Freelancers are driven by many of the same motives as entrepreneurs. You want to be your own boss, do things your way and take control of your own destiny. The big difference is that as a freelancer, there is a limit to how much you can grow your client base, with only so many hours in the day, and only so much you can reasonably charge for your time.
Plenty of freelancers are totally fine with this arrangement; happy with the flexibility and control it gives them over their schedule and how they work. There are others, however, who end up craving something bigger, whether that’s a desire to make more money, work on larger projects, or build a team around them. If you reach that point, it’s a good sign that you’re ready to make the jump from freelancer to entrepreneur.
Of course, making the transition can be pretty daunting. So, where do you start? Andrew Clough, founder and managing director of The Brew gives his thoughts.
Freelancing provides you with some of the skills and attributes you’ll need as a fully-fledged entrepreneur, such as self-motivation, business development and managing your own tax affairs. But it’s important to be aware that running a business isn’t just an extension of being self-employed, bringing loads of extra responsibilities on top of your core service.
“While a co-founder isn’t essential to start a business, there are numerous benefits to having one”
You’re likely to face a steep learning curve in areas such as finance, leadership, hiring and firing, managing a team and marketing your brand. You should also expect to take a hit on earnings – at least initially – while you juggle hiring staff, putting processes in place and building up your client base.
Do your research
All these new challenges mean it’s wise to do plenty of research before you start, to ensure you understand the challenges in your particular industry, as well as how you can stand out from existing businesses. Try to have a chat with some people who have done it before, as they’re sure to have plenty of advice about the biggest pitfalls and how you can make it a success of your new venture.
Also, don’t forget to check out software that can streamline processes and can simplify or automate certain tasks, everything from managing your accounts to HR issues such as absence management and holiday booking.
Take it in stages
If you’ve got more work than you can handle as a freelancer, a good first step can be to find another freelancer or contractor to support you in the short-term – allowing you to take a cut of 10 or 20 per cent on their fees. Doing this enables you to handle bigger projects, while also developing the processes and plans you need to take the next step.
Find a co-founder
While a co-founder isn’t essential to start a business, there are numerous benefits to having one, including access to complementary skills, help making big decisions and of course, moral support! But to enjoy those benefits, it has to be the right person, or you’re likely to end up with more problems.
You may already have somebody in mind from a previous role, or from your freelance network. Just make sure you’re aligned in terms of your ambitions, objectives and that you have clear areas of responsibility, before you finalise anything – there is nothing messier than divorce!
Redefine your offering
Chances are that as a freelancer you were a technical specialist in one or two key areas, whereas as a business you have the opportunity to expand your offering. So, if you are an expert copywriter, you could look to develop a variety of content services around that, by bringing in designers, video or SEO specialists. Providing a one-stop-shop for clients will give you the potential to win bigger and more interesting projects, and of course command higher budgets.
Make that first hire
Without employees, you are technically still freelancing, so hiring your first member of staff is an important milestone. Think carefully about the skills you need based on the kind of business you want to build, and the areas where you and your co-founder are lacking. For an agency model, a good strategy is to hire talented junior staff, who are cheaper at the outset, but can be trained up and nurtured in line with your business ambitions.
However, you may also require some more specialist skills to enable you to offer a more integrated service. Either way, you’ll need to put some recruitment and training policies in place quickly, including job specifications, employee contracts and benefits packages. Also think about whether you want to share business equity with early hires, as this can provide an additional attraction and incentive.
Is it scaleable?
A lot of freelance models are based on being very good at one particular activity, and then charging for the time it takes to deliver. But, in order to make a more scaleable, profitable business, you could look at moving away from this model, to creating a product or service to sell for a fixed price.
“You’ll be busier and more stressed than you were as a freelancer – and earn less money to begin with”
That could be packaging a number of services up and charging per project, or developing a monthly retainer. Alternatively, you could look to build a new tool for your sector, which can be licensed or sold as a subscription. So, if you’re a self-employed accountant, that could be developing a piece of software, or an app, that makes life easier for other accountants, or their clients.
While this might be a greater departure from what you do now, the reward is likely to be greater scaleability and revenues in the long-term.
On the less exciting side of things, as an employer you have certain legal obligations that you didn’t have as an independent professional, so make sure you have these ticked off. For instance, you need to register as an employer with HMRC and invest in employers’ liability insurance, which is a legal requirement.
Also make sure you’re on top of any employment regulations you need to abide by, such as minimum wage, parental leave, pensions and flexible working.
Having made the scary leap from freelancer to small business, I can tell you that it isn’t for the faint-hearted. You’ll be busier and more stressed than you were as a freelancer – and earn less money to begin with.
But if you plan properly (with a written business plan) – and you’re in it for the long-game and know what to expect, it also has the potential to be infinitely more rewarding – giving you the chance to build something bigger than yourself, learn tonnes of new skills and create jobs for other people. And if it does all go wrong – freelancing will always be there.
Harriet Gingell, principle and owner of Sparkle Dance Studio in Preston discusses her move from freelance dance teacher to business owner.
I started straight out of school at 17 as a freelance professional dancer all over the world, working for many high profile companies, performing for celebrities and royals. However, despite what many people think, the life of a professional dancer is far from glamorous. The constant battle to get paid, endless unpaid rehearsals, living where you’re told and with whom was exhausting.
In four short years it was time to unpack my suitcase and do something that gave me purpose. I’ve always loved teaching so I knew this was the route I had to follow. There was a huge gap in the market for affordable dance classes in my area so I gained my teaching qualifications with the Associated Board of Dance and in January 2015 I opened my school.
We started with three classes on a Saturday morning in a church hall with six inspired dancers, and almost four years on we have over 150 students, more than 40 classes a week, contracts with local primary schools, three employees and our own premises complete with two state-of-the-art studios, which is far more than I could ever have imagined at the start of 2015.
“Stand out from the crowd, know your competitors, always try to improve yourself, and give it all you’ve got”
Being your own boss is tough! You have to be motivated and you have to want to make it work as it’s far too easy to give up. The first two years of business I also worked a full time job to grow my business from its profits. I quickly learnt that I’m not very good at working for someone! I don’t like being told what to do and I’m far too opinionated to work in an office setting.
In November 2017 I was working up to 90 hours a week between both jobs, no work-life balance, I no longer needed the financial support of the full time job and after yet another heated discussion in the office it was time to take the leap and run my business full time. Life has never been better!
While growing my business I’ve had no financial support and had very little advice given to me so I’ve had to learn a lot through experience. The most important things I’ve learnt so far are use all social media outlets, have an informative website, charge what you’re worth, give the service you’d expect to receive, remember you can’t please everyone, be reliable and consistent, record everything in writing, and invoice for EVERYTHING!
For anyone reading this thinking about starting their own business, make sure you stand out from the crowd, know your competitors, always try to improve yourself, give it all you’ve got and you won’t regret it. (And learning to function on very little sleep will also be very handy).