Earn More Money by Growing Your Freelancing Business
Posted February 23, 2010 in Business, Productivity 56 Comments »
Do you need to earn more money?
At first, freelancers earn more money by taking on additional clients. However, there is a practical limit to how many clients a single freelancer, working alone, can handle. Eventually, a successful freelancer will be faced with more work than he or she can handle alone. That’s usually when the question of growing your freelance business comes up.
By growing the freelance business, I mean adding additional people to your business efforts so that you can handle additional work (and earn the additional income that goes along with it).
In this post, we’ll discuss the growth of your freelancing business. We’ll examine the best time for a freelancing business to grow and also take a look at several options for growth.
What to Ask Before Growing Your Freelance Business
Before you decide to grow your freelance business, you need to ask yourself the following questions (be honest):
- Am I really getting more requests for work than I can handle alone, or do I just need to manage my time better?
- Are my rates high enough that I can afford to pay another person and still earn a profit myself?
- How much additional business would having another person on board bring to the business?
If your flood of work is due to poor time management on your part, then you are probably not really ready to expand your freelancing business. The best thing to do in this situation is to organize your time a little better. Once you free up more time through better organization, you’ll find that you can take on more paying projects.
Considering your rates is also an important factor in determining whether your business is ready to expand. If you’re charging the lowest market rates for your services, you probably don’t have enough profit margin to bring someone else on board. Remember, you need to pay that person a good rate and still have enough left over to earn a little from the project yourself.
However, there are times when adding another person makes sense even if your time management skills are not what they should be and your rates are low. If that other person can bring new business of their own to the table, teaming up can still be beneficial. The classic case of this is when two individuals have complementary skills. (For example, a web designer and a writer team up. Now the combined business can handle both writing and web design.)
Remember also that you may be able to free up some of your time for higher paying project work if you delegate some of your administrative tasks to someone else.
Now that we’ve looked at the question of whether your freelancing business is ready to grow, we’re ready to examine some options for growth.
Options for Growing Your Business
If you do decide to expand your business by adding others, you have several options:
- Bring a partner on board. In a partnership, you and the partner both share the responsibilities, decision-making, and ownership of the business (your partnership agreement will usually define what percentage of the business each partner owns). You also both share in the profits from the business.
- Hire employees. If you have a lot of work, you can hire employees. The benefit of having employees is that they are usually with you for the long-term, providing some consistency to your business. However, remember that you will be responsible for payroll taxes, withholding, and providing benefits.
- Outsource work. You can also expand your business by outsourcing work to other freelancers or to outsourcing companies. This choice allows you to delegate tasks only when you are too busy to handle them yourself. The drawback, of course, is that you may wind up using different people each time you outsource, which could have a possible impact on quality.
Do you have to bring additional people on board to earn additional income? Not necessarily. We’ll take a look at this question next.
Another Alternative
Of course, there is an alternative way to grow your freelancing income even if you don’t want to bring additional people into your business. It’s simple, but many freelancers avoid it–raise your rates.
By raising rates, you eliminate the low-paying clients who may be draining your time. You’re free to provide a higher level of service to the clients who contribute more to your bottom line.
In the future, make sure to accept only clients who are willing to pay your new rates.
A Few More Thoughts
Remember that when you involve additional people in your business you are still ultimately responsible for the quality of the work that those people provide to your clients. This might mean that you need to implement a review process for checking over work before it is turned in to your clients.
If other people will be performing the work, you should be up front about it with your clients. Instead of saying things like “I will do this,” you should mention that “my team will handle this.” Most clients won’t mind, but a few want to work directly with the person who will actually be performing the work.
Now that your business is bigger, you may want to consider a different business structure. An accountant or an attorney can tell you whether you should incorporate your business.
What Do You Think?
Have you grown your freelance business beyond your start as a lone freelancer? Which option did you use, and why?
Are you thinking about growing about your freelancing business?
Share your thoughts in the comments.
Image by charlietakesphotos
About the author: Laura Spencer is a freelance writer from North Central Texas with over 19 years of professional business writing experience. If you liked this post, then you may also enjoy Laura’s blog about her freelance writing experiences, WritingThoughts
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56 Comments
Tom | Build That List
February 23rd, 2010 at 8:37 amI constantly wrestle in my mind about my pricing. With clients always wanting something cheap, I find myself doing it for the prices they request. Just recently I have decided to set my prices and walk away from the jobs that are not willing to pay my price -after all I am not a charity! I love the idea of outsourcing.
Ed Gandia
February 23rd, 2010 at 8:43 amGreat post, Laura! I would add that the first question to ask yourself is “Why do you want to grow your business in the first place?”
While growing your freelance biz makes sense for many, it’s not the right path for everyone. Sure, if you do it right you can now earn profits from the work of others. But growing your business also creates a level of complexity many people aren’t ready (or willing) to deal with.
In my case, I chose to raise my fees gradually before expanding my biz. Once I got those fees to a very comfortable level, then I began exploring options for expansion.
Minna
February 23rd, 2010 at 8:56 amI’ve found that collaborating with other freelancers has worked very well. It also helps expand opportunities because the other freelancers will either refer work my way or partner with other projects that require my skills. I just work out an hourly rate for them that is slightly lower than the hourly rate I charge clients. And vice versa if I do work for them. I maintain the main contact with the client and manage the project. It has worked out well for me, and now that I have found a few that I can depend on, I don’t have the problem of having to outsource to different freelancers all the time.
Richard Moldovanyi
February 23rd, 2010 at 9:06 amMy business is not large enough right now to consider hiring someone else or outsourcing, but I have raised my rates once in response to getting too busy. That decision alone was pretty tough as I worried how it would affect my clients. It didn’t and everyone stayed on, just now I don’t have to deal with new people looking for charity.
Louisa
February 23rd, 2010 at 9:49 amThat is a really useful post, and I hope to be in the position one day where I’m considering these options. It’s always been in the back of my mind though, that I should have more freelance contacts ‘just incase’ but I wouldn’t know where to start making those contacts. I would love to hear how other people have gone about this…
Thursday Bram
February 23rd, 2010 at 10:13 amI think that it’s incredibly hard for most freelancers to convince themselves to raise their rates. I’m a big believer in increasing my rates every quarter — I know, though, that it takes a lot of self-confidence to do that. If you believe in your work enough to turn it into a client, though, I think you have to believe in your work enough to up your rates.
Jordan Walker
February 23rd, 2010 at 10:16 amAs a freelancer creating a means to generate a residual income has been on the forefront of my thoughts lately.
Salma Jafri - Content Development
February 23rd, 2010 at 10:24 amThanks for asking that question Ed Gandia!
“Why do you want to grow your business in the first place?”
One of the reasons I wanted to (and did) expand my freelance business is because i wanted more time to focus on creating my own products and devote more time to my blog and other websites versus client work. Client work sure pays the bills right now, but i don’t always want to be dependent on that as my only source of income.
So even though I’m very hands on with my (still new) team and I’m still the front-person for clients, I hope to be able to eventually transition most client work to trusted lieutenants while I concentrate on business building activities.
Or at least that’s the plan :) Would love some expert advice from the community here about what they think.
Salma.
James Chartrand - Men with Pens
February 23rd, 2010 at 10:42 amThose are good questions, Laura, and different from the usual “team up!” cheer. I think that freelancers need to sit down and figure out if growing their business is really what they want, can do right now, and in which ways they’d like to do so.
I’ll add a question to your list, too: Are you ready for growing your business? A larger business means more commitment, dedication and responsibility – and while the extra income and gigs are nice, some people just aren’t ready for that leap yet.
Lexi Rodrigo
February 23rd, 2010 at 11:04 amThanks, Laura. Your post raises plenty of good questions for freelancers who may *think* they need to expand their business.
I’ve tried working with an assistant writer so I could accommodate more clients. However, I didn’t like having to manage and monitor another person’s work. I also didn’t like not being as hands-on with projects as when I work alone.
For some freelancers, staying small may be the perfect solution. Not everybody wants or needs to get big. I know of freelancers who make six-figure incomes while remaining one-person operations.
Laura Spencer
February 23rd, 2010 at 11:44 amThanks for all the thoughtful comments.
I can see by the responses that this is a question that has many right answers. And that’s okay. :-)
The purpose of the post is to get freelancers asking the really difficult questions of themselves so that they can make the best decision for their own business needs.
Some freelancers are comfortable where they are and may wish to remain in the status quo for a long time.
Others may long to grow, but don’t quite know how.
There will also be those who are comfortable progressively raising their rates and others who like to manage people.
It’s all okay and it’s all freelancing. :-)
Keep the comments coming! I love this discussion.
Travis
February 23rd, 2010 at 12:05 pmGreat read! It’s important to stick to your prices, as if you give too many freebies or discounts away, it will be much tougher to justify raising your rates to clients later.
Kirk True
February 23rd, 2010 at 12:35 pmI’m right at the start of trying to grow my business. I have too much work for myself, which is a good thing. But my issue is that it’s proving to be very hard to find (good) people to which to outsource :(
iLoveCoding
February 23rd, 2010 at 2:33 pmNice motion. Growing is definitely essential for anybody. But how is a difficult question to me? Hiring employees on board – hmm, will that set a lancer free? Will that retain a lancer status intact. Or a lord will ultimately evolve out of a lancer? So free-lancer will become free-lord or captive-lord depended on other freelancers? I do not know.
Lillie Ammann
February 23rd, 2010 at 2:40 pmLaura,
I have deliberately avoided growing my business other than raising prices. I spent 20 years in the business world with up to 18 employees, and while I enjoyed it for many years, I no longer want to deal with the hassles.
However, I have reached the point that I need to consider the future. A couple of my clients have asked me to ensure someone will take care of them like I do if anything happens to me or if I decide to retire (I’m nearing that age). So I’m thinking about bringing someone in to help me out now and eventually take over the business. But finding the right person will be a challenge, I know.
Amberly | Web Designer
February 23rd, 2010 at 3:02 pmAmazingly well written article. I truly enjoying reading your article.
Webby freebies
February 23rd, 2010 at 3:19 pmInteresting post! I am actually starting to work as a freelance web designer my self, so this post helped me.
Thanks!
Lisa
February 23rd, 2010 at 3:21 pmExcellent topic and comments!
Some things I’ve had to keep in mind when outsourcing are whether a confidentiality agreement has been signed with the client, how much time will potentially have to be taken to revise their work because it is going out under my name, and whether the difference between what I charge the client and pay the sub-contractor covers that time and effort.
Like Salma above, I would like to find collaborators so I can spend more time on other, long-term business goals (I have a couple of book projects in their infancy), but the pros and cons of outsourcing or hiring employees will have to be weighed carefully.
If we enjoy the actual work we do as freelancers (translation and writing in my case), it’s important to consider to what extent you want to get involved in running a (larger) business, which could prevent you from doing that work.
As with many things in life, that balance can be elusive. Hopefully ideas for solutions will come through discussions like these!
Laura Spencer
February 23rd, 2010 at 3:53 pmWow!
What a great community we have here at Freelance Folder.
Everyone has a different experience and their own unique perspective on how to handle the issue of growing their business.
As I said earlier, this is one question where there are MANY right answers.
For those of you who are just getting started as freelancers, or who are considering growing their business–be sure to take your time with the decision. It’s important to pick the option that works best for you. Hopefully, this post (and the comments) will help you make that decision.
Leanne
February 23rd, 2010 at 4:02 pmI’m at the early stages of my freelancing career, but one thing I’m always holding in the back of my mind is something that both Salma and Lisa hint at:sometimes earning more by growing your business doesn’t have to mean doing more work directly.
Even if you hire someone or go into partnership with someone or outsource some of your jobs, you are still directly involved in the work (because you’re coordinating the freelancers *you* hire, or you’re overseeing/editing the work of your employees, or you’re negotiating admin responsibilities with your new partner.)
Another answer is to create products–resources, templates, classes, that sort of thing–that require a one-time investment of your time as the freelancer, but that will continue to deliver backlist revenues. It’s the same principle as in book publishing: yes, there’s an investment of time and energy and money up-front, but if you wind up with a winner, you’ll continue earning on that particular book for decades to come, and all you have to do is reprint or maybe revise periodically.
Celeste Stewart
February 23rd, 2010 at 5:00 pmI’m one of those people who likes to do everything myself, so outsourcing is not attractive to me. That said, I do have a few reliable writing buddies that I know I can count on should I ever need a favor – and vice versa.
Nick Burd
February 23rd, 2010 at 5:04 pmGreat post. I am just starting off freelancing full time.. I find myself not as busy right now, but periods come across where I am busier than the rest of the month, etc.
p.s. looks like the stumble button is broken..
Julia
February 23rd, 2010 at 6:02 pmI’m thinking about growing my business, and this post came really in time for me. Thanks!
Nicole Foster
February 23rd, 2010 at 6:09 pmAnother great article Laura!
I just raised my rates starting in January, but I have been having a hard time finding clients. I’m afraid the rates are scaring off even the small businesses I talk to locally. Either that or it’s the lack of portfolio pieces. Right now, I have 3 portfolio pieces I am personally proud of because the rest were for cheap and were poor quality.
Click the link in my name and tell me what you think about my portfolio and my pricing. I know it’s either one of those that are scaring off potential clients (or I’m not looking in the right place).
Laura Spencer
February 23rd, 2010 at 6:46 pmHi Nichole!
I think that your website looks professional and your pricing is actually lower than what I’ve seen other web designers charge. (However, you might want to check around and see what other designers are charging for yourself.)
There are two factors at work right now that are slowing business down for many freelancers:
1) We are in a recession and some businesses won’t commit to “unecessary” costs like updating a website.
2) Many new “freelancers” are entering the market as those who are laid off look to freelancing as a possible way to make a living.
Don’t panic. I can’t tell for sure, but I don’t think you’re doing anything wrong with your website or pricing. (Other community members might see something that I didn’t.) Instead, you may want to re-examine your marketing efforts to see if you are overlooking something there.
I hope this helps!
Laura Spencer
February 23rd, 2010 at 10:07 pmGreat comments everyone. Keep them coming!
paul
February 23rd, 2010 at 10:10 pm@Nicole : I agree that your rates are not expensive, maybe it’s your marketing strategy?
I find myself spending too much time communicating with clients about their projects, rather than doing actual paid work. I need to find a way to reduce this unpaid time.. At the moment, I’m pretty busy, so that’s a good sign!
I’d like to develop a partnership with other developers so that we could cover for one another..
Glenn Sorrentino
February 24th, 2010 at 12:33 amI think getting to the point of hiring employees is an exciting idea. Instead of being known as a freelancer, being known as the company that you created is an inspiring thought!
Salma Jafri - Content Development
February 24th, 2010 at 8:03 amLisa & Leanne: one more thing I’d like to add to the build a business versus a one-person operation way of thinking is that most successful entrepreneurs know how to either delegate, automate or delete non-essential tasks. The 80-20 Pareto Principle also applies to this theory: an entrepreneur should focus on 20% of those tasks that build the business, and not on the 80% of the more routine tasks. Of course there’s a certain challenge in finding, training & trusting reliable people but once you can do that, you’re free to focus on what makes your business unique.
All this is assuming you want to be an entrepreneur. Of course there’s nothing wrong with not being one either and if someone prefers to do all the work themselves, that’s fine too :)
Ramona
February 24th, 2010 at 2:10 pmIn my case the raising of the rates is the way now,since I am still under my normal comfort zone rates. If the rates will be the ones they should I might earn enough to not quite care about growing too much.
Anyway .. I am thinking about growing my small business in the few years and I will do this by HIRING professionals in my area. I would rather have 1 employee first and then little by little an entire team, than have to work with people from other parts of the world fulltime. I have worked with agencies who wanted to outsource and I can’t say I am too pleased. If I dislike the system, I cannot expect another GOOD professional to be too happy with this and I won’t risk anything. I used to run a small paid forum posts business and the result was that I got to work on my own since my “professionals” ditched the projects when they felt like. I have canceled projects when I felt like my client was abusive or unreasonable, so the best idea is to have someone in the house to work on.
This way I solve another problem: lack of specialized jobs in my area. I have a fulltime employee I can discuss DIRECTLY to and manage the projects together. There is no partnership in my opinion. As long as I have worked my head off to make this business “float” in such dire times, I won’t accept anyone to take a “share” of my efforts. Not even if he/she comes with don’t know how much money to invest. I hire people, not get partners. Most of the time this doesn’t work too well and again, I am not trying to bring in any risks.
Rajib Roy
February 24th, 2010 at 4:36 pmI truly enjoying reading your article.
Aleksandar
February 26th, 2010 at 9:42 amI am very near to moment for that decision – shall I start an agency? I already hire programmer from time to time but it’s not regular still.
Chris
February 28th, 2010 at 10:14 pmI think it’d be difficult to raise rates on existing clients. I think I’d start by only charging the higher rate to new clients. Of course you end up complicating your paperwork, but at least that way your existing customers don’t dump you and all your new customers are premium.
Online Outsourcing
March 5th, 2010 at 5:16 amNowadays the freelancing business has been developing, because of earning more money.
Jeff
March 17th, 2010 at 1:59 amFunny i came across this today, i have been thinking about growing my company for a little while. Such a big leap of faith even though I have plenty of well paying clients. Great article for sure…thanks for the ideas!
Freelance Des9er
March 30th, 2010 at 1:36 amWe just posted an in-depth article on how outsourcing can help you grow your business: http://www.smashingapps.com/2010/03/29/7-situations-when-designers-outsource-to-other-designers.html
Anna
April 2nd, 2010 at 5:07 pmJust found this site and am so impressed by the great writing and the spot-on topics. As a freelance bookkeeper for the past 3 years, I wrestled with a lot of these issues. I did one large rate increase, which really helped my income, and the fact that all of my clients agreed to it actually helped to boost my confidence.
I also had more demand from potential clients than I could meet, and several friends were encouraging me to hire someone to help out. But, I found I didn’t really want to grow my business in that way, being ultimately responsible for another bookkeeper’s work. Instead, I had a friend who wanted to learn bookkeeping, so I trained her and “sold” my clients to her – she’s paying me a percentage of the money she makes from them for 1 year. It worked out well for both of us, and is a model I would recommend to others.
Isaiah Frazier
May 1st, 2010 at 8:15 pmI’ve grown my business by simply adding more services which allows me to bill more per project.
Jibran
July 12th, 2010 at 9:46 pmI am really impressed with comments of TOM. he is saying right. We are not a Charity.
WE have our value.
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