobe’s Creative Cloud, and even basics like email and instant messaging for keeping in touch with your clients.

It’s vital that you establish trust from the beginning with a remote client. Communication is key, and it’s important to make sure that you give your client regular progress updates to ensure that they continue to trust you.

Don’t limit your clients to just your local area if you really want to maximize your potential earnings. Be sure to check out our previous article on the subject: 10 Tips for Working With Clients Remotely: Part 1 and Part 2.

Planning projects and time management

Planning your projects and how you will utilize your time is key when you’re freelancing and working as your own boss. It’s too easy to decide to take an afternoon off because the weather is gorgeous, which quickly turns into only working every other morning and taking way too much time off.

All that does is add to your overall stress level and take away from your bottom line. Yes, part of the point of freelancing is to have the flexibility to set your own schedule, but you still need to make sure you’re working enough hours.

A calendar and project management app (or at least a robust task list app) are key tools for any freelancer. Make sure you enter important deadlines and milestones in your calendar, as well as any other key dates. You should also keep a calendar for personal obligations and events, so that you can make sure you’re balancing your work and your private life.

Depending on what app you’re using, you can either set up multiple calendars that you can then display all at once, or you can tag your events based on whether they are work or personal. This way you can see exactly how busy your entire schedule is.

Scheduling certain times for work regardless of what else you have going on in your schedule is a good idea. And don’t forget to schedule some time each day for your marketing, and some time each week for administrative tasks (like invoicing and bookkeeping).

The business side

While most freelancers are keen on the design aspects of their new freelance business, the business side can be daunting. Unfortunately, most design programs do not include business classes (though they really should).

There are a few basics you’ll need to deal with, primarily revolving around tracking your income and expenses, as well as marketing and promotional activities.

Getting paid

Your business won’t survive very long if you’re not getting paid the funds owed to you by clients. We’ve already discussed the necessity of having a bulletproof contract but assuming you’ve clearly detailed how much and when your client is expected to pay, what next?

First of all, get a deposit before beginning work. This deposit might range anywhere from 25-50% of the total estimate, depending on the scope and how much you’re comfortable charging your client up front.

You should have it clearly outlined if there will be interim payments due while the project is still underway, or if the balance will only be due when the project is complete. For very large projects, requiring payments when certain milestones have been met, or based on certain time periods (if billing hourly) can help prevent completing a bunch of work that you’ll struggle to get payment for. It can also be helpful to the client, who will spread out the amount due over a longer time period (which may make it easier to swallow for them).

Make sure that when milestones are met you have a note or task set to generate an invoice. Make sure terms on that invoice are clear, including when the payment is due and if the client will get a discount for paying promptly (even a small 5% discount for paying within 5-10 days can be a big incentive to many businesses). Unless you have an arrangement with your client, extending payment terms beyond 30 days can be a very risky proposition and seriously interfere with your cash flow.

What if a client doesn’t pay?

If a client doesn’t pay you by the due date on their invoice, then you have a few options, none of which are particularly pleasant for most designers to deal with.

The first step is to reissue the invoice with a note that the payment is now overdue and should be paid immediately upon receipt. Following up with yet another notice after 10-15 days is also a good idea.

So what if they still don’t pay? Hopefully you have it built into your contract that late fees and/or interest can be assessed if payment is not made on time. In that case, you should automatically generate new invoices on a monthly basis with the updated amount.

Depending on the amount due, you may want to consider small claims court (or civil court if it’s a very large amount). Sometimes even just the threat of going to court will prompt your client to pay, or at least to try to work out payment arrangements with you. Be sure you have a record of all communications with your client prior to any court filings or appearances, and also be sure to have proof of the work completed.

If you have multiple past due invoices, you may consider turning to a collections company. Since in general they don’t get paid unless they collect, you won’t be out of pocket anything until money has been collected. Just realize that you’ll pay a healthy percentage of the total amount due to the collections agency. Then again, recouping half of something is better than all of nothing. Some collections agencies will even buy the debts owed to you outright. Realize that you’ll only receive a percentage of the total, so that the agency can make a profit when the debt is collected. But this can be a great solution if you have very old debts that you’ve otherwise given up on collecting.

In any case, consulting a lawyer or accountant who specializes in this kind of thing is a good idea before taking any drastic measures to collect on the invoices owed to you by uncooperative clients.

To team or not to team

Occasionally you may have a project come your way that is too great in scope to take on as an individual. In these cases, you have three options: you can turn down the work and simply let the prospective client know that it’s beyond your capabilities; you can outsource specific parts of the work to other freelance subcontractors; or you can partner with other freelancers and work as a team.

Subcontracting can be a great idea if there are specific tasks that need to be completed that are beyond your skills (or below them). For example, say you’re creating a huge e-commerce site that needs to have hundreds of products added and checked for accuracy. That’s a daunting task for a single individual who is also working on the design and other functionality of the site, but can easily be completed by a subcontracted data entry team.

A team is often the better choice if you need a more collaborative effort, rather than just delegating specific tasks. Finding team members can be tricky, but hopefully you already have some contacts in the design industry that you can turn to. If the people you specifically want to work with aren’t available, ask them for referrals to others who might be available.

Remote teams

Working remotely with teams is a great way to expand your freelance business. For many freelancers, there may not be a huge design community in their area. By finding team members from different areas, you can expand your potential client base, too. Each of you can pull in clients from your respective geographic areas and then share the work when necessary. It splits the workload for things like marketing and client management, but at the same time it still gives you the flexibility you likely want from freelancing.

Tools like Skype, online project management apps, and Adobe’s Creative Cloud tools all make it relatively simple to work with distributed teams. You can video conference to go over things, as well as share work that’s in progress and get notes and comments from the others on your team within your regular workflow.

Build relationships with other designers that you meet in various ways. That means reaching out to design bloggers, designers whose work you admire from their portfolios, and designers you might meet at conferences or other professional development events. You never know when you’ll need to call on one of them to team up on a project, or when one of them might want to team up with you.

Avoid becoming a workaholic

It’s incredibly easy to end up working 60-80+ hour weeks when you start freelancing. Sometimes that’s necessary when you start out, because you never know when the work will dry up and leave you without a regular income. But at the same time, maintaining that level of work over a long period of time is going to inevitably lead to burnout.

So make sure that you carve out regular time for your personal life. That means taking back your weekends, and taking a day off once in a while. Sure, occasionally you might need to work a 70 hour week to get a project done for an important client. But that should be the exception, not the norm.

Schedule vacations for yourself, too. And while it can be difficult, avoid only taking “staycations”. When you work from home, it’s all too easy to check your email or take a phone call from a client when you’re supposed to be on vacation. Even if you don’t want to take an actual trip, make sure you get out of the house and away from your workspace.

Reserving your weekends for personal activities is another important step to avoiding burnout. Taking a day or two each week to recharge makes you much more efficient during the week.

Be sure to limit the number of hours you work in a given day, too. It’s easy to sit down at your desk in the morning and not get up again until you’re ready for bed. Carve out time to take a walk or otherwise take a break, and make plans in the evenings on occasion so you’re forced to step away at a set time.

You’d be surprised at how much more efficient you can be when you limit the number of hours you can work. I’ve found that on days when I only have four solid hours for work I can get as much done as other days when I have nothing planned and end up working ten or more hours. It’s all about productivity and holding yourself accountable.

Handy freelancing tools

There are a ton of great tools out there that you can integrate into your freelance workflow. Here are some of our favorites, though be sure to research these and others to make sure you find tools that are the right fit for you.

Podio

Podio is a team project management app that also offers a mobile app. It includes the ability to add multiple workspaces, and customize each with apps. And of course it has a calendar, task manager, and contact manager built in. While it takes a bit of time to get Podio set up, it’s incredibly powerful once you have it personalized to your liking. There are both free and paid accounts.

Basecamp

Basecamp is one of the most popular project management apps out there. They’ve been used by more than 285,000 companies for more than 2,000,000 projects. It works on Mac, PC, iOS, Android, and via email. Basecamp offers weekly online classes to make better use of the platform. There’s a 60-day free trial, and plans (which all include an unlimited number of users) start at $20/month.

FreshBooks

FreshBooks is a popular cloud accounting app that’s easy to use and can be accessed from anywhere. It offers automatic backups, easy collaboration, and more. They offer a free 30-day trial, and while there is a very limited free account available, paid plans start at $19.95/month.

The Invoice Machine

The Invoice Machine is a simple online invoicing service. It’s simple to use and creates beautiful invoices. The free plan offers up to 3 branded invoices and 3 branded estimates per month for a single user, while paid plans offer more starting at $12/month.

Google Apps for Business

Google Apps for Business is a great resource for any freelancer. Get free email, calendar, Drive storage, and more. There are also paid premium accounts available with more features (like more storage).

The Best Freelance Tools of 2013

The Best Freelance Tools of 2013 is a collection of tools from around the internet for finding clients, improving your business, managing your money, and much more. It’s a fantastic resource for freelance designers, regardless of how much experience you have.

Conclusion

There are as many ways to go about setting up a successful freelance business as there are successful freelance designers. The keys are to create systems that work for you and the way you work.

That means finding great tools, figuring out how you best attract clients (whether that’s in person, via social media, or in other ways), and finding people to work with when necessary, as well as carving out time for your personal life and obligations.

A successful freelance business requires you to take some time to really explore how you work best. You won’t have anyone dictating how you should or shouldn’t do something. Instead, it all falls on you to find the best work habits for you.

And remember, not everyone is cut out for freelancing full time. Some work much better with the structure provided by a corporate or agency gig. Don’t be afraid to admit that if that’s the case for you.