How to Transition From Freelancer to Small Business

Last Updated: 

April 18, 2023

How to Transition From Freelancer to Small Business

For years, freelancing was a great way to make money and work on your own schedule. But lately, the world has been changing. Our economy is shifting, and many businesses want to hire freelancers full-time instead of relying on them as remote resources. If you're thinking about making this shift yourself, here are some helpful tips to help you transition from freelancer to small business owner:

Key Takeaways on transitioning to business owner from freelancer

  1. Create a business plan: A solid business plan will help you define your business goals, target market, marketing strategy, budget, and other important aspects of running a small business.
  2. Register your business: Registering your business with the appropriate state and local authorities will help you establish credibility and legitimacy.
  3. Separate your personal and business finances: Create a separate bank account and credit card for your business expenses to keep your finances organised and make tax time easier.
  4. Establish a pricing strategy: Research industry standards and determine a fair and competitive price for your services that reflects your skills and experience.
  5. Build a team: As your business grows, you may need to hire additional employees or contractors to help you with tasks such as accounting, marketing, or customer service.
  6. Invest in marketing: Develop a marketing plan to reach your target audience and build brand awareness. Consider using social media, email marketing, or paid advertising to promote your business.
  7. Embrace technology: Use tools such as project management software, accounting software, and communication tools to streamline your operations and improve productivity.
  8. Stay organised: Set up systems to track your time, expenses, and invoices to stay on top of your finances and ensure that you are meeting your business goals.
  9. Keep learning: Continuously educate yourself about your industry, business management, and marketing strategies to stay competitive and adapt to changing market trends.

By following these key takeaways, you can successfully transition from a freelancer to a small business owner and achieve long-term success.

Want to Close Bigger Deals?

Figure out what you really want to do.

When you're a freelancer, you have the freedom to do whatever you want. But when it comes time to start your own business, that freedom can be paralysing. You may not know what your strengths are or what kind of work would be most fulfilling for you.

To figure out what direction is right for your business, start by identifying what drives and excites you as an individual. Are there certain passions or skills that come naturally? Do they align with something related to the field in which I'm interested? If so, then how can I use those interests to create value for others?

Once these questions have been answered (and this process isn't about finding answers quickly, it might take some time), begin looking at market opportunities where those passions could be put into action, or even better yet: where there aren't enough people doing such work already!

Set a business plan

A business plan is a written document that outlines your goals and strategies for achieving them. It should include:

  • A description of your product or service
  • A description of the market you are targeting
  • Your target customer
  • How much money you need to get started and how much you'll make in the first year, second year, etc. (this will help you determine if starting a business is right for you)

You can buy software programs that will help with this process, they'll ask questions about what kind of business model you want to use and then create a full-fledged business plan based on those answers. But even if it's not perfect from the beginning, don't be discouraged; simply keep revising and improving until it's good enough for investors!

Be clear about your goals

When you're starting a business, it's important to be clear about your goals. What do you want from your business? How will you run it and grow it over time? What kind of company do you want to be in the long term?

If this feels like too much for now, here are some questions that can help guide your thinking:

  • What problem am I solving for myself and others by starting this venture?
  • How does my product or service solve that problem for people (and what does "solve" mean)?
  • Who is my target customer, what are their needs and desires when buying products like mine on the market today (and how does my offering compare with theirs)?

Choose the right business structure for your needs and goals

  • Sole proprietorship: This is the simplest business structure, and it's also the most common. You'll be responsible for all of your taxes, but you won't have to pay any additional fees or charges to register your business with state or federal agencies.
  • Partnership: Partnerships are similar to sole proprietorships in that they don't require extra paperwork, but they do mean sharing profits and losses among multiple parties. If you're planning on working with others, this is probably your best option, but make sure everyone involved understands their financial obligations before signing anything!
  • Corporation/LLC/S corporation/C corporation: These are more complex structures that come with more rules about taxes and reporting requirements; however, they also offer some significant benefits when it comes time for hiring employees (more on that later).

Get the right tools for each part of your business

As a freelancer, you are likely to have a lot of different tools at your disposal. You may be using some for managing time, others for managing finances and still others for projects. Once you've decided to go into business for yourself and begin hiring employees or partners (if applicable), it's important that these tools keep up with the changes in your business model. That means finding new ones that help manage each part of your business:

  • Time management
  • Finances
  • Projects/tasks/workflows

Think about what kind of company you want to be

It's time to think about what kind of company you want to be in the long term. Do you want a small business? A large corporation? A franchise? These are all valid options, but they require different approaches and strategies for success.

If your goal is to build a small business, then it makes sense that your focus should be on building relationships with customers and clients rather than trying to grow as quickly as possible (although there's nothing wrong with that strategy either). On the other hand, if your goal is simply making money from day one before selling out or going public later on down the road, and maybe even opening up franchises across multiple states, then this may not be such a great fit for you after all!

Know why people will work with you and buy from you repeatedly

You have to know why people will work with you and buy from you repeatedly.

This means knowing your strengths and weaknesses, what makes you unique and different from your competitors, and most importantly: what can YOU offer that others can't?

There are two common mistakes I see when trying to figure out the answer to this question:

  • People focus too much on their strengths rather than their weaknesses (or vice versa). This is dangerous because it causes them to miss opportunities for growth by not addressing areas where they could improve. For example, if someone thinks they're great at writing but not so hot at sales then maybe they shouldn't be focusing on writing as much as they should be focusing on improving their sales skills!

Starting out on your own is easier than you think

Starting out on your own may seem scary, but it can be easier than you think. If you're not starting from scratch, there are things that will help ease the transition into owning your own business:

  • Start small. Instead of trying to tackle a huge project all at once, start with something simple and manageable that shows off what you can do. For example, if you're an illustrator and want to transition into doing graphic design for websites or logos for businesses instead of just illustrations for magazines or books (or vice versa), try pitching some small projects first before going big time!
  • Work with others who have experience in this area so they can guide you through all the steps involved in getting started on your own as well, from creating a website and marketing materials down through creating contracts with clients so everyone understands their responsibilities around deadlines/deadlines etcetera...

FAQs on transitioning to small business from freelancing

As a freelancer, you've been used to being treated like an independent contractor-but now your client wants to register you as an employee. This is not a decision they're making on a whim; it's one they've thought long and hard about. They see the future of work and are getting ready for it in advance. How can you make a shift away from being a freelancer? We have answers for you.

How to decide if I need a business partner for my startup?

Deciding if you need a business partner for your startup is one of the most important decisions you can make. It's not something to be taken lightly, and it's something that will impact the success or failure of your business in many ways. A good partnership can help you avoid pitfalls, save time and money, and ensure that everyone has their fair share of responsibility. But if done poorly, or without careful consideration, a partnership could cause more harm than good.

The first step is finding someone who has complementary skills and interests with yours; this will make them easier to work with over time as well as ensure that they share similar goals for how they want the company to run going forward (which we'll get into later). You also want someone who understands what needs doing because they've been there before, which means having some experience running businesses themselves (or at least knowing other people who do).

How to decide if I'm ready to hire help for my small business?

Hiring the right people is one of the most important decisions you can make as a small business owner. When you find the right person, they can help take your business to the next level. But how do you know when it's time to hire?

Here are some questions to ask yourself:

  • Do I need help with my current workload?
  • Do I have enough time for other tasks like sales and marketing?
  • Can I afford another employee or contractor?

Do I need a physical location for my small business?

The next step in the process of transitioning from freelancer to small business owner is deciding whether or not to have a physical location for your business.

There are many benefits and drawbacks to having a physical location, so let's take a look at both sides.

How to establish a good pricing strategy?

  • Understand your costs.
  • Understand your target market.
  • Understand your competition's pricing strategy and how it relates to their value proposition, profit margins and costs.
  • Set a price that covers costs, but also makes you competitive with the market in which you operate so that you can make a profit on every job or sale (or at least break even).


So if you're looking for a way to turn your freelancing career into a small business, we hope our tips have been helpful! If you have any questions about the process or want some advice from someone who has gone through it before, feel free to reach out in the comments below. Good luck!

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