Your market
After you understood yourself, your needs, and your current standing, it is time to look at your market. Start by asking yourself “Who do I see as my potential customer?”
For many fresh entrepreneurs and freelancers, this can be a difficult question to answer. Answering "Everyone could use my service/product" is a common pitfall. A company that wants to reach "everyone" with its marketing needs a gigantic marketing budget. This is why you have to use your resources wisely.
Client profile
So who do you most want as a customer? Create a clear picture of your desired customers. Ask yourself:
What do they have in common?
What distinguishes them?
Where are they?
Answering these questions will give you a rough idea of who your main market is. This, of course, does not prevent you from taking other customers who are looking for you. But knowing who your target audience is gives you a direction and focus when designing your marketing campaigns.
Depending on whether your customers are reached through paid ads or make direct purchases, are located locally or elsewhere, are IT-savvy or not, etc., you need to tailor your marketing approach. There are no universal truths here. Marketing is effective and can be done with small investments when it is aimed at a clear target group. All you need to know is what your clients’ needs are and the channels they use to communicate.
The more you understand who your target group is, the better you can clarify for your clients what your services are and how to provide value to them. One key aspect of marketing is that it is not about you describing your product, but rather you helping the client understand how your service/product solves their problems or satisfies one of their needs.
Therefore, as a freelancer and entrepreneur you need to build your communication and marketing skills. look at companies your client profile likes. What are they doing? Join classes on basic marketing to help you get out of your own perspective. I have often seen putting yourself out of the picture and look at your company and your potential customers from the outside helps. as a small business owner and especially as a coach or consultant where the main product is your personal delivery the entire thing gets too personal. If people choose to put their money somewhere else it is not about you, it is about how you have managed to tell the world what you have to offer. Focus on adapting your marketing strategy and message, not diminishing yourself with self-doubt.
And then next area of building and running a business that tends to evoke self-doubt. Finances.
Your finances
Let’s make this clear right off the bat: you do not have to be a mathematician to manage your finances. The common sense many of us use to manage a household budget will get you a long way. Basically, it is the same in business as everywhere else: the income needs to be greater than the expenses for there to be anything left over.
Making wise investments
When you have your own company there may be a lot of things that you want to invest in. However, in the beginning it is wise to invest only in the absolutely necessary things; this until you feel you have a steady income and cash flow. Professionalism must be weighed against economics. For example, if you are a consultant, you can rent meeting rooms for specific occasions when you meet customers or arrange customer meetings on site with them in the beginning to avoid a fixed office rent.
Other examples include using simple business cards and sending digital presentations instead of printing out expensive brochures. Similarly, see if you can hold onto your old computer and printer for a while. However, if it is very important in your market and industry to have an office in a specific location for visibility and credibility, then you have to bear the cost of your professional appearance. Different freelancers and entrepreneurs in different industries have different needs. You need to analyze your own situation and make decisions based on that.
The budget needs to drive the decisions
There is no right or wrong - you make the decisions. And your budget should be your check point. How much more do you have to sell to cover the cost of what you want to invest in? Is it reasonable to believe that your investment will create more sales? If not - where do you get the money from then? This is how entrepreneurs think.
Setting prices
When you calculate your prices, at least take into account the conditions and the salary you would have had as an employee at a corresponding position. When you now take on more responsibility by being self-employed you need to make sure that you have the means to cope with and recover from the additional stress.
In practice it might be more difficult to achieve this, especially if the customers do not come at the pace you hoped for and you may receive a lower income for a period. Setting your prices high enough to cover expected salary when hours are filled is one measuring point, setting them within the range where customers are ok is the other. You need to set fair prices for your customers, but also for yourself.
To know this you need to figure out how many hours a week are you going to do actual product-related work. Some part of your time will be spent on accounting, meetings, marketing, training, technology, office cleaning, and others.
It differs from industry to industry, but it is not uncommon that from the total working hours of entrepreneurs and freelancers, perhaps 50-75% are actual product-related hours. However, your salary needs to cover all the non-product related time as well, and in time, the days you will want to take off for holidays.
Therefore, when you set your prices, think about all costs: salary, company costs, deductibles, and taxes. Lastly, do not forget to check your industry peers or competitors - where are the market prices? Make use of the information and resources available and use it as the basis of your decisions. An informed entrepreneur is a successful entrepreneur.
Useful tools
You can find in your country the equivalent of organizations such as the Swedish Verksamt. There you can find helpful tools for calculating the price you need to charge based on your budget and your conditions. Other governmental agencies might have extra tools to support you in that as well.
For example, the Swedish Tax Agency organizes events around the country where you can learn how taxes and fees work for you as a self-employed person. Advisors at incubators, investment companies, and business development centers (Swedish examples include Nyföretagarcentrum and Almi) or similar organizations are available around the country for advice and support.
Free checklist
To help you with this first stage we have put together a downloadable step-by-step checklist with the things you need to do when starting your own company. Get it here for free.
Join us in the next episode and learn about “Deciding between sole and co-ownership and working with others.”