7 tips to transform from freelancer to agency owner

More people are striking out on their own as freelancers. It gives them the flexibility to choose their clients, work from anywhere, and even earn more than their previous jobs.

Let’s say that you’ve been freelancing for a few years now, but you’re ready for something bigger. You’re looking to scale and take your business to new heights.

The next logical step is to turn your venture into a creative agency. Expanding your venture will allow you to offer more services under one “roof” and increase your earnings potential.

But starting an agency isn’t exactly like freelancing. It requires careful planning and strategic execution to make the transition.

This article will look at how you can make the shift from freelancer to a full-blown creative agency.

1. Establish a legal entity

Sole proprietorships are the most common entity for freelancers — they’re easy to form and you don’t have to pay any fees. You’re also entitled to all the profits you earn. But being a sole proprietor means you’re held personally liable for any debts and losses you incur.

Operating a sole proprietor is a good option when you’re starting out. But you’ll want to form an LLC, or Limited Liability Company, for your agency.

Here’s why:

• An LLC protects your personal assets if something goes wrong (e.g., a client sues or you file for bankruptcy)
• Unlike corporations which are taxed twice (at the entity and shareholder level), profits you earn as an LLC are only taxed once
• Forming an LLC gives your agency professional credibility, which can help you apply for business loans and win more clients

Each state has its own procedures for establishing an LLC. But the process typically involves submitting organizational paperwork to your state and choosing a registered agent to accept legal documents on behalf of the LLC. Companies like AO Funds offer a wide range of business loan options, and have made the application process easier than ever before.

After you’re up and running, consider using a corporate identifier domain for your website, and don’t forget to make use of the many available resources for registering your business. 

This will enable you to operate as a fully legal business entity rather than as a freelancer.

2. Start small

Companies like Apple and Amazon didn’t become giants in their respective industries overnight. They started with an idea and slowly expanded until they became household names.

While you may have dreams of starting the next Fortune 500 company, take small steps before jumping into a full-blown agency. Trying to take on too much at once can leave you feeling stressed and overwhelmed.

Here are some small steps you can take:

• Delegate tasks on your to-do list to a virtual assistant
• Subcontract parts of a project you’re working on

Working with a virtual assistant allows you to delegate non-client work, like managing your social media accounts and uploading content to your blog. This can free up more time in your schedule.

Subcontracting work also gives you firsthand experience of what it’s like to delegate tasks and communicate with others. Once you gain more confidence, you can delegate more work and bring on new team members.

Depending on the type of project you’re working on, you may need to inform your client that you’re getting outside help. Check with your client to make sure you’re in the clear.

3. Document your work processes

When you start off freelancing, you’re doing everything yourself — reaching out to clients, preparing sales pitches, managing expenses, etc. This includes the work itself, as you likely have workflows that you follow for each project.

But to scale your operations, you need to document your processes. Well-defined processes allow you to streamline everyday activities. They also establish guidelines that your team can follow as you take on more work.

A good place to start is to create standard operating procedures (SOPs). These documents include detailed instructions on how to carry out a task. Look at the activities that make up your business’s operational and financial side, and carefully document each step.

You can take things even further by turning to business process automation, using technology to automate routine activities and manual processes.

For example, bringing on a new client typically means creating a contract and getting it approved. But performing each step manually is incredibly inefficient. Workflow automation software can help you streamline this entire process.

Getting your workflows in place will allow you to create repeatable processes that you can delegate to others.

4. Build up your sales pipeline

To make the transition from freelancer to creative agency, you’ll need more revenue to support the change. But don’t expect clients to start pouring in. You need a well-defined process to bring in prospects and turn them into clients.

Follow these steps to build up your pipeline:

• Identify your target clients: When you first started freelancing, you may have decided on a niche like graphic design or WordPress development. Use this as a starting point to identify clients interested in your services.
• Find decision-makers: Decision-makers are individuals in a company who has the authority to make purchasing decisions. Use a tool like LinkedIn to find specific contacts that you can reach out to.
• Reach out: One technique you can use is cold email outreach to present your services. Make sure to use an email verifier to verify your receivers and avoid any emails bouncing back.
• Follow up: Prospects may need more time to think about your offer. Demonstrate the value of your services by following up with engaging content. Examples include eBooks, personalized reports, videos, and case studies.

Then it’s just a matter of repeating these steps to build up your sales pipeline. Consider using automation to streamline tasks like lead scoring and automate your email marketing.

5. Build your team

Before you start taking on clients, you should have a plan to support that growth. Otherwise, you risk missing deadlines and losing clients.

You have a few options here. You can do most of the work yourself and delegate parts of a project to part-time employees or freelancers. If you have more work than you can handle, you can also hire full-time employees.

When hiring freelancers, make sure to set up contractor agreements. These are legally binding documents that describe the services provided and include payment details. If you hire employees, have them complete a Form W-4 to withhold taxes from their wages.

Depending on the nature of the work, you may also need to have freelancers or employees sign a non-disclosure agreement (NDA) to keep sensitive information confidential.

Something else to consider is whether your team will work on-premise or remotely. Having a workspace allows you to manage employees and have them work alongside each other.

However, more employees increasingly prefer remote work. In a FlexJobs survey of people who worked remotely during the pandemic, 65% said they want to continue working remotely full-time. By offering remote options, you can attract more talent to your agency.

Make sure to set clear expectations early on and define responsibilities for your team. Be sure to add them to the appropriate tools you use to manage projects.

6. Outsource your HR

As your business grows, continue outsourcing any areas that take up valuable time from your creative efforts. 

According to Nelson Sherwin, manager of PEO Companies, “As a supplier of virtual admin and HR services, PEO Companies’ value proposition is ‘Let us do the stuff you hate.’”

Sherwin adds, “It’s a riff on how much time the average online business owner spends engaged in tasks that are sheer drudgery. Offering to do the job tasks which have been universally hated for as long as the concept of organized work is a strong selling point.” 

While you can handle tasks like payroll and recruitment on your own, your time is better spent on more productive work. Consider outsourcing your HR to a PEO company, so you can focus more on the revenue-generating side of your business.

7. Seek out mentors

Turning your freelance work into a creative agency won’t be easy. There will undoubtedly be situations where you’ll need to learn new skills to grow your business.

But that doesn’t mean you have to go it alone. While you can learn about anything online, a mentor can provide more personalized guidance. 

Mentors can share the exact strategies that have worked for them and reveal costly mistakes to avoid. Such information can save you the stress of figuring things out on your own.

Identify the skills that you want to develop. For example, if you struggle with closing deals, you might consider working with a mentor who has sales experience. Likewise, if your email marketing efforts aren’t generating results, you might reach out to someone with expertise in this area.

Then use resources like LinkedIn or SCORE to find a mentor with the skills you’re looking for and reach out. Some people you contact may decline for different reasons, but don’t let this discourage you. Ask for referrals and keep reaching out until you find someone to work with.

Conclusion

Starting a creative agency is by no means easy. It takes a lot of time and effort to take a solo venture into a full-blown company. But it can also be one of the most rewarding endeavors you ever take on. 

Follow the tips laid out here to make the transition successfully.