How to Successfully Grow from Freelancer to Full-Fledged Business

Summary: In this week's free training episode, we take a deep dive into the idea of growing beyond a one-person business. If you're currently thinking about expanding (or even if you're perfectly happy as a solo practitioner) this material will give you plenty of food for thought.

The idea of growing beyond a one-person business is anathema to many freelancers. Yet it's an issue that many of us grapple with at least once in our solo careers.

In fact, according to the 2012 Freelance Industry Report, 40% of freelancers and solo professionals routinely outsource or delegate some work to others.

The idea of getting help often comes up when you're booked solid and unable to fulfill all the needs of current clients. Or when you keep putting off a much-needed holiday because you can't seem to justify forgoing billable work. Or maybe when you start losing business because you can't provide some of your clients with a more comprehensive offering.

Whatever sparks the thought of growth, the important thing is to give it careful consideration. Adding staff — whether full-time or part-time, on a contract basis or as employees — is not for everyone.

You need to understand and carefully evaluate your motives. Why do you want to grow? Have you carefully weighed the pros and cons? Which staffing model would be right for you? For which role would you hire first? Where do you find good people? What can you expect from your new hire?

In this training episode, we'll discuss all these important questions. If you're currently thinking about expanding — or even if you're perfectly happy as a soloist — this material will give you plenty of food for thought.
Let's start by discussing the most common growth options available to solo business practitioners, as this will provide some important context for the rest of our discussion.

1) You + Support Team

This path is one of the most common options freelancers choose. It involves hiring professionals who can take on ancillary tasks related to your project work. For instance, if you're a freelance writer, it could mean hiring a proofreader. If you're an SEO professional, it could involve hiring someone to research potential keywords for a client.

There are a couple of ways to approach this model from a staffing standpoint. One approach is to deconstruct your most common client projects and look for the project-related tasks or functions someone else could do better, faster or cheaper. The other option is to focus on outsourcing or delegating non-core administrative activities such as bookkeeping, accounting, running errands, filing, email management, invoicing, collections and so on.

2) You + Complementary Freelancers

Another common path involves the hiring of freelancers from other disciplines in order to provide your clients with more comprehensive solutions.

An example of this would be a designer bringing in a copywriter for a website project. This enables the designer to provide her client with both copy and design, eliminating the number of people the client has to find and hire directly.

This is a more strategic move than the "You + Support Team" option, and it can be a very profitable path when executed properly.

3) You + One or More Clones

This model is about trying to duplicate your specific talents so you can occasionally remove yourself from the day-to-day work. The idea is to hire one or more professionals who can deliver most (or all) of the work you'd normally do. This frees you up to work on business development, strategy and other high-value activities in the business (oh, and to take the occasional vacation!).

Interestingly, this is the model most freelancers immediately flock to, even though it's often one of the most difficult to implement. It's challenging to find others who can do what you do — and do it well. Plus, this path has a longer ramp-up period. And it can be difficult to find a talented, hardworking professional who would rather work for someone else than provide these services directly to his or her own clients.

4) Agency/Studio Model

Those who successfully pull off the "You + One or More Clones" model will often choose to grow their businesses into a true agency or studio. This is typically a full-fledged business with three or more employees, payroll, office space and real business leverage (although I know of many successful virtual studios and agencies, where everyone works from home). It's a natural progression, but it's not for everyone.

5) Multiple Streams Model

The same tools that enable freelancers to deliver their professional services in a virtual world can also be used to develop one or more sideline businesses.

These side projects can be either product- or service-based. But what makes this model different from the others I've listed is that the product or service being offered is not necessarily tied to the freelance services offered through your main business.

Here are some examples:

  • A freelance designer who offers a line of stylish T-shirts
  • A freelance software developer who offers a line of consumer smartphone apps
  • A freelance writer who writes fiction e-books in Kindle format and markets them through Amazon.com

The other big difference is that this path doesn't typically require a big team — but it does require sweat equity. Many freelancers end up doing most of the work themselves, especially when they're starting out. If you don't have the time but have some working capital, you can always hire a specialized virtual assistant (VA) or online business manager (OBM) to help you with some of the more technical or administrative tasks.

It Has to Make Sense for YOU

The allure of growth can be very powerful. But growing your business without really knowing which path or model makes the most sense for you is a big mistake. This is not something you want to wing.

Each of these models has its benefits and disadvantages. Some can also evolve into bigger and bolder visions. But before moving on to the next set of questions, you should have a pretty clear idea of which growth model is best aligned with your purpose and personality. The time to set the right course is now, before you make big investments and carry out important staffing decisions.

Your First Hire

Who should your first hire be? What role should you fill first? Again, these questions become a lot easier to answer once you know which path you're going to start on.

In the "You + Support Team" model, you could start with a VA who can help with some of your administrative tasks. Or you could decide to outsource your more specialized administrative tasks — such as bookkeeping and accounting — to a professional.

Alternatively, if you'd rather farm out some of your project components (following the "You + Support Team" path), your first hire could be a junior freelancer who is trying to get some experience and is willing to work under a seasoned pro for a reduced fee.

"Keep the things that you're good at — the tasks and functions you enjoy — and consider hiring someone for tasks you don't really like to do or are not your core strength," says David Jenyns, director of Melbourne SEO Services.

As freelancers, we often think that we have to be good at every aspect of our business. But the fact is, no one can be great at everything. There are a handful of things you do very well. These are the core talents that clients hire you for; tasks that, for you, feel easy and almost effortless.

Where's Your Flow?

Not sure what they are? When you look at your daily task list, ask yourself: What activities get me excited? What tasks tend to get you in a state of "flow," where you suddenly lose track of time? Chances are, this is where your true strengths lie.

Conversely, tasks that seem to always bog you down — tasks you tend to put off — are probably those that you're not great at and that don't come easy for you. Those would be good functions to consider outsourcing or delegating to someone else.

"Whatever you do, don't hire another you," says Mike McDerment, CEO of FreshBooks, a Toronto-based online-invoicing company that mainly serves freelancers and small businesses. "Hire people who complement you, not people who have the same set of strengths and aptitudes you do. I know it's hard to believe, but there are people out there who actually love doing what you hate doing. Find and hire those people so you can focus more of your time on your true strengths."

Jenyns adds that you need to get very clear about what you want this person to do for you. "Doing so will help you make a few important decisions, including who the best candidate would be. It will also tell you if this is someone you should hire locally to work on-site with you, or if it's a role that can be filled virtually by an out-of-town resource," he says.
Whether to hire a freelancer or an employee, and whether to make the position full-time or part-time, really depends on what you'd like to accomplish. If what's really bogging you down is administrative tasks, a freelance VA may be the best option. If the tasks are part of your client work but are more tactical and repetitive in nature, it may make more sense to start with a freelancer and scale from there.

But if you're trying to duplicate yourself or grow into more of an agency or a studio, then an employee (full-time or part-time) could be the way to go. That's what Khaleelah Jones, a social media consultant and freelance writer, decided to do earlier this year when she needed a reliable way to scale her business after landing several large clients back to back.

"My clients come to depend upon the tone that I create for them and their brand, much of which is organic for me as the writer," says Jones. "Therefore, I have found that I must hire a freelancer for an entire project to ensure that the tone is consistent. That, of course, has its own issues, because freelancers sometimes fall through or cannot perform on schedule. So I recently hired a full-time staff member who is as invested in the work and reputation of the company as I am."

Having worked with this individual several times before, Jones was very familiar with the quality of her work. As for salary and benefits, Jones couldn't afford to offer much yet, but knowing that the prospective employee had health insurance and other benefits through her partner made the decision easier.

Risk and Legal Considerations

This brings up a couple of important points. One is that you can always hire the individual as a freelancer first and see how he or she performs. If this person proves to be a good fit and would be interested in a full-time gig, you limit the risk of the relationship not working out.

The second point is that you must be aware of the employment laws and regulations in your country, state or province before making that first hire. In the U.S., for instance, you need to ensure that you're classifying your contractors or employees accurately to avoid fines and penalties.

Unfortunately, classifying accurately is not easy. "You need to look at each relationship and all of its relevant factors to determine whether it's more likely to be an employee–employer relationship or a contractor relationship," says Tricia Meyer, founder and managing attorney of Chicago-based Meyer Law. "When in doubt, discuss the relationship with your lawyer so that he or she can help you determine the appropriate classification."

When Hiring a Contractor

But that's just the tip of the iceberg. When hiring a contractor, Meyer adds that you need to also consider whether your business insurance (if you have any) covers the acts or omissions of a contractor. She also recommends that you have a written agreement with your contractor that sets forth various important provisions, including:

  • Compensation details
  • Confidentiality
  • Ownership rights
  • Indemnification
  • Limitations of liability

When Hiring an Employee

Similarly, when hiring an employee, Meyer recommends drafting an offer letter to be signed by you and the employee that sets forth the following information:

  • Title and duties
  • Compensation (including bonuses, commission, etc.)
  • Reporting structure
  • Review period (for raises in salary)
  • Benefits, if any
  • Paid time off

Additionally, you should draft an agreement that includes terms for the following key items:

  • Confidentiality (to protect your confidential information)
  • Noncompete restrictions (to protect you in the event you have to let the employee go)
  • Inventions and their ownership (applies to some professions where there's intellectual property involved)
  • Ownership rights (in terms of the work being created)

When Should You Hire?

Whatever you do, start small. Don't try to bring in too many people at once. One idea would be start with one person — someone who will perform the lowest-risk job function you can think of — and go from there. Better to ease into this and do it right than to get overwhelmed and have it backfire on you.

Also, try not to rush into making that first hire. Put it off as long as you can, especially if you're hiring someone to help you with client work, or even if you're hiring a support person and committing to a certain number of hours or a monthly retainer.

"Many entrepreneurs make the mistake of hiring too early, only to have to let that person go a few weeks or months later because they can't afford to keep him or her," says FreshBooks' McDerment. "So try to delay that first hiring decision as long as you can. Wait until you're so busy with client work that you can't possibly wait much longer."
As I mentioned earlier, one of your best sources of new hires is the freelancers and contractors who have worked with you in the past. Don't pass them over just because you think traditional employment will not interest them. Many freelancers would jump at the opportunity to get a steady gig, even if that means putting their solo business on hold in order to become a full-time employee.

And again, who said you had to hire them as full-time employees? Consider retainer agreements, part-time arrangements or some creative structure that works for both of you. (As I previously mentioned, check with a business attorney if you have any questions about how to properly classify your potential hire.)

Another great source of talent is your friends and colleagues. Draft a clear job description, and ask them if they know anyone who may fit the bill. Also look within social or personal interest groups you may be a part of. Your church or place of worship; your children's school; or any clubs, sports teams or associations of which you're a member are all good sources for talent.

"One of my best hires is Irene, a lady who worked at my church," says Michael Stelzner, who founded Social Media Examiner as a one-person business in 2009. Today, Social Media Examiner is the world's largest online social media magazine, with more than 500,000 monthly readers and nearly 200,000 email subscribers. "Another hire, Phil, worked at my kids' school. In both cases they started as subcontractors. But eventually I had so much work for them that they both became employees."

Finding a Good VA

If you're looking for a VA or an OBM, a good place to start is an organization that trains and certifies VAs. These groups typically have a referral page on their website where you can specify what kind of professional you're looking for. They will send that information to their network of VA graduates and will usually have interested candidates reply directly to you.

Keep in mind that while most of these organizations' certification programs require VAs to take a series of paid courses, there is no governing body overseeing the quality of VAs coming out of these groups. So it's up to you to qualify referral candidates thoroughly.

Having said that, here are a few organizations to look into if you're looking for a VA or an OBM:

International Virtual Assistants Association
http://IVVA.org

OnlineBusinessManager.com
http://onlinebusinessmanager.com/blog/hire-an-online-business-manager

VA Classroom
http://www.vaclassroom.com/rfp.aspx

VA Networking
http://www.vanetworking.com/clients/blog/

Techie VA
http://thetechieva.com/find-a-techie-va

Virtual Assistantville
http://www.virtualassistantville.com/

And don't ignore social media. Our very own Crystal Coleman, VP of Operations here at International Freelancers Academy, came to us via Twitter. Almost three years ago, my business partner, Pete Savage, was searching Twitter for someone who could help us with a multitiered promotional campaign for our book, The Wealthy Freelancer.

He came across Crystal, took a look at her website and contacted her immediately. We hired her a week later. A few months after that, we increased her workload. And today, she's my right-hand person here at the Academy!

What to Expect

Regardless of the scope and nature of the new position you add to your business, you need to accept the fact that every new hire will undergo a ramp-up period. Training a new hire properly will require a considerable amount of your own time. Your new colleague won't learn everything about you and your processes overnight. So you need to be patient.

You also need to assume responsibility for this person's success. Yes, he or she needs to take initiative. But ultimately it's you who's responsible for leading new hires and doing everything possible to make them successful.

Take the time to work with your people to define (and even document) key processes and operational procedures. It may seem silly and unnecessary at first. But doing this will keep everyone on the same page.

Plus, if and when you bring others on board, you'll have documentation they can turn to. You won't have to do all your training from scratch. And should someone leave your company, you'll be able to get a replacement up to speed much more quickly.

Yes, growing beyond a business of one can seem a bit scary. But if you know in your heart that this is the right path for you, don't ignore the nudge. Give it some thought. And start exploring some options.

Hiring and leading others may very well be one of the most rewarding things you'll do in your business.

How do you know if you've hired the right person? FreshBooks' McDerment has the perfect answer: "You know you've hired well if you can invite that person to your house for breakfast with you and your family ... and it doesn't feel weird."

Well said!

What Do You Think?

This is obviously a very big topic. Entire books have been written on it. So I know I've left out some important points.

If you've gone through this experience, what advice would you have for someone looking to grow beyond a one-person business?

And if you're considering one of these growth paths, please add your comments and questions below. I'd love to hear from you.


  • Great stuff, I am sure many will take heed of these freelancer guide.

  • I am currently in the middle of debating how I should approach this. Currently, I use a second freelancer for projects that add value to what I do, but are outside of my skill set. I am also working on an information project that will hopefully create a passive stream of income. In terms of growth I am doing exactly as you suggest, starting small and adding pieces as they organically evolve.

  • @Ed Gandia, Hey Ed. Thanks. I\'ve read The E-Myth Revisited and got a lot out of it, but unfortunately it can only take me so far. It really focuses on turnkey businesses that you could set up to be easily franchised (in theory, if not actually) and while that concept has given me some ideas (like creating SOPs to eliminate the number of questions or things people need to get from me directly and also automating processes) it isn\'t very applicable to specialized work. If you come across any books that focus on building virtual teams or building a team using subcontractors rather than employees, I\'d love to know.

  • Hey Ed. Thanks. I've read The E-Myth Revisited and got a lot out of it, but unfortunately it can only take me so far. It really focuses on turnkey businesses that you could set up to be easily franchised (in theory, if not actually) and while that concept has given me some ideas (like creating SOPs to eliminate the number of questions or things people need to get from me directly and also automating processes) it isn't very applicable to specialized work. If you come across any books that focus on building virtual teams or building a team using subcontractors rather than employees, I'd love to know.

  • I followed a path much like you described in this article. I started with a VA for administrative tasks, then started subbing out work to complementary freelancers who provided services that my clients wanted but which I did not excel in. About 8 months ago I brought on a more devoted subcontractor who has a part-time job half the day and then freelances for my company the other half. His work complements mine and I've started dividing up work by our primary interests and specialties. It's worked out great so far, and things are expanding to the point that I also just brought on an OBM this summer to help provide some structure and consistency I'm hoping will allow me to take things to the next level with some side businesses involving infoproducts and workshops.

    I have thus far drafted simple letters of agreement with each project, but it would save a lot of time if I could just have a standing agreement similar to the ones you described. Any templates or examples you could point me to? Also you mentioned whole books devoted to this subject--are any targeted specifically to structures involving contractors and a virtual work space, not employees? If so I'd love some recommendations.

    • Hi Ally -- Wow, that's exciting! Sounds like you're well on your way to growth and you're liking where it's going. Congrats on taking that big step!

      I know there are lots of templates out there (just Google the ones you're looking for and you'll find tons of them). However, I think it's better to have a local attorney draft them. Maybe not now, but once things get pretty serious and you feel you need to get it right.

      I recommend going with an attorney in your state or province. Ask around in your area (or online via freelancer social media networks) to see whom others have used. And focus your search on those who work regularly with solos and very small businesses. They'll "get" your world and be easier to work with.

      As far as books to read, the one must-read is "The E-Myth Revisited" by Michael Gerber. You'll not only get critical nuts-and-bolts advice, you'll also walk away with very practical insights on how to approach growth. Can't recommend it enough.