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Your motivation to start a side business may have been to create a source of secondary income or an avenue to pursue professional goals. But, if over time you’ve achieved great success in terms of revenue and creating a strong network of clients, it’s normal to start contemplating taking things to the next level. For freelancers planning to convert their side hustle into a full-fledged small business, this article by Entrepreneur Funding Experts explores the important steps that need to be followed.

Crunch the Numbers

The core of any successful small business is sustainability i.e. you need to generate enough revenue to cover costs. Before making the leap to entrepreneurship, take the time to understand where you stand financially, here are some key aspects to consider:

  • Current revenue figures

  • Monthly costs – utility bills, inventory, taxes, software subscriptions, etc.

  • Investment needed to scale the business

Additionally, create revenue predictions for at least 12 months, that’ll provide you a clear idea of whether the business will be sustainable from the start or the timeline needed to achieve the same.

Create a Business Plan

Creating a plan will provide clarity regarding whether you are ready to make the transition and if not, what changes need to be made. Here are some important aspects your business plan should include:

  • Product Offering: Include insights regarding the product/service you’ll be selling to consumers. Should outline its unique selling points, pricing, and features.

  • Company Structure: According to ICSTD, as a new small business, choosing a Limited Liability Company (LLC) is the best option as it establishes the business as a separate legal entity and provides protection from liabilities. Other options include creating a corporation or a partnership.

  • Business Goals: In addition to serving as a source of motivation, goals provide the business with a direction to follow. Your short-term goals should be around the timeline of 3-6 months, while long-term goals are typically for 1,3, and 5 years.

Have Realistic Expectations

Based on freelancing experience, you know that there is no such thing as overnight success. Developing a successful business will take time, and rather than focusing on the end goal, channel your energy towards making the right decisions and establishing strong foundations.

For instance, while receiving funding from investors is great, they will ask for a percentage of the business in return and impose certain expectations. In this scenario be realistic about whether you can meet those expectations or would it be better to work towards making the business self-sufficient.

Additionally, if you ascertain the workload to be overbearing, don’t refrain from hiring professionals on a per-project basis. This could include working with a social media manager to create an online presence, hiring an accountant for creating financial statements, and more.

Develop a Customer Base

A strong customer base means repeat business and a regular stream of revenue. While a consistently growing customer base is key for any business, as reported by Constant Contact, repeat customers spend 300% more and are easier to sell to. Moreover, happy customers are more likely to provide referrals, drastically reducing your customer acquisition cost.

In addition to individual customers, you can sell to other businesses as well. But, you’ll need to take a different approach to market your services and land them as a long-term client. Here’s what to do:

  • Design a business website that includes information regarding the list of your product offerings. If possible, record product/service demos and upload them to the website as well. Additionally, collect testimonials from past clients and showcase them on the homepage itself.

  • Create a professional-looking resume, which can be included on the website and in client outreach mails. If you’re looking to revamp your resume, use this resume builder.

  • Reach out to family, friends, and colleagues and request them to refer you to business owners in their network. Being referred will increase the chances of securing them as a client.

Transitioning from being a freelancer to a small business owner may feel like a leap of faith. But, by following the above-mentioned steps, you’ll create a business with strong foundations and a clear path to success, instilling confidence that you’re making the right decision.