The motivation behind the drive towards freelancing is remarkably similar to the drive behind entrepreneurship: tired of the 9-5, tired of the commute, tired of working for someone else, and desiring an independent pursuit of what you really care about.
In both cases, you might be responding to a gap you have noticed in the market, trying to make things better with a vision in your mind which can’t be realised when working slavishly for someone else. But if you start out freelancing and things keep going well, if the clients keep rolling in and your stock rises, you might reach the point where it becomes attractive to put the one-man-band on hold and scale up into a small business.
There are some questions you might want to consider, before taking the plunge:
How do I know if I’m ready to expand?
There is no single correct answer here, but the signs should be pretty self-explanatory. If you are forced to turn down a lot of exciting and valuable work because you are otherwise too busy, then it’s likely that you could benefit from expansion and taking on some staff.
Do I actually want to expand?
This is a question which shouldn’t be laughed at. Some people can feel pressured by their success and try to expand when they really have no appetite for it. For some people, going freelance was a choice of lifestyle, motivated by considerations of work-life balance, and running a small business won’t necessarily square with that. For someone who pursued a freelance lifestyle for less stress and structure, the new challenges and stresses involved in hiring and managing staff could be unpalatable. You might need more resources to grow, but that doesn’t always require becoming a bigger business in terms of personnel (it might be possible to outsource some of your business to other freelancers). Growing into a business can be incredibly worthwhile if it is what you want, but it can also be a big change, so make sure that you are honest with yourself about what you really want out of it.
Does it make financial sense? Do I have the skills?
First and foremost, once you have an idea of the costs involved in scaling up the business, taking on new staff, more space, and probably more marketing, will your business still be as profitable? The bottom line can depend on whether the effort you put in is worth what you will get out? These are the sorts of questions and figures you need to have answered and worked out before you even contemplate expansion. Secondly, the skills that have made you a great freelancer aren’t always the same as those which would make you a good business owner. The skills required to build a profitable business and manage staff aren’t the same as those you will be already demonstrating – although that’s not to say you don’t have them. Ask yourself what skills you will need and if you don’t have them, where can they come from? Will you need extra training or simply more help?
If you are pretty set on taking the leap, here are a few things to think about and build into your plan going forwards:
Market your business, not just yourself:
Steady growth will depend upon investing some time, money, and effort into your marketing strategy. Give clients the sense they’re dealing with a business not an individual. A lot of people are far more comfortable doing this, as talking up one’s business and projects can sound more sincere and less arrogant than promoting yourself. Make sure you outline the core values of your business – rather than yourself – and stop using ‘I’ in any promotional/marketing material; use ‘we’ instead. You need to very purposefully create a brand image that shows off what you think the strengths of your small business are, demonstrating how it stands out from the rest, while developing a cohesive marketing strategy that will make the most out of your business’s strengths and exploit current market conditions. Failing to spend enough time on marketing and management may leave you with an excess of manpower and shortage of projects.
Find staff, and once you’ve got them, use them. There are only so many working hours in the day, and everyone needs to get some sleep, so if you want to grow your business you will need to focus on areas such as marketing, while trusting your new staff with other activities. Part of your new responsibilities will be getting a clear grasp on your cash flow. When freelancing you will experience hot-streaks and lulls; which you can soldier through with a little bit of good planning (or lean living). But now that you have employees to worry about, ‘lean living’ isn’t an option. You need to be able to handle your cash flow and pay those working for you. Nobody can work for compliments alone; if you can’t pay up your business may shrink down and collapse back in to a lone-freelance operation.