There’s no denying that freelancing is a difficult and stressful life. You don’t get paid unless you find the job and successfully complete it. No one holds your hand through the process. You have to be resourceful in order to learn what you need. You have to know a lot about a lot of things, not just in regards to your industry but also general skills such as communication skills and marketing your skills with the world. Not to mention, you’re required to manage your own finances and ensure you have enough money left at the end of each month for expenses such as rent and utilities. You also have no one standing over your shoulder to make sure you work hard enough, because if you don’t do a good job freelancing… well, there’s no one there to make sure you get paid.
This article is not meant to tell freelancers that they should quit their job and work for an agency, but rather inform those who have always wanted to run their own business of things to think about first before diving in head-first. Running a business is a lot different from working as an individual. There are so many more things to think about and handle, not just the work itself.
Here are 12 things you should do if you want to go from a freelancer to running your own agency, and some tips to grow your agency.
1. Pick a niche
One of the biggest mistakes new business owners make is having a diverse range of services they offer to potential clients. While diversification can be lucrative, it often requires you to work on more than one project at the same time, and managing multiple projects with different people is not always easy. Having a specific niche can make it easier to promote your services and attract potential clients who need help with the very service you specialize in.
Focusing on one thing will benefit you more than you think because if someone needs what you’re offering, they are more inclined to hire you over the competition due to the fact that it’s already clear that you can handle this specific type of project.
Having a niche and specializing in one thing (whatever that may be) will help attract clients and make it easier to market yourself. Just make sure you do your research before deciding what your niche is going to be, because if all of the competition has already specialized in something similar to your idea… well… you’re going to have a hard time convincing someone to choose your services instead of theirs.
Diversifying yourself can be profitable, but it’s not always the best option for beginners or those just starting out a business. Know when diversification is good and when it’s bad so that you know what direction to head in.
2. Jump on an emerging trend
Hopping on a trend that has just emerged can have a huge impact on your work. If you are very early on a trend, clients will pay more for the initial find. This is due to the fact that there is not much competition yet and they don’t know who else can provide this type of service. Do your research and see if there is a way you can build yourself up before the trend becomes too competitive.
3. Do free work if referrals are built-in
Working for free can come with its own problems. However, if your client is willing to give you a referral (i.e., “Hey, I can vouch for them, and here’s how we met”), it might be worth doing free work for that client as it will lead to more business in the future.
Be sure to ask your client for referrals before agreeing to do free work. You don’t want to work for free and not get anything in return, that’s just a waste of your time and energy.
4. Do value-based pricing
Value-based pricing will help you to get a sense of the value that your services have for a customer, rather than just going off of what industry standards are. You will also be able to see when a client trolling for a bid is lowballing you, and will even help weed out clients who don’t appreciate your work so much they can’t afford it!
Recurring clients can also become your bread and butter; if you can establish a circle of clients who are willing to pay the value that you provide, then they will keep coming back for more. That is how most agencies began!
5. Bill upfront to improve your Cash Conversion Cycle (CCC)
This is very important because it makes your business more flexible. You can increase your cash conversion cycle (CCC) by up to three times, depending on the industry you operate in. Increase cash conversion by ensuring you aren’t waiting 30 days for a client to pay, but more like 7.
Billing upfront was one of the keys to a successful cash flow. By charging for projects in advance, you will be able to build up cash reserves which could then be used for longer-term investments or to help cover any cash flow gaps that might come along.
6. Hire senior people instead of junior people
Now hear us out, we know that junior recruits are less expensive to hire, but they are also harder to manage, more likely to quit, and oftentimes will only be able to work on the tasks you assign them.
Working with senior hires means getting better quality people who can help take some of the weight off your shoulders. With their experience, they can make sure that projects are followed through at every step of the way.
With the right senior hire, you can generate more revenue and get your tasks done faster.
7. Streamline communication and kill email
Train your clients to not email or text you. Get them on a Slack channel if you can. It is also important to note that Slack’s Slackbot is there to help you automate some of your work. Slack has had a huge impact on the way we communicate and run projects at our company. Slack helps us solve some of our company’s biggest issues: reducing response times, killing off email, and creating transparency within the team.
8. Leverage technology to become a one-person sales organization
Never have to manually schedule calls or send follow-ups. Make use of tools that help you automate these tasks like ConvertKit, Mailshake, and PandaDoc.
You can also use technology to manage your contacts and keep track of everything in one place, so it’s easy to refer back to old conversations and stay up-to-date with the status of all your projects. Tools like Contactually help you organize these important details seamlessly.
9. Sell your strategic process but not your execution
If a sales call immediately goes to discussing your rates and them setting the deadlines, then you’re losing big time. You must learn to be a decision-maker, not just someone who takes orders.
Here is how a sales call should go:
-Understand their number one concern
-Qualify them on the call
-Show them that your process is built for them
-Give examples of how your work process has helped other brands like them
10. Know your unit economics as an agency
As an agency boss, you have to keep a close eye on your unit economics. You have to know how much money is coming in from clients relative to how much money your company is spending so you can figure out whether or not your company is profitable overall. If a business’s revenue exceeds its costs it is said to be profitable and vice versa if its revenue does not meet its costs it is unprofitable. According to Business Insider, successful startups have average unit economics of $2.5M.
Some metrics that you should keep an eye on as you grow your agency are:
-Cash in bank
-Client churn rate
-Team utilization rate
11. Get leads in a predictable and repeatable manner
If you want your agency to be successful, leads are important. Having a steady flow of leads coming in every week not only allows you to plan better, but it also helps with your budgeting. Leads are free for the most part, so the more you have the more profit you’ll see on your monthly report at the end of each month!
You will need a lead machine to have a steady flow of leads coming in. Leads can literally be anything from your Facebook page to your Tripadvisor.com listing to Yelp or even just a landing page that you create on Wix or Squarespace with the goal of getting as many email addresses as possible. Leads are literally everywhere, so finding them is very important.
Start investing in channels like SEM, SEO, and partnerships in order to diversify your leads.
12. Embrace results from your team and not hours
If you want your team to put in their best effort, then you must put in your best effort as a leader and give generously.
There’s a big problem with how most people approach their teams. People tend to think that controlling the number of hours they work will result in higher output and results. This couldn’t be further from the truth. If you want to see great results, then you must be able to embrace the results of your team and not the hours they work.
Don’t forget to commend and give bonuses to employees that over-deliver and help drive the company forward.
So what are you waiting for? Go forth and put all this information to work. We know that transitioning from freelancing to running a multimillion-dollar agency is no easy feat but we hope that these tips will be helpful and aid in your success in this new path that you are about to take.
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