{"id":5570,"date":"2018-03-28T14:06:39","date_gmt":"2018-03-28T13:06:39","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=5570"},"modified":"2024-05-17T15:52:32","modified_gmt":"2024-05-17T14:52:32","slug":"how-can-i-turn-freelance-work-into-a-small-business","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/how-can-i-turn-freelance-work-into-a-small-business\/","title":{"rendered":"How can I turn my freelance work into a small business?"},"content":{"rendered":"

Freelance work is a fantastic way to supplement your income \u2013 and over the course of the last decade, more and more UK professionals have started to ditch the typical nine-to-five job in order to start exploring the lucrative benefits that go hand-in-hand with freelancing.<\/p>\n

According to the UK Government\u2019s Office for National Statistics<\/a>, just under two million workers are now operating as freelancers. Some industries are more reliant upon freelance workers than others, too. The Department of Digital, Culture, Media and Sport<\/a> reckons some 43% of all work carried out in the media sector is done by freelancers.<\/p>\n

But how do casual freelancers transform their hobbies or side projects into a full-time, sustainable business? We\u2019ve designed this guide to walk you through all the basics of turning your freelance work into a small business.<\/p>\n

How do I build up freelance work?<\/h3>\n

Before you hand in your notice at your day job, you\u2019ve got to do a whole lot of planning \u2013 and that planning starts with an assessment of exactly what it is you\u2019re trying to turn into a business.<\/p>\n

So, what are you good at? What sort of professional skills do you have that other companies or individuals could benefit from, and what types of projects or work could you do for those businesses? What would they be willing to pay, and would it be enough to support you financially?<\/p>\n

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If you haven\u2019t already established yourself as a freelancer, you need to come up with answers to all of these questions before jumping into the deep end. The best way to do that is to try and get your feet wet with some freelance work while you\u2019re still employed.<\/p>\n 5 things you need to form a limited company<\/span><\/a>\n \n

By freelancing while still in full-time employment, you\u2019ll be able to make a name for yourself and start building up cash reserves in order to bootstrap your business and place it in a good financial starting point. Most financial advisors recommend you save up between three and six months\u2019 worth of income to cover living costs before quitting your day job \u2013 and so you\u2019ll want to stockpile enough cash to cover your accommodation expenses, overheads like insurance and utilities, childcare, and personal living expenses.<\/p>\n

But let\u2019s not get ahead of ourselves here. If you haven\u2019t already got enough clients or work to start building up a rainy-day fund for your new business, you\u2019ll need to attract some customers.<\/p>\n

Assuming you already know the type of niche you\u2019ll be able to fill with your skills and the sort of freelance work you\u2019re capable of achieving, the first thing you\u2019ve got to do is write a business plan. Why?<\/p>\n

First and foremost, writing a business plan will help you to stay organised. In a business plan, you must clearly state what it is your business is going to do, the services you\u2019ll offer, and how those services will be delivered. You should also outline your price points, and marketing tactics and conduct extensive market research in order to figure out what sort of competition you\u2019ll be facing.<\/p>\n

Later on in the lifecycle of your business, this business plan could help you to secure a bank loan<\/a> or investor funding to secure financial backing and grow your enterprise. But while you\u2019re still employed and are simply testing the waters, your business plan will serve as a manifesto. It will make you think long and hard about the sort of people you should target as clients and what you have to offer them.<\/p>\n

So, once you\u2019ve thought long and hard about your unique selling points (USPs) as a freelance worker, it\u2019s time to approach potential clients and start building a customer base.<\/p>\n

One of the easiest ways to get started with freelance work is to spot gaps in the processes of former employers, businesses you know, or individuals you\u2019ve worked with in the past. Don\u2019t be afraid to approach these companies with a phone call, and confidently explain what it is you think you could offer that business. If they\u2019d like to hear more, they\u2019ll generally ask what sort of rate you would charge, and the calibre of work and timescales they could expect in return.<\/p>\n How can I generate passive income for my company?<\/span><\/a>\n \n

That\u2019s where your business plan will come in handy. You should have already thought about how you\u2019re planning to charge clients \u2013 either hourly, by the word, at a flat rate, or another method of your choosing.<\/p>\n

After that, it falls on you to deliver what it is you\u2019ve promised. You need to prove yourself by finishing your work on time and returning it to a standard that you\u2019re proud of and that your client is happy with.<\/p>\n

Having trouble approaching or finding first-time clients? Don\u2019t panic. There is a wide range of online platforms that can help you attract customers. Sites like PeoplePerHour<\/a>, Upwork<\/a> and fiverr<\/a> give you the opportunity to write a service pitch or create a product listing. Then, customers can sift through the platforms and approach you to take on their freelance tasks if they\u2019re impressed by your pitch.<\/p>\n

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It\u2019s worth pointing out that these sites can be fantastic in order to help you build a first-time profile, but they generally operate on \u201cfreemium\u201d models that will demand some sort of small percentage in return for generating you business. That\u2019s why it\u2019s often advisable to establish yourself on these types of websites before approaching regular customers and asking them to contact you externally to continue developing your working relationship.<\/p>\n

Once you\u2019ve started impressing clients, encourage repeat business and start casually marketing your services online. It\u2019s worth creating a website and building a social media profile for your business so that happy customers have somewhere to leave positive reviews and redirect friends and colleagues they\u2019ve sent your way.<\/p>\n

In turn, your freelance work should start generating a reasonable amount of income in order to supplement your nine-to-five salary \u2013 thus enabling you to build up business savings to bootstrap your new company. And after you\u2019re confident that you have an adequate rainy-day fund and a sustainable client list to keep you going, you might be ready to quit your day job and start freelancing full time.<\/p>\n

Should you incorporate your business as a company?<\/h3>\n

Going it alone and becoming self-employed is incredibly exciting and liberating \u2013 but it can also be a little daunting. Starting a new business can often leave you feeling financially exposed and at risk, particularly if you\u2019re investing personal funds in your new business idea. To help relieve some of that worry, a lot of freelancers choose to form a limited company<\/a>.<\/p>\n

So, what exactly is company formation?<\/p>\n

Company formation<\/a> is the process of registering your freelance business as a limited company through Companies House. Companies House is the UK Government\u2019s official registrar of companies, and it is the only organisation in the UK that is allowed to officially incorporate your company.<\/p>\n

It\u2019s worth pointing out that you are not legally obligated to form a company. Instead, you can operate as a sole trader. As a sole trader, you\u2019ll be able to trade as a business owner \u2013 and in the eyes of the law, you and your business are essentially one and the same. That synergy can make life simple if you\u2019re running a very small micro-business.<\/p>\n

However because a sole trader has no legal separation between them and their business, those individuals can face personal financial ruin if their business runs into trouble.<\/p>\n

Meanwhile, if you choose to incorporate a limited company, you can turn your business into its own legal entity. That means your liability for that company will be limited only to the value of the shares you have in your company, and all of your personal money will be protected. This protection is what\u2019s known as \u201climited liability\u201d, and it should give you peace of mind in knowing that you won\u2019t go flat broke just because your business doesn\u2019t pan out.<\/p>\n What is the Business Asset Disposal Relief scheme, and is my business eligible?<\/span><\/a>\n \n

So, are you keen on registering your new freelance business as a limited company? The process is fast and simple. All you need to form a company is a:<\/p>\n