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Business 101 for freelancers

CNET@Work: OK, demand for your product or service is strong. What's next? Freelancers seeking to establish a sustainable business should heed these basics.

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With technology increasingly intertwined with all aspects of business, CNET@Work can help you -- from prosumers to small businesses with fewer than five employees -- get started.


"The gig economy is now estimated to be about 34 percent of the workforce and expected to be 43 percent by the year 2020," Intuit CEO Brad Smith told CNN in May.

Smith was talking about freelancers who sell their services by the hour, by the day, or by the job; and who might work from home, in an office, or at customer work sites.

Freelancers come in all shapes and sizes.

They can be stay-at-home moms and dads who have a skill desired in the market, and who work from a home office; a retired engineer who decides he wants to work on software design projects part time; or a law school grad who passes the bar and is interested in starting her own practice.

Emerging from this pool of freelancers will be individuals who find themselves running a successful practice that begins to evolve into a brand and a growing company.

"Soon after I graduated from law school, I realized that it was not enough to practice law," says Dan Jaffe, CEO of Lawlytics, a marketing and website platform for attorneys. "I had to gain a fundamental understanding of how to run a business."

Getting the business basics down

For freelancers who establish a market niche, see their practices take off, and want to develop them into a sustainable business, there are several essential steps to take.

Step 1: Register your business

"Once you've identified your competitive advantage as a freelancer and have formulated a name for your business, you should register the business, so that you can properly report your income for tax purposes," says Mahesh Sharma, North America communications manager for online freelance job portal freelancer.com.

Most freelancers will want to establish a single proprietorship business. The process is straightforward: Register with the government of the state you reside in, pay a modest registration fee and register the name of your business. The state searches its business database to ensure that the business name you want is not already registered by someone else.

In some cases, forming a limited liability corporation (LLC) might be the way to go. Consider this option if your business involves potential significant liabilities or if you're planning to bid on government contracts that demand liability insurance and protection. In these cases, there are services that can help guide you through the business registration process.

Step 2: Create an online presence

"The next step," says Sharma, "would be to register a domain name, so that you can build a website and also set up a professional corporate email, which customers can identify with your brand. It's not a great look when you're emailing from a Hotmail email account, with a name you registered when you were in high school."

Platforms like Wix offer ready-made website templates that you can customize for your own business. Lawlytics (for attorneys) and freelancer.com also provide additional capabilities for website personalization and marketing.

In all cases, the goal is to present highly effective content and a brand image for your business on the web, because your customers and your clients will surely ask you for it. On your website, you can also show examples of your work.

Coffee Caffeine Colleague Cooperation Relax Concept

 It's easier to keep your overhead low if you're working from home or a coffee shop.

Getty Images/iStockphoto

Step 3: Keep your overhead low

It's easier to keep your overhead low if you're working from home or a coffeeshop, but less so if your business requires you to have an outside office.

To keep costs down, freelancers can rent office space on demand that will give them a physical presence in a remote location, such as when they're making a presentation or a formal sales pitch to a client that benefits from a polished, professional setting.

Look for opportunities to share office space -- and resources such as administrative support -- with other businesses looking to keep overhead low. Some cities interested in attracting entrepreneurs offer "enterprise zones" with affordable office space

Step 4: Be able to perform all of the duties your business requires

When freelancers start building a business, there is a tendency to focus on what they do, and to outsource ancillary business functions like bookkeeping or handling phone calls to someone else.

"Freelancing is very different from being good at your job, or good at what you do," says Sharma. "Working within a company, you have other people to perform the tasks that support your role. As a freelancer, you have to do all the little things, and ancillary functions, yourself."

Lawlytics' Jaffe agrees.

"Don't delegate these tasks right away," he says. "Whether it is bookkeeping, getting insurance and so on, as a single operator, you have to know how to do all of these things yourself, even if you do decide to get help from someone, because you might have to step in to do these tasks and you also are ultimately responsible for ensuring that the work is done correctly."

Step 5: Connect and communicate with your clients

"You have to understand your customers' expectations, be able to communicate quickly, openly and honestly, deliver on or before deadlines and work with set budgets," said Sharma. "Generally speaking, there's a much higher degree of accountability because the quality of work expected is much higher."

Also, you should never overpromise what you can't deliver, or to just say what you feel your clients want to hear.

"Above all, provide great service," said Jaffe. "One of the biggest complaints I hear is that clients feel they are not being communicated with. They want to be acknowledged, and to be called back quickly when they have a question or a concern."