How To Start Your Own Business: 14 Steps for Success

Starting your own business is an exciting process—and it can be quite lucrative. In 2024, skilled knowledge freelancers generated a collective total of more than $1.5 trillion. And many freelancers out-earned their full-time employee counterparts, too, with a median freelance income of $85,000. 

Even though AI continues to change the world of work, it’s creating strong demand for skilled freelancers in a wide range of industries, and enabling people to become independent professionals by streamlining their workflows and breaking down barriers to entry. Whether you’re interested in working for yourself full time or want to start a part-time side hustle, now is the perfect opportunity to launch a freelance business.

The 14 steps outlined in this article will help you do just that.

1. Find a business idea

A number of great self-employed business ideas can be turned into successful ventures with minimal startup costs—and many of them are jobs you can do from home.

When considering different business ideas, think about:

• Your existing skills and certifications
• Your access to necessary equipment
• Any additional training you may need
• Opportunities made possible with AI

Depending on the answers to this self-assessment, consider these approaches to launching a profitable business from scratch:

• Provide a service to other business owners. You could do graphic design, work as a project manager, offer technical support, and more.
• Sell handcrafted products. Sites like Etsy and Gumroad make it easy to create an online business centered around your creative work.
• Teach lessons. Many successful educators and tutors use Upwork to teach everything from foreign languages to crafts.

Read transcript

2. Identify your target audience

Once you’ve identified what you’re going to do and why you’re going to do it, you’ll need to figure out who you’re doing it for. This is your target audience.

To find your target audience, you’ll need to consider details like:

• Demographics
• Psychographics
• Interests
• Behaviors

You’ll likely find that your target audience is made up of several groups of people with some shared characteristics. Creating buyer personas is a good way to keep track of the differences between each audience group.

3. Pick a business name

Many freelancers decide to operate under their own name. However, depending on your goals, industry, and business structure—more on that in a bit—you may need or want to come up with a business name.

A good rule of thumb: keep your business name simple and easy to say and spell. If you’d like to operate under your given name but it’s very difficult for others to spell, consider using a simpler or stylized version of it as your business name.

For example, I have a long last name that’s often misspelled. As a result, when I registered my own business name, I incorporated my initials rather than my full legal name.

4. Validate your business idea

Before you make your business idea official, take some time to validate it. This is also called market validation.

When you validate your business idea, you confirm how much demand for your product or service exists within your intended audience groups.

Harvard Business School outlines the market validation process in 5 steps:

1. Write down your goals, assumptions, and predictions about the business
2. Consider the size of your market and what share you could potentially hold
3. Listen to online chatter about your business or industry
4. Talk to members of your target audience
5. Test your products and services

While you can conduct idea validation on your own, many business owners prefer to hire a professional market researcher for help.

Photo by RF._.studio on Pexels

5. Write a business plan

Once you’ve decided on and validated a business idea, you’ll want to write a business plan.

According to the U.S. Small Business Administration (SBA), a business plan will:

1. Act like a GPS to guide your business growth over the next three to five years
2. Help you develop key business milestones and plan for how to reach them
3. Bolster your ability to obtain business funding

A basic business plan should include:

1. Company summary and purpose
2. Target audience data
3. Services or products for sale
4. Competitors and how to compete with them
5. Customer acquisition and retention strategy
6. Marketing and sales strategy
7. Key goals and milestones
8. Financial plans

6. Review your finances

The next step in starting a business is making sure that you have enough capital. You’ll also want to make sure that the business has the potential to bring in the income you need. 

Calculate your estimated profits

To calculate your estimated profits, you will need to:

1. Write down all of your monthly expenses. Add these up to find your total expenses.
2. Assign a monetary value to your time and sales.
3. Estimate how many products you expect to sell, or hours you plan to bill, per month.
4. Multiply your expected working hours or sales units by the dollar amount established in step two. This is an estimate of your expected monthly revenue.
5. Subtract your total expenses from your expected monthly revenue. The money that is left over is your monthly net profit, or profits before taxes.
6. Also consider any yearly expenses, and ensure that your total profit is enough to cover them.

You’ll want to make sure that the number you end up with is positive, not negative. If it’s negative, you won’t bring in enough money to keep your business operational.

Estimate income needs

In addition to calculating your estimated profit, you’ll also need to estimate your personal income needs. Think about the following: 

• Will your business be a full-time operation or a side hustle?
• How much income do you need to generate in order to cover things like rent, mortgage, utilities, food, health care, and transportation?
• Does your expected net profit each month cover the amount you need for personal expenses? (Don’t forget to factor in local and federal tax payments, too!) 

7. Consult with an attorney and tax professionals

Some businesses are required to register with the government or obtain special tax and operating permits. These requirements can vary by location, so you’ll want to consult with lawyers and tax professionals who are familiar with your type of business and operating location. 

Possible requirements may include obtaining sales tax collection permits, operating licenses, a business bank account, or taxpayer identification numbers.

These professionals can also help you decide what kind of business entity to form—whether that’s a sole proprietorship, a limited liability company (LLC), or something else.

8. Consider business insurance

Some businesses are also required to purchase insurance policies. This requirement could come from the government or from a client.

Thimble and Next are two examples of companies that offer business insurance policies for freelancers. The type of policy you purchase will depend on your business structure, location, and services.

Photo by Kindel Media on Pexels

9. Fund your business

If your business will require significant upfront capital, you may want to seek funding. 

There are several ways to obtain business financing. An accountant or a financial advisor can help you decide which of the following options are best suited for your business:

• Bank financing. This can include secured loans, unsecured loans, and lines of credit. You’re always responsible for paying your lender back when you use bank financing.
• Small business loans. Small business owners may also be eligible for loans backed by the government. These loans often come with lower interest rates but can have additional requirements like completing an education program or participating in a business incubator. 
• Business grants. It’s harder to get a grant than it is a loan (you typically have to go through a rigorous application process) but the resulting funds are more like a gift. As long as you meet the requirements for the grant, you won’t have to pay back the organization that issued the money. 
• Crowdfunding. This type of financing involves collecting a pool of relatively small contributions from a large number of people. Kickstarter and Indiegogo are two crowdfunding platforms that businesses use to raise capital. 
• Investors. The two main types of business investments are equity, where investors get an ownership stake in a company, and debt, which functions similarly to a loan and requires repayment with interest. 

10. Develop your business's brand

Be sure to finalize your business brand before launching any funding campaigns. Having a well-defined brand is helpful when winning over investors and crowdfunding supporters.

Even if you don’t plan to acquire funding for your business, you still need a brand identity. Your brand will help customers and clients remember who you are, what you do, and the value you bring.

When creating a brand for your business, you’ll want to think about the:

• Logo. Your logo is an important visual representation of your brand, even if you’re operating under your own name. (Remember when I said that I used my initials in my business name? I have a logo made of—you guessed it—my initials.) Place your logo design on your website, invoices, email signature, business cards, and more.
• Tagline. A tagline or slogan is a short phrase that can appear on your website and other marketing materials. Taglines aren’t essential, but a memorable one can be a catchy way to quickly convey your business focus.
• Mission statement. This is a succinct explanation of why your business exists. If you need help developing this content, consider working with a professional mission statement freelancer.
• Brand voice. Your brand should have a “voice” or style that is consistent across all of its communications. Your style doesn’t have to be set in stone forever, though. Working with a branding specialist can be very helpful as you develop and refine your brand—now and as your company changes over time.

11. Build a website

Once you have your business’s brand developed, you’ll be able to create marketing materials. A website is arguably one of the most important elements any business owner needs.

You’ll use your business website to:

• Generate leads from potential customers
• Share details about your services
• Take orders for physical and digital products
• Showcase your work
• Highlight testimonials from clients

Creating an online presence for your business can be accomplished in several ways: 

1. Work with a web designer or developer
2. Use a website builder  
3. Purchase a domain name for your website
4. Create a Google Business Profile

12. Decide how to invoice your customers and collect payment

As a self-employed individual, you can be paid in many ways. Depending on your business model, you may:

• Send invoices and accept credit card payments or bank transfers
• Sell items in person and collect cash or process credit cards via a point of sale (POS) system
• Accept payments via Venmo, CashApp, or other digital payment system
• Use the convenience of a platform like Upwork

You can actually use Upwork’s escrow-based invoicing system no matter how you and your client meet. The trick is to use Upwork Direct Contracts. Here’s how it works:

1. You log into Upwork and create a contract.
2. You send your client a link to the contract before the project begins.
3. Your client pays an agreed-upon amount via credit card, PayPal, or U.S. bank transfer. The client doesn’t need to create an Upwork account. (If they already have an account, you can create a regular Upwork contract!)
4. Upwork places the funds into a secure escrow account.
5. You complete the project and deliver the work to the client.
6. The client approves the work and the escrowed funds are paid by Upwork to you.

By using Direct Contracts, you’ll get the benefit of Upwork Payment Protection and dispute resolution assistance—something you won’t find with other payment processors.

13. Promote and grow your business

If you want to get paid, though, you’ll have to find some clients. Successful business owners often acquire new clients through a blend of networking and marketing.

You should try a range of techniques when building a marketing plan, including:

• Search engine optimization (SEO)
• Generative engine optimization (GEO)
• Search engine marketing (SEM)
• Social media marketing
• Brand partnerships
• Affiliate marketing
• Influencer partnerships
• Traditional media advertising

Read transcript

14. Build your team

Once your business is up and running, you’ll need to focus on its day-to-day operations, take care of your customers, continue to build a pipeline, pay bills, and ensure all your finances are on schedule. It’s a lot of work! You might begin to consider expanding your team in order to keep up with changes and growth.

For some entrepreneurs, the added expense and complexity involved in hiring employees is worth it.

Other business owners find this traditional way of growing a team to be too rigid or complex. Instead, they prefer to work with fellow self-employed individuals to carry out key business projects.

By contracting with other freelancers, you can get help in nearly any area you need. You may choose to work with some of these professionals on an ongoing basis or engage them as needed.

Launch your new business

Whether you want to subcontract some work to another freelancer or need a consultant who can help you solve a problem, Upwork is the place to look. Plus, with an Upwork client account, you get the added benefit of using Uma, Upwork’s mindful AI. (It’s super helpful when you want to quickly generate a great job description!)

And if you’d like even more help finding the right freelancer, a free Upwork Business Plus membership gives you access to Talent Specialists who can build curated shortlists of professionals in just two business days. 

Take control of your new business by tapping into the world’s work marketplace. Develop your brand, grow your company, form rewarding relationships with other experts, and do more of the work that inspires you. Get started by creating an Upwork account today.

‍

This article is intended for educational purposes and should not be viewed as legal or tax advice. Please consult a professional to find the solution that best fits your situation. Upwork is not affiliated with and does not sponsor or endorse any of the tools or services discussed in this section, and does not intend this to be a comprehensive review of all steps needed. These tools and services are provided only as potential options, and each reader and company should take the time needed to adequately analyze and determine the tools or services that would best fit their specific needs and situation.