How To Turn Extra Clients Into Passive Income

An interview with freelancer Tim Daalderop

I had the pleasure of interviewing Tim, a freelancer with a simple but powerful method for connecting clients with other freelance professionals, and receiving ongoing passive income in the process.

Below is a summary of his method and the interview, with links to the recordings. If you have any questions be sure to leave a comment below!

Tim’s Background

Tim is a freelance copywriter and content marketer from the Netherlands. At the time of this interview he had been freelancing 15 months, but has been working in these fields for 12 years. Since transitioning into life as a freelancer, he has established a reputation and client base such that he has more work coming his way than he has time for. As someone who likes to help and build new collaborations and opportunities, he has begun to pass off those clients to other freelancers for a commission. Here’s how he does it.

His Method

Simply put, Tim earns passive income by passing off extra clients for an ongoing commission. When a client approaches him for a job and he is fully booked, he taps into a network of trusted freelancers that he built precisely for this reason. Tim receives 10% of all income made with from clients he refers for the first year.

Step 1

First, he takes the necessary time to gets to know the company and the client offering the gig. He tells them that he is full at the moment, but knows another freelancer who does have time for new projects, and he can put them in contact. He stresses that this freelancer is someone he trusts, and the quality of the work is equal to his own. He can connect them if the company desires.

Step 2

If the company says yes (which they usually do), he then contacts the specific freelancer he has in mind, or taps his network to find them. He can do this because he knows the project, he has discussed the details with the client, and he has built up a network of freelancers that he trusts.

He calls that freelancer to ask if they have time for new projects, tells them about the gig, asks if they are excited about it, and discusses the commission. Tim sends a document with the commission arrangement and forwards the the job details to confirm that they are in fact excited about this project and that it is a good fit. This is to avoid any potential confusion that may result from a strictly verbal conversation. For the first year, Tim receives 10% of all income made with that client from the freelancer. The freelancer forwards a copy their invoices from the client to Tim, who in turn sends an invoice to the freelancer for 10%.

*Though it is an option, Tim does not include any contracts in his commission arrangement. More on this later.

Step 3

If everyone involved is feeling good about the arrangement, he introduces client and freelancer, and let’s them sort out any further particulars that need discussed. Tim checks in with the freelancer every now and then to ensure things are going well. Monthly invoices are forwarded to him by the freelancer, which he responds to with an invoice of his own for 10%.

*As a reference for those who are unfamiliar, commissions and referral fees are standard in many industries. Also, most big freelancing platforms like Upwork, Freelancer, and Fiverr take a whopping 20% of all income freelancers on their platforms make, which is considered by many freelancers to be quite high.

This video cut a bit short when our connection was interrupted, my apologies for the technical glitch. The complete description is written above.

How To Build A Network Of Trustworthy Freelancers

This began for Tim with a single client that he wanted to pass on to another freelancer. He made a post on his LinkedIn account asking if there were other freelancers who would want to take a job he did not have time for – nothing special, just the general post function. Not only did many freelancers respond, but a lot of people tagged freelancers they knew who would be interested.

Now armed with a long list of candidates with time for new projects, he set out to do his due diligence. He reached out to the ones who were best qualified and got to know them. He made sure to check their CV and talk with them personally about their skills and experience. He explained the commission system he wanted to work with. The freelancers were excited, and said that the arrangement seemed fair. There was a general sense of “when you have a new project, pass it on to me, let’s see how this works.” Tim also made sure to check out all their social profiles and get a sense of them as a person. Since then, there he has a project he does not have time for, he has a network to contact.

We noted that there are two general strategies you can use to build and utilize such a network. First, it’s worth noting that any number of social networks or other websites could be used to build a candidate list. Job posts, generally speaking, get a lot of attention, applicants, and recommendations. LinkedIn is already important to Tim – 50% of his leads come through it – but there are many sites that could be used to build a circle of high quality freelancers. Facebook groups, industry specific forums, blogs, and other sites that the relevant professionals frequently visit are also perfectly viable options.

Two strategies for building a freelancer network:
  1. The Quantity Approach
    1. This strategy would be to focus on having as many freelancers on your list as possible. It is easy to throw out a post on social media, or a job site such as Upwork or Fiverr, and get tons of replies. The idea would be to refer as many projects as possible, with the idea of generating income quickly.
  2. The Quality Approach
    1. This is what Tim uses and strongly recommends. With this approach you take the time to familiarize yourself with the client and their needs, and also make sure the freelancer you are passing the project to is actually capable, professional, and trustworthy. Focus on a smaller number of high quality professionals that you build work relationships with. Not only does this mean that the freelancers you pass clients to are much more likely to be honest and actually pay you, it also serves the crucial function of protecting your personal brand and reputation. Tim sticks with people he has worked with and has gotten to know.

To us, the quantity approach seems very short term focused and likely to fizzle out, whereas the quality approach is a better, honest, and longer term strategy. Your personal brand will be damaged if you refer a freelancer and they do a shit job. If you gain a reputation for passing clients off to bad freelancers, they will not come back to you. The quality approach also carries the benefit of helping to establish you as an authority. Clients and freelancers may begin to seek you for your network, and advice on who to work with. It’s just a matter of putting in the time to get the right people.

How much has he made so far?

For Tim this is still relatively new. He’s only just reached a point in which he is overbooked with clients. In the time since he started these arrangements, He’s made a couple hundred euros passively, and a new project will soon bring him 500 euros a month without any further effort on his part. It is important to not that this is not something he considers as a main source of income. To him, this is a side project that diversifies his income streams and gives him more flexibility, but ultimately it is supplementary to his other work.

This method has many implications. Even clients who have trouble keeping their pipeline full will occasionally have many projects offered at once, or they might have a client who is a bad fit. There is also ample room for collaboration – a designer, for instance, might have a client who is also in need of a programmer, or a writer. The implications are far reaching.

Questions From Other Freelancers

Before the interview we collected some questions from freelancers around the world. Here are the answers to their questions.

Melina – How did he get so many clients in the first place? How did he build such a robust pipeline?

One of Tim’s biggest advantages is he can do for himself the same thing he does for his clients. His main focus is content marketing, which is all about how to attract new clients. He uses those same strategies to attract his own. For him this probably makes marketing himself a little easier, but freelancers in other fields can absolutely replicate his methods.

Tim publishes a lot of free content related to his industries. He likes to help other people and writes articles with useful information. He publishes on his own website, LinkedIn, Twitter, and has his own newsletter. He repurposes content and combines all these channels to essentially publish as much as he can and get his name out. When he has a lot of articles on the same topic he combines them all into an e-book, which he then spreads through these channels as well. This kind of output and audience establishes him as an authority, and clients seek him out. This, combined with referrals and network contacts, is what has expanded his client base quickly.

Because he’s just focused on two things – content marketing and copywriting – it’s easier to make sure his name is associated with these two fields. This approach would be more difficult for freelancers whose skillset is more broad and diverse, or who do not have a well defined niche. There’s more competition and topics there are out there, the harder it is to build your brand.

Tim emphasizes making sure to keep yourself on the radar. You have to keep promoting yourself. If you are on the radar you are establishing yourself as an authority. This is especially useful if you want to make money from referral commissions as we’ve outlined here.

*The practice of giving instead of asking is often recommended in social media in particular. The more you give, the more value you create, the more it will come back to you.

Nicole – Do you keep the clients you refer, or do you never hear from them again once they work with other freelancers? Do you use contracts? How do you manage invoices?

It depends on the project and the person. He started to do this just a couple months ago, so some of it is still a work in progress. To him it’s quite important to maintain the relationship with the freelancer. The next time you work with that freelancer, you want to know that everything went well with the project. Importantly, if you lose the connection, you might lose the invoices. You might not get the commission. But if you keep the relationship going, this is less likely to be a problem.

Tim doesn’t use contracts or strict rules when it comes to collecting his referral fees. He considers the commissions as a nice extra bonus. He likes to get to know other freelancers, and thinks it’s fair to get the commission. Having to send constant reminders or worrying about contracts would ruin the fun of it for him. If he needed the money badly, then he would have taken the job and not passed it off in the first place. He does, however, write out a document in which he explains his expectations, which is important for clarity and to avoid misunderstandings.

Of course it’s possible to write up a contract and have extra security that you will get your commission, though the particulars will vary widely depending on what country you are in. It would take some research up front to make sure the correct legal terms and conditions are in place, but once done, in most cases it would be easily repeated.

Camilo – How do you know you can trust the other freelancers, especially if it’s the first time you’ve worked with them? How do you vet freelancers that you met through a post or recommendation?

Tim says you should handle that the same way you handle a job application. Check them out – visit all their social media profiles, look at their CV, visit their website, and have a Skype conversation to see them face to face. If after all that you still don’t have a good impression of a person, you just shouldn’t do it. The client will make his decision based on experience and their gut. So should you.

Supposedly you could call a reference, but at that point you might be moving towards becoming a mini-agency.

Are you ever worried that a bad freelancer will damage your reputation?

Not really, but there is no denying that you are taking a risk. You can reduce that risk by vetting, and by making the right connection. Get someone who specializes in the field and style that the project needs. Make sure the fit is good.

Cecilia – Do you manage the communication/ relationship between clients and the freelancers you pass them to?

Tim doesn’t have a specific protocol or procedure. Freelancers are very happy to get projects, so the feelings are positive. It comes naturally to check in with them and see how things are going. Maintaining a positive working relationship is central – it’s not like he calls them up with a clipboard and interrogates them. He has some reminders in his calendar but often doesn’t need them. The freelancers often get in touch to update HIM about how the project is progressing. He’s making money and helping other people, which creates good vibes.

Do you check in on the client side as well?

He doesn’t often check in on the client side. A client recently sent a message thanking him for a great experience with a referral, but Tim is more focused on the freelancer.

Lujan and Marta – Do you use info products, affiliate links, or other methods? Do you have any supporting materials?

Apart from the content he already publishes, there are no supporting materials or extra tools he uses for the commission arrangements. It might be a good idea, especially if you wanted to scale it. Affiliate links sound very impersonal to him. Maybe the more you use this strategy, the more you need those tools, but so far it hasn’t been necessary.

To him the power of this strategy lies in the personal aspect. He prefers not to use these kinds of tools.

Alegria – Do you ever use an assistant?

Not yet. But he is interested in checking out virtual assistants. Some of his clients and freelancers in his network are using them. Potentially, you could dedicate a VA to finding clients for you. He hasn’t done it personally. Another strategy could be you don’t pass clients off to other freelancers, but instead you build your own employee pool. This, of course, would be moving towards building a business based around that model.

<h5><b>Alegria – Do you ever use an assistant?</b></h5>
<span style="font-weight: 400;">Not yet. But he is interested in checking out virtual assistants. Some of his clients and freelancers in his network are using them. Potentially, you could dedicate a VA to finding clients for you. He hasn’t done it personally. Another strategy could be you don’t pass clients off to other freelancers, but instead you build your own employee pool. This, of course, would be moving towards building a business based around that model. </span>

Gerardo – How do you balance personal life and work so you don’t end up busy 24/7?

Great question, because it’s kind of the whole reason he started this project. How full do you want your schedule to be? Ask yourself. Tim sets a work limit of 25-30 hours a week max. For him this is perfect. Sometimes he takes on more projects than this because they are really exciting and he wants to work with the client. But mostly he refers them because he doesn’t want to exceed the limit he has set for himself.

If you consider your own free time as holy as your work, or your clients’ demands, then you protect it. Imagine this common scenario: You want to spend time with friends, or read a book, but a client calls you up and wants something done right now. But your time is just as important. He’s noticed that when you tell a client “no, I’m having dinner with friends,” you might expect they would be angry, but he finds they respect you. This is because you’re being honest, and you consider the things you do to be important as well. He thinks more people should do this. He became a freelancer to be a “free”-lancer. He doesn’t want to be a self-employed double employee.

*Tim, among other things, is living example of freelancers who have built full client pipelines without killing themselves with 60-80 hour workweeks. Everyone’s situation is different – the lifestyle certainly comes with many challenges – but the work/life balance is achievable.

Thank you and last words

Let us know if you have anymore questions! We wish everyone luck. Have fun with it. Help other people if you’re full of work, and enjoy everything that comes.

Do you work remotely and have a method or resource to share? Get in touch. 

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