I freelanced making websites, e-commerce shops, and web applications for several years before incorporating and running a business. At first I didn’t know if I ever wanted to move on from freelancing. Running a business is hard enough without the pains of employment, offices, phone lines, articles of organization, and so on. Eventually I knew that it was less about the job I wanted and more about the life I wanted.
After much deliberation I decided to build a small business. But the plan was to keep it small. Really small. Not in breadth, reach or income, but in team size. A small, nimble organization keeps things fast paced, fun, and allows for the flexibility that comes with the freelance lifestyle. On the other hand, managing a team means leverage so that my time can be spent in my favorite activities, and others’ in theirs, and we all make fairly good change from it at the end from whereever we want.
Recently a local client of mine expressed similar concerns. Her primary concern was that, in a consultation, she expressed three concerns with making her freelance business generate a stable income and relevant presence: growth, hiring, and location. The following are some insights I would like to share based on that consultation.
Generally freelancers have a wide variety of services they provide. This is often because they want a wide net to catch the most fish, or because they haven’t settled into the service they want to focus on.
If your company has no standard rate, but that you have several services with different rates, I would recommend focusing on your support services in order to to gain the highest leverage. Once you’ve determined you can do this, raise your rates a touch. Even $5 or $10/hour can make a huge compound difference! Identify the service that is most requested versus the service you prefer to offer most. Focus on these two, and gear toward them so it’s easy to market to.
It may seem like shrinking, but that’s the magic in this illusion. Knowing exactly who to target means that prospecting and sales is now a science, rather than a guessing game. A series of niche testimonials makes a great case to close out any competition in the exact arena you are focusing on. This also makes it easier to turn down work. “Why would I want to do that?” I’m sure you ask. In short, when running a business, decision making is your primary activity. The ability to accept or shut down work in seconds rather than minute or hours of deliberation will not only provide peace of mind, it will free your time.
There are two paths I’d recommend in hiring. The first has a high success rate but requires more cash flow; the second is harder but has less risk.
1) Find/train a contractor to do your simplest high quantity service. For this, you would have a freelancer/contractor whose job it is to take your work as soon as it arrives and prep all of the easy tasks. For instance, a support job might require initially installing firewall software or registering DNS filters. Their job would be to do this the moment work has been acquired, leaving more complicated or specific configurations to you.Your primary job would then to be to make sales until your hire is completely booked, after which you could break from sales to take all of his work over down the line, clear the pipes, then return to sales. The problem is that constantly running contractors require fast, consistent cash flow
2) Find/train a salesperson to sell your physical products on commission. This one would have a trained salesperson sell your Seagate hardware to clients. You would include a markup enough for you to gain profit and her to earn a commission. Her pay would be largely based on the volume she sells (since products are more leverageable than services) and can produce more revenue faster. This means you can focus on sales and work with the assurance that there will always be a consistent income. The problem is that it requires a skilled, knowledgeable sales person, which can be hard to find, and harder to negotiate a commission with.
In either case, don’t hire unless you’ve met these three criteria:
- The job you’re offering is necessary to the company. This can’t be something you can go a week without tending to.
- You have enough work in the pipeline the be suitably booked yourself.
- You have enough saved to pay that person for one month if income died.
Also, prepare yourself to know where to find a new employee BEFORE you need them. This means that you should identify the site, agency, or audience you will farm in to get your next hire when work is light. When you’re slammed and need to release pressure on the valve is no time to need to break and build a Linked In or Craigslist strategy. This means you can go straight into prospecting immediately.
Concerning Office Space
Wilmington and RTP are rife with coworking spaces. UNCW’s CIE or the more expensive (and exclusive) TekMountain, along with AU and others in Raleigh offer affordable opportunities for space.
If you aren’t ready for that, try to make deals with existing agencies you fill a whitespace for. A whitespace is some service or expertise you offer that they don’t. This way, you can sit in their spare office space and invite clients there. In return, you are on call to help with their services for a highly reduced tenant fee. I’ve done this myself with local journalists and another digital agency.
On the whole, I wouldn’t concern myself with this at an early stage. Coffee shops, Skype, and tea house conference rooms are plenty and more affordable. When it’s time for you to expand, typically you will know. Focus on having a discretionary $20k available before worrying about renting space. The fees can become ridiculous on top of moving, security, storage, insurance, and networking.
The trick is to have preparation as you go into each new phase. Choose potential clients in your field, know where to find our hires, determine which office scenario you will want. Further, be consistent. Make sure you reply in timely ways and are available when you say you will be. This will keep loyal customers. By offering fewer services and to fewer industries you’ll be less likely to ever over promise.