So, you’ve already flown the relatively safe coup of a large company, and decided to go it alone as a freelancer. Fantastic! But what happens when you want to take the next step, and turn your freelancing into a fully-fledged small business?
Like setting up any business, preparation is the key. Although you’ve already taken the first scary step, and left the security of a bigger company, there are many more potential risks involved with setting up your own business. If you’ve already considered passing work onto other trusted freelancer friends, it may be time for you to take the next step - delegating in this way is often the beginning of a small business.
We’ve put together a guide for freelancers who’ve found themselves thinking about expanding and starting a business. But, before you decide to expand, there are several things you need to consider:
Do you have the right mindset?
We won’t lie - starting a business won’t be easy, so you need to be sure that you have the kind of personality that can deal with the lows as well as the highs. It’ll be a lot of work, and you’ll end up spending a lot more time working (more than you already do!) in the initial stages, especially on tasks not immediately related to the nature of your business, such as admin and project management.
Do you have enough work lined up?
There’s no point starting a small business if you won’t have enough work to go around – and no work means no money! If you can’t guarantee that you’ll have enough work to ensure the finances of the company will be fine, then it might be a better idea to stay as a freelancer until your customer base (or workload), is bigger.
It’s best not to just judge this on the past few weeks or last month – you need to know your workload is stable, and you’ve not just had a crazy few days! However, if you do have a large surplus of potential work, and you’ve had to turn clients away, passing work onto other freelancers is a great way to start, and as we mentioned, can often be the start of your business empire!
Have you planned ahead/thought through cashflow issues?
Money is likely to be the most important factor you consider at this stage: even if you were making a fair amount as a freelancer, you may now have to consider additional costs: salaries, rent, utilities, business insurance, and of course, cake and beer.
Before you make this decision, work through your finances very carefully. Do you have the money to cover start-up costs? Where will you source any additional money? What will your profits and losses be like? At the start, consider hiring other freelancers, rather than employing people, just in case money is tight. This is the perfect point to look back on your business plan; just to double check you’ve got all the bases covered. Be thorough and realistic: the main reason for small businesses failing is a lack of money!
Will you be able to spend sufficient time training employees?
If you left your job because you didn’t like having to compromise your ideas, or have to explain them, think about how you’ll train new people as well as how you’ll feel about their input on your ideas. If you prefer doing things your way, you might want to ensure you have very clear processes in place that all employees can read and take on board. Remember, at the start, it will also probably take a while to get new recruits settled. If you’ll be hiring people with skillsets that you don’t have, you won’t need to worry about training!
Once you’ve made the decision to turn into a small business, you’ll perhaps want to:
The good bits:
The bad bits:
Think you’d rather stay freelancing?
Regardless of whether you want to employ other people, it can be a good idea to set up as a limited company to legally cover you and your freelancing.
Or are you ready to take the plunge?
If you’ve decided you’re going to start your own business, what do you need to do next? Apart from writing a business plan (which you can find some tips on, here soon), you need to figure out how you’ll get the finances to make your dream a reality.
In the coming weeks, we’ll be looking at the best ways to approach the bank, or the various other paths you can take while searching for funding, so keep your eyes open!
Already taken the plunge from freelancer to founder? We’d love you to share the most useful piece of advice you've received (or lesson you've learned) along the way. Tweet us using the #MOOStartupKit hashtag and pass it on!