There comes a time in many small companies’ and freelancers’ lives when they want to grow their businesses and reach a new level of sales and profitability. There are four tried and tested ways for freelancers to grow their businesses without too much stress. Deciding how you will grow your business may be the most important decision of your business’s life.
James Cash Penney, the Founder of JCPenney says, “Growth is never by mere chance; it is the result of forces working together.”
There comes a time in almost every successful business when it’s time to broaden your horizons and grow your business. There are four common scenarios for business growth—and we’ll take a look at each of them here. There is also a scenario to which you want to give very careful consideration listed at the end.
Scenario 1: You’ve Hit Peak Earnings – So Branch Out
It doesn’t matter what you do for a living—sooner or later, you’re going to maximize the hourly or project rates that you can get for your work. This is true even when you’re selling value rather than fixed rates. This is your “peak earnings”.
One way to increase your income without hiring anyone or outsourcing is to develop your skills and branch out into new areas. If you can obtain skills that are more valuable to clients—you can sell those skills for more money.
The alternative way to branch out is to start offering your services in a better-paying marketplace . If you do websites for restaurants, they’ll normally have a limit on how much they’ll invest in a website. Tech companies, on the other hand, have much higher budgets for websites. Catering, excuse the pun, for new client groups can be a great way to boost earnings.
This is a great solution for those who enjoy the solofreelance life—and that’s a lot of freelancers. They don’t want to freelance in order to become large company owners; they do it to earn cash and enjoy the way that they live. The “price” of being footloose and fancy free in this sense is the shift in focus from potential big money generation to lifestyle. Time is precious, too.
Author/Copyright holder: Phil Oakley. Copyright terms and licence: CC BY-SA 2.0
Branching out is something that even the biggest companies use to grow. Not every Google product turns into a huge success, but enough do so that they are now one of the biggest technology companies in the world.
Scenario 2: You’ve Hit Peak Earnings – Outsource
Outsourcing can be a good way to increase the capacity of a business without having to hire people (and give them employment rights, etc.).
Given the abundance of freelancing sites such as Upwork and Guru, it’s pretty easy to find outsourcers.
You will need to take this slowly—try smalltest projects and gauge competencies rather than dumping large projects on unknown quantities.
One of the joys of outsourcing is that if you have a bad month, you won’t be paying salaries and benefits to employees – if you have no work, you’ve no outsourcing to do.
However—conversely—outsourcing requires a greater amount of trust (because of reduced oversight) in the outsourcer than with an employee.
Don’t forget to ensure that you incorporate the costs, not just of the outsourcer but also for your time to manage the outsourcer – otherwise, you may find outsourcing much less profitable than doing it yourself.
Author/Copyright holder: Sacha Chua. Copyright terms and licence: CC BY 2.0
Outsourcing decisions can be made at any time. This is a pretty good process for deciding on outsourcing as a freelancer orentrepreneur.
Scenario 3: You’ve Hit Peak Earnings – Partner or Hire
You may decide that you’d rather build a stable practice that isn’t dependent on outsourcing. This will normally involve taking on either an employee (or employees) or some kind of business partner.
Taking on Employees
You need to make yourself familiar with the employment laws of your country. In particular, you need to understand taxes and benefits related to employment. For example, you should carefully research if you as the employer have to pay the employees when they or their children are ill, if they get pregnant, if they get selected for jury duty, if your country requires you to pay for their health insurance, etc.
You need to examine your cash flow and ensure that you at least have enough money to pay the employee(s) for a few months while you scale your business to get enough work for them to make you a profit. Again, don’t forget to ensure that you incorporate the costs, not just of the employee(s) but also for your time to manage anyone you take on. Being a good, motivating, supportive and effective leader is more time-consuming than you might think. You should also take into account that being a leader requires new work tasks for you—meaning you will have to subtract the time working as a manager from the time you will be doing your normal work tasks. Some people love working as leaders and managers. Others are not thriving with the new responsibilities and feel that they have important work time stolen away from them. Overwhelmed by the prospect that they may have bitten off more than they can chew, they’re left feeling stressed and frustrated. You have to figure out the pros and the cons for your freelance business as well as for your working life before you take on an employee. Regardless of your personality type, the impact of involving more than yourself in your concern can suddenly take on unexpected sources of angst. Nevertheless, don’t overlook the potential joys, either.
It may be that it makes more sense to outsource work initially than to take on employees. You can always take on an employee once the volume of work justifies this and cancel the outsourcing arrangement at that point.
If you are going to take on an employee—you must have a specific plan for him or her to add value to your business from the day of hiring. Never stockpile talent in the hope that you might need it “one day”. It’s wasteful and expensive. It also makes for a lousy job for the stockpiled talent to wait around for that “one day”, too.