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.
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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:
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- 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.