Freelancing is a very popular business model nowadays, you can read about it on nearly all blogs about entrepreneurship, online business and general business.

I get quite some questions on freelancing businesses, so I wanted to use this opportunity to give you some real-world insights out of my daily business.

Let me back up a bit. I define a freelancing business as business model where you offer your skills as service. You work on projects with various customers, leveraging the skills you already have, to help them achieve their goals.

By this definition, consulting is a freelancing business just like web design is. Copywriting for clients is a freelancing business, graphic design is and if you’re great at cleaning houses you could start your freelancing business around that topic too. You get the idea.

The main difference between freelancing and other business models like affiliate marketing, selling digital goods or podcasting is, that you’re paid for your work per project.

In affiliate marketing, selling digital goods or podcasting you’re creating content once, drive attention to them and let them pay you over time. In freelancing you offer your skills as a service and get paid once on a per-project base.

The Good, The Bad & The Ugly Of Freelancing

Like any other business model, there are some strings attached to freelancing – but there also are massive benefits compared to other business models.

What you’re reading now are my very own experiences, based on my day-to-day work. I’m not holding anything back here, because I want you to leverage the experiences I made for your own benefits.

The Good Of Freelancing

Freelancing allows you to work on interesting projects.

Since you’re working on projects with lots of different people, some projects will be more interesting than others. In the beginning you have to accept most of the projects you’re proposing to or that get offered to you – regardless whether you find them interesting or not. But over time you’ll be able to select only those projects that are most appealing to you.

To me, this is kind of work is way more fun than using my blog for affiliate marketing, promoting my content on the same channels over and over again, creating content on topics other people are writing about as well (and sharing similar thoughts & advice). In the past I tried affiliate marketing and it didn’t work as well for me as freelancing did, so my opinion might not be very objective – it’s my opinion though and I like combining fun and profits.

As you see I’m still running my blog, so be sure that you can always combine elements from various business models. Pick what you like and go with it!

Leverage skills you already have.

Freelancing gives you the opportunity to sell skills you already have. What stops most people in the beginning is not-knowing their own skills and talents. I experienced this dilemma myself, that’s why I created a training program to help those of you who struggle.

Once you know your skills though, you can package them up into services and find the ideal target market to sell to. Since we are so many people connected to the Internet nowadays, I bet there’s a target market for any service.

Let me emphasize this point:

I believe that anyone with a clear goal can build a profitable freelancing business! (Tweet this!)

It’s like Gary Vaynerchuk says:

If you dig smurfs, smurf it up!

Freelancing can start small and grow fast.

Another reason to consider starting a freelancing business is that you can start with very small risk but grow fast. You can start the business on the side, using your paycheck to pay your bills. Once you’re getting more clients, you can reduce your time at work to invest more time in your freelancing business. You might end up living the exact lifestyle you dreamed of…

That’s exactly the way I grew my own Internet business in the beginning.

You don’t need to take big financial risks before your business concept is validated by paying clients. Get clear about the services you could offer, set up a website presenting your services and get in touch with your target market.

No big investments necessary and you can do the work in the evenings at first, so that you can keep your job (at least until your business generates more revenue).

Freelancing constantly challenges yourself.

This probably was the main reason for me to fully focus on freelancing. I’m a person who needs a constant challenge each day. When I’m doing the same work (or just similar work) over and over again I feel frustrated and unhappy.

In freelancing I’m working with individual clients all over the world (currently Australia, Singapore and Germany) and each client obviously has a different business with a different story.

It’s so much fun to dig deep into those businesses, to undeprstand their mission and to help my clients accomplish their missions. No project is like the other, the clients make each project unique.

Since I want my clients to be successful and to get great results from working with me, I’m constantly learning new technologies, development techniques and design patterns – so that I can take each project to the next level.

The Bad Of Freelancing

A medal always has two sides. And freelancing hasn’t only benefits compared to other business models, but it also comes with some drawbacks.

These drawbacks are also my real-world experiences and don’t necessarily need to comply with the things you’re reading on other blogs. Again, I don’t care what others are writing, I’m just sharing business lessons that I found to be true.

Freelancers usually trade hours for dollars

I quit my job because I didn’t want to trade hours for dollars anymore. I wanted to create a scalable business that makes money when I’m not working, which is a bit more difficult with freelancing than it is with other business models.

When I’m working on projects, I trade hours for dollars. That’s it. The difference to my job is huge though. The projects are fun, my clients are awesome (be picky about your clients!) and I love the work I’m doing.

Scalability is limited when you’re running your freelancing business on your own. That’s why I’m working with a team of web developers, designers and app developers. My team supports me to handle projects efficiently, so that I can offer reasonable prices and timeframes to my customers. Did I get you interested? Here’s Chris Ducker’s guide on VA team building that you’ll love!

Building a team of VAs is crucial for almost any business, don’t fall victim to the superhuman syndrome! (Tweet this!)

You can also introduce more scalability by packaging your experiences in digital products. That’s what I did with my training program Restart Academy – a guide for those of you who want to start businesses on the side without making the common mistakes.

Especially for developers it’s easy to create digital products, they can create and sell software. I’m currently working on a WP plugin to extend the functionality of WordPress membership softwares, so stay tuned 😉

Rule for Freelancers: no work, no money.

This ties in to the point mentioned above. When I’m not able to work because I’m sick, the projects won’t make any progress and thus I won’t get paid.

Freelancing heavily depends on you being able to do the work, due to it’s project-based payment system. However, when you’re not promoting your digital products, affiliate products or not creating new podcast episodes, you won’t make any money either.

I just wanted to mention the importance of your physical and mental health.

You might have to work for free in the beginning.

Working for free? Am I nuts?

No I’m not. When you’re starting your freelancing business and nobody knows you (and trusts your skills!), what you need is a reasonable portfolio of successful projects. Without that portfolio you won’t be able to get bigger clients or raise your prices in the future.

I did the first few websites for free to build my own portfolio, living of the paycheck from my job. If you don’t have a job and need to make money freelancing now, I still advocate for building a portfolio first and charging higher prices later. Make one step after another.

Even though I’m not advertising it on my website (yet), this portfolio most often is key when proposing for new projects and talking to prospects.

Think about it: How can strangers develop trust in your abilities? (Tweet this)

By seeing what you’ve done already and deciding whether they like your past work or not. So always give 110% in your projects and treat your customers like diamonds. If you do, they’ll refer their friends and business partners to you.

This chain of referrals is happening to me currently. To be honest, I wouldn’t be able to handle all these clients without my team. And I didn’t approach a prospect actively for a few weeks – they just come to me by referrals from my past clients.

The Ugly Of Freelancing

There are some ugly things in freelancing that bothered me in the early days of running my freelancing business. However, now that I’m in it for a few months, they tend to look not as ugly anymore. When I learned how to handle them successfully, you can too.

Competition on freelancing websites like oDesk or PeoplePerHour.

We all know these platforms where you can hire freelancers. Thousands of people advertise their services on those platforms and posting a job publicly normally results in getting at least 40 – 100 proposals from freelancers claiming to be the best fit for you.

These platforms are good opportunities for people who hire freelancers.

As freelancer though, I hate those platforms. How do you want to stand out and build a kick-ass brand when you’re just one of hundreds of thousand of other freelancers?

I’ll never promote my any of my web design or app development services there, I want my clients to find my via my website or to come to me from other clients. This ensures that I build a real connection with anyone I’m working with – and that they build a connection with me.

As a freelancer you need to be working hard to provide good service to your clients and you want them to have an outstanding experience of working with you.

This would never be possible when they hire you on a platform where other freelancers propose for the same project.

And to be honest, most freelancers on those platforms don’t really care about the client. Heck, they apply for jobs without having understood all requirements. Why would you ever want to associate yourself with those people?

Clients expect premium service at low prices.

I’ve experienced this quite often now, clients who want results like a Ferrari but pay for a VW Beetle. This got me frustrated in the beginning, because I didn’t know how to handle those clients, but then I read Book Yourself Solid by Michael Port and learned about his velvet rope policy.

Now I’m very picky about my clients. I hop on Skype with every single one before a project starts to see whether we’re a good fit or not. This might lead to loosing a few clients, but those persons would have caused nothing but trouble anyway.

While you can’t afford to loose any client in the beginning, be aware of the kind of client you like to work with the most. Create an avatar representing your ideal client and sooner or later you’ll find yourself working only with those.

Clients who expected premium results at low prices tend to not to be satisfied with any result you deliver, regardless how outstanding it is. They cause you nothing but headaches and tear down the quality of your work in other projects. Become confident and end the relationship with them.

Now you know why I started my freelancing business and hopefully got some insights whether freelancing is for you.

If you’re not sure what skills you have to build a freelancing business, take a look at this interview I did with business coach and passionpreneur Aj Amyx.

We’re going through various techniques you can use to uncover your hidden talents and turn them into business opportunities.

Now it’s your turn!

I’d love to know what kind of freelancing business you’re running or planning to start. What were the main obstacles you had to overcome and what were your biggest successes?

Please share your story to inspire the other readers to take action and break free from their jobs.