Grow Your Business or Stay Solo?

Posted in Tips, Web Design • Posted on 9 Comments

Freedom is one of the major reasons to become a freelancer. Freedom from a stupid boss, malicious co-workers, and the whole office politics circle. However, soon you discover that working solo is not that good either.

It comes to your mind that if you grow your business and start hiring people, life will be awesome. Could be but more often than not, growing your business not in the right time and not in the right way brings so much trouble that you wish you knew all this in advance. Failure as a manager isn’t fun!

Common sense says that the purpose of every business is to grow, grow, grow. However, as life proves, growth for growth’s sake is disaster in its purest form. It would have been much better if you hadn’t taken the expansion road but who knew this? If you don’t want to end in a situation like the one above, before you start growing your business, you need to analyze the pros and cons of this. Here are some thoughts in this direction.

What Are the Benefits of Growing My Business?

Basically, you are growing your business because of the benefits an expansion can bring. There are many benefits and here are some of them:

  • You can take larger projects. When you have more manpower, you can take larger projects. When you work solo and you take a large project, it might take you months or even years to finish it and since it is unlikely for a client to wait that long, you just can’t even think of huge projects. Many large clients don’t even bother to work with soloists, so if these clients are your target market, you should really consider an expansion.
  • You can branch into new areas. When you hire new people and they are a good match, they presumably bring new expertise you don’t have, which means you can take new types of projects. For instance, if you are mainly a Web designer and know just a bit about programming, when you hire a programmer, you can diversify your business really a lot.
  • More profits. All equal, the more you work, the more you earn. If you used to make $3,000 a month while working solo and you hire 2 more guys, you could easily make $5,000 or more a month. Of course, your expenses also grow but the net result is let’s say at least $2,000 more a month.

Image Credit: grietgriet

If I am to be honest, I can think of one more reason to grow a business but since this isn’t a sound reason, I won’t include it in the benefits list. This reason is kind of ridiculous and I call it Ego Boosting. In two or three of the companies I have worked for, this was the major reason to expand. The corporate dreams of some of the managers were so big that they didn’t pay attention to the growth negatives I’ll discuss in the next section. No doubt, it sits well on a CV to have orchestrated an expansion and if the managers knew what they were doing, probably the outcome wouldn’t have been that disastrous. I can also think of fellow freelancers who made similar mistakes to grow their business but since they backed off quickly, they couldn’t see the sky falling on them.

Negatives of Growing a Business

Growing your business can be really lucrative, especially if you know how to handle it, but it also could be your worst decision. You also need to know the negatives. Here they are:

Image Credit: jppi

  • More expenses. Depending on what exactly you are doing, an expansion could require minor to substantial investment. If you plan to have an office, you will have to pay rent. Of course, you can use the virtual office model, so you could do without paying rent but sometimes you do need a brick-and-mortar office.
  • Also, unless you hire guys and girls who have their own equipment, you will need to spend money on hardware, software, membership fees, etc. These cost a lot and if things don’t go as planned, you will be in the red.
    Finally, if you hire permanent employees, you will need to pay salaries. If you hire freelancers, you can do without monthly or weekly salaries but if you fail to provide them good income, soon you will lose them. There is another catch with freelancers – freelancers jiggle multiple projects, so you can hardly rely on their immediate availability. If you don’t have urgent tasks, this isn’t a problem but if you need people to be available at all times, this requires more commitment on your side, too.
  • Communication overhead and more difficult to manage. In the growth example from the previous section the profits aren’t tripled or even doubled and this is for a reason. When you triple your manpower, your profits don’t triple because you aren’t doing three times more work. The more people work on a project, the more communication there is. All this communication overhead inevitably slows down the process but if you use good collaboration tools, it improves efficiency.
    Also, you will need to spend more time on management, organization, promotion and synchronization and this eats from your time to do actual work on the project. Managing people isn’t easier than being an employee. In fact, it is much harder and the mistakes are much more expensive. If you aren’t a good manager, it is easy to predict that soon chaos will reign.
  • Creative differences. While this might not apply to other businesses, design is a very specific business and people are unique. Designers have their style and work manners and you can have great designers per se but their creative differences might make it impossible to work together. You need to factor this, too.
  • Will you be able to find the right people? Finally, one more question you need to ask yourself is whether you will be able to find the right people. If you don’t find the right people, as the case with my former employers and fellow freelancers was, this can really sabotage your efforts. Of course, you can’t always expect crowds of top talent dying to work for you but when the best you can find are people with little experience and no potential at all, and you place them in important positions, it becomes a nightmare.

As you see, it is not easy to decide whether to grow your business or stay solo. Very often growth is good but it could come at a price. In many other cases staying solo is the much better alternative. Carefully analyze the options and only then decide which is the best way for you personally. Of course, there is also a middle ground – to stay solo but form loose partnerships with other designers, developers, copywriters, marketing experts, etc. and use them when you need but it also has its downsides. For many freelancers these loose partnerships seem to be the best option – or the lesser evil – and they solve, at least temporarily, the problem whether to grow the business or stay solo.

7 Written Articles

I am a fulltime freelancer from Sofia, Bulgaria. I have long ago discovered that freelancing is the best option for me because it allows me to grow professionally as a writer, designer, web master, etc. and doesn't confine me to a 9 to 5 schedule. Ditching my fulltime job (and I have changed so many of them) was the wisest decision I have ever made!

9 Comments Best Comments First
  • Wasim Ismail

    Sunday, September 18th, 2011 17:33

    1

    I would say always look for growing your business, it can be daunting, especially if it is your first business, but once things start rolling you soon will adapt to the new things. By growing your business you also increase yourself development, learn new things, and also learn how to handle various tasks and challenges….All part of running a business.

    0
  • Alex

    Monday, September 19th, 2011 14:00

    3

    Hi,
    I am at this cross-road right now. I manage Tenddeapact Solutions – based in Ireland, a freelance business mainly into web design and development and online / digital marketing. I currently have some other professionals who work remotely with me when needed but I am now thinking to set it up as a company.

    Given the economic situation in Ireland, I am wondering if it’s the best decision to make right now. I am thinking about it because I have identified some real opportunities in SEO and online marketing – most companies now have web presence in Ireland and wanting to promote their web sites online using SEO and PPC techniques as a major leads generation strategy.

    0
    • Tsveti

      Monday, September 19th, 2011 18:33

      4

      @Alex: If you can service local companies with the remote workforce, why set a company? On the other hand, if your new projects will require onsite presence (i.e. meetings in the client’s office), then you definitely need local workforce. Well, it could turn out that it is more beneficial financially to have a company because many expenses are tax deductible but I’m that last one to tell you if this applies to you or not. :) Maybe you should ask ask an accountant, a lawyer, or somebody who knows the laws of your country about what taxes you will have to pay and all the other boring administrative stuff that goes hand in hand with an expansion and decide if it is worth.

      0
  • Rui Catalão

    Monday, September 19th, 2011 13:24

    2

    Most of what was said in this article is very true. When the economy is going well its great to have your business and when things get difficult you think twice if going for the growing mode was the best choice!
    In the end you will have much more experience and be more prepared! Like someone said, Life is great for the ride, not for the place where you go!

    0
  • Chris

    Tuesday, September 20th, 2011 16:38

    5

    So very good points and considerations listed above! This is certainly a challenging decision that gets made at one point or another in the lifetime of a business. All I can say from experience is that even with good cost projections about expanding, costs are often underestimated, and an initial growth spurt is often followed by downsizing due to those higher costs, specifically the “ego” office space upgrades. Any business that can run lean has a much greater chance of higher profits and overall success.

    0
  • Morgan

    Friday, September 23rd, 2011 04:50

    6

    Also with every growing business, there’s the pressure of maintaining it’s greatest assets, staff. Many incentives can be put in place to achieve such work harmony balance, eg. a rewards programme, staff of the month gets a day off etc.

    0
  • Tsveti

    Saturday, October 8th, 2011 09:06

    9

    Thanks to everybody and Elsy in particular for sharing the advice. I think Elsy has discovered the winning formula for a successful boutique business. The points are valid – like take fewer jobs but put stress on quality and sustainability and I guess many of us (me included :))) have learned them the hard way. :) What I wanted to do with this article was to point out that contrary to what many people have as a firm believe, growth isn’t always your best bet, especially if you are concerned about your quality. If you are just profit-driven, then an expansion might fill your pockets but this is frequently at the expense of quality and drastically increased levels of stress. :)

    0
  • Elsy Aumann

    Wednesday, September 28th, 2011 18:24

    8

    I have been in both roads and I will tell you all something that has been working for me for a couple of years after in early 2010 I had to downsize my business again (for the 3rd time since 1999 when I formed my design studio) and is to remain a “design boutique”. Everything said above is true. Is hard to stay completely alone, and much harder to find good talent who can help you along the way, but not impossible. The trick: sell yourself high providing only quality work, have one other committed designer to receiving assignments remotely so it can help with the extra load you can’t handle, and only take fewer jobs that will provide you with a decent and secure income that can cover all your bases and give you some financial freedom. For the most now, and with 20 years + of experience I have one motto and recently twitted this to all my fellow Designers and Colleagues: “Don’t be afraid to walk away from gigs that your are not well paid for. If you take a gig that doesn’t pay you very well, then you will be doing the worse thing some one can do: chasing revenue. Get paid for what you know, not for what you can do.” Having my own business allows me to be like a rubber band: to contract and to expand when need it, but when you are small (solo or with 2 or 3 people only), just focus on being a good Art or Creative Director, where you can orchestrate medium (or larger) projects, to provide your clients with the quality of work they deserve.

    0
  • Schelli Whitehouse

    Sunday, September 25th, 2011 19:57

    7

    No question, as a freelancer that in order to grow your business you have to grow your self! As an independent biz owner some of the toughest times for me have been when there is rapid expansion and needing to find the right person to pick up the extra work. On the flip side, when business is slow, having to let go of great help is doubly painful.

    0
  • Tsveti

    Saturday, October 8th, 2011 09:06

    9

    Thanks to everybody and Elsy in particular for sharing the advice. I think Elsy has discovered the winning formula for a successful boutique business. The points are valid – like take fewer jobs but put stress on quality and sustainability and I guess many of us (me included :))) have learned them the hard way. :) What I wanted to do with this article was to point out that contrary to what many people have as a firm believe, growth isn’t always your best bet, especially if you are concerned about your quality. If you are just profit-driven, then an expansion might fill your pockets but this is frequently at the expense of quality and drastically increased levels of stress. :)

    0
  • Elsy Aumann

    Wednesday, September 28th, 2011 18:24

    8

    I have been in both roads and I will tell you all something that has been working for me for a couple of years after in early 2010 I had to downsize my business again (for the 3rd time since 1999 when I formed my design studio) and is to remain a “design boutique”. Everything said above is true. Is hard to stay completely alone, and much harder to find good talent who can help you along the way, but not impossible. The trick: sell yourself high providing only quality work, have one other committed designer to receiving assignments remotely so it can help with the extra load you can’t handle, and only take fewer jobs that will provide you with a decent and secure income that can cover all your bases and give you some financial freedom. For the most now, and with 20 years + of experience I have one motto and recently twitted this to all my fellow Designers and Colleagues: “Don’t be afraid to walk away from gigs that your are not well paid for. If you take a gig that doesn’t pay you very well, then you will be doing the worse thing some one can do: chasing revenue. Get paid for what you know, not for what you can do.” Having my own business allows me to be like a rubber band: to contract and to expand when need it, but when you are small (solo or with 2 or 3 people only), just focus on being a good Art or Creative Director, where you can orchestrate medium (or larger) projects, to provide your clients with the quality of work they deserve.

    0
  • Schelli Whitehouse

    Sunday, September 25th, 2011 19:57

    7

    No question, as a freelancer that in order to grow your business you have to grow your self! As an independent biz owner some of the toughest times for me have been when there is rapid expansion and needing to find the right person to pick up the extra work. On the flip side, when business is slow, having to let go of great help is doubly painful.

    0
  • Morgan

    Friday, September 23rd, 2011 04:50

    6

    Also with every growing business, there’s the pressure of maintaining it’s greatest assets, staff. Many incentives can be put in place to achieve such work harmony balance, eg. a rewards programme, staff of the month gets a day off etc.

    0
  • Chris

    Tuesday, September 20th, 2011 16:38

    5

    So very good points and considerations listed above! This is certainly a challenging decision that gets made at one point or another in the lifetime of a business. All I can say from experience is that even with good cost projections about expanding, costs are often underestimated, and an initial growth spurt is often followed by downsizing due to those higher costs, specifically the “ego” office space upgrades. Any business that can run lean has a much greater chance of higher profits and overall success.

    0
  • Alex

    Monday, September 19th, 2011 14:00

    3

    Hi,
    I am at this cross-road right now. I manage Tenddeapact Solutions – based in Ireland, a freelance business mainly into web design and development and online / digital marketing. I currently have some other professionals who work remotely with me when needed but I am now thinking to set it up as a company.

    Given the economic situation in Ireland, I am wondering if it’s the best decision to make right now. I am thinking about it because I have identified some real opportunities in SEO and online marketing – most companies now have web presence in Ireland and wanting to promote their web sites online using SEO and PPC techniques as a major leads generation strategy.

    0
    • Tsveti

      Monday, September 19th, 2011 18:33

      4

      @Alex: If you can service local companies with the remote workforce, why set a company? On the other hand, if your new projects will require onsite presence (i.e. meetings in the client’s office), then you definitely need local workforce. Well, it could turn out that it is more beneficial financially to have a company because many expenses are tax deductible but I’m that last one to tell you if this applies to you or not. :) Maybe you should ask ask an accountant, a lawyer, or somebody who knows the laws of your country about what taxes you will have to pay and all the other boring administrative stuff that goes hand in hand with an expansion and decide if it is worth.

      0
  • Rui Catalão

    Monday, September 19th, 2011 13:24

    2

    Most of what was said in this article is very true. When the economy is going well its great to have your business and when things get difficult you think twice if going for the growing mode was the best choice!
    In the end you will have much more experience and be more prepared! Like someone said, Life is great for the ride, not for the place where you go!

    0
  • Wasim Ismail

    Sunday, September 18th, 2011 17:33

    1

    I would say always look for growing your business, it can be daunting, especially if it is your first business, but once things start rolling you soon will adapt to the new things. By growing your business you also increase yourself development, learn new things, and also learn how to handle various tasks and challenges….All part of running a business.

    0

Comments are closed.

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