How to Start a Freelance Agency- and Why

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It’s a wonderful problem to have: You become so adept at your at-home freelance business that you have more clients than you can handle. Instead of worrying about having enough work to do, you’re now worried about getting enough sleep. If this is your “problem”, then the solution might be to hire other freelancers for your freelance business and, in effect, create an agency.

There are some key considerations when you start an agency, including changing your marketing strategy, hiring the right individuals, finding enough work for everyone concerned, and deciding how much to pay your contractors. Likewise, you might hear some grumbling from your current clients regarding work exclusivity. How do you address these dilemmas? Here is a step-by-step guide to transitioning from an at-home “solopreneur” to agency head (or president, if you prefer).

1. Understand the why.

Why exactly do you want to start a freelance agency? Is it so you can make more money? If you are thinking that having additional contractors is a surefire way to generate some quick cash, think again. You will probably need to pay these workers a set amount of money while they are trained and situated in your agency. And if by some chance these contractors ever transition into full employees, you will need to cover overhead expenses such as unemployment compensation as well as Medicare and Social Security taxes.

However, if you want to start an agency in order to draw upon different talents and outlooks, to expand your client base, or to create a community that understands and thrives on the freelance lifestyle, then creating an agency is the next logical step.

2. Become legit.

If you’re going to be dealing with contractors (or perhaps even employees), that means you could be sued. Protect yourself and your business by incorporating as a limited liability company or LLC. In addition to protecting you from legal liability, the LLC status gives your agency a measure of credibility. Furthermore, if you ever decide to retire or just get out of the freelance business altogether, you can sell or pass the agency to someone else.

3. Target deeper pockets.

While you were a sole freelancer, it was no big deal if you occasionally took on a private, low-pay or hard luck client who couldn’t pay your base rate. It may even have been OK if, on occasion, you bartered your freelance services for other services or goods.

Now that you have people counting on you, taking these approaches is no longer realistic. Most agencies pay contractors by the hour regardless of what work (if any) they are doing, so if you keep snagging low-pay work, having those contractors will eventually hurt your bottom line. You’re going to have to start playing in the big leagues- and by that I mean finding corporations, consultants and even other agencies that have big budgets and multiple projects.  You’ll have to become more insistent on getting paid and getting paid on time. You’ll probably also need to raise your rates so that all members of your team are paid fairly.

4. Start seeing the forest- and maybe a few trees.

Once you hire other freelancers, your job duties will change. You’ll go from working directly on freelance client projects to deciding which one of your contractors is the best fit for a given project. You’ll also spend a lot more time marketing to and “wooing” potential clients.

While this might seem like a welcome reprieve at first, it will also diminish your creative output. Arguably, the creative side of your work is what attracted you to this business in the first place. Fortunately, since you are the one finding the projects and handing them out, you might want to focus on those projects that interest you personally. You may also wish, at least from time to time, to take a more hands-on approach (i.e., directly work) with clients and projects that excite you.

5. Become proactive with current clients.

Your current clients will probably be not too pleased to hear that you are handing off their work to a batch of unknown and untested freelancers. Some of your clients may even threaten to leave unless you promise to handle their work personally, as you had been doing all along until you formed an agency.

To allay such fears and doubts, announce ahead of time what you are planning to do and whom you are thinking of hiring. Collect work portfolios of your potential hires and offer them to your current clients for perusal, soliciting their advice on who might be the best fit. By actively involving your clients in the formation of your agency, they will feel less resentment towards the new hires. Your current clients may even grow to appreciate the “extra sets of eyes” looking out for their projects.

6. Become your agency’s champion.

When it comes to wooing potential clients, some of those clients may also have doubts about working with an agency versus a single freelancer (i.e., you). In these cases, it is essential that you remember why you formed an agency in the first place. Be ready to list the advantages of working with your agency rather than just you alone, whether that be increased expertise, large project capability, niche area strengths, etc.

Don’t be shy about bragging- if you can’t believe in your agency and its inherent advantages, then who will? Never apologize for your team. Also, never let your clients blackmail you into working alone for them- no matter what kind of offer is on the table. After all, there is no “I” in team (although, I have been told that there is an a-hole!).

The Bottom Line

It’s a great day when you not only do good work for your current clients, but you have current and potential clients clamoring for more of your time and efforts. To this end, starting an agency gives other freelancers the opportunity to follow in your footsteps and learn something from your experiences. It’s also a vital part of entrepreneurship and business stewardship. Here’s to you doing something great!

Photo credit by nkeppol

2 Comments

  1. Some great words of wisdom here. For me, the biggest advantage of outsourcing work to other freelancers is that it frees up your time to work on the aspects of your business that you enjoy. I see it as the difference between being a ‘business owner’ and a ‘freelancer’ as you’ll be working ‘on’ your business instead of ‘in’ your business all the time.

    Jamie

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  2. I’ve been thinking of moving to this business model instead of my current setup as a solo freelancer. To me the most important task will be to find the right freelancers that I can trust to produce good work and on time, to the same standard I aim for. Passing responsibility to others can be difficult and finding the right people is vital!

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