Are You Ready to Be a Small Business Owner?
If you're doing it right, you'll inevitably reach the point during a freelance career when it's decision time: Do you keep doing the freelance thing, or do you grow into something bigger than yourself? (There's no right answer, by the way.)
That's where I was three years ago when I had the good fortune of teaming up with my business partner who was at the same crossroads. Since then, our creative services boutique has grown to work with some of the world’s biggest brands. We've assembled a talented team that executes at levels far beyond anything I could ever do as an individual. It's been incredibly rewarding, but it's also been incredibly difficult.
Going from one-man show to small business isn't as simple as, "More people plus more resources equals buckets of money." There's a big scary world of responsibility and stress that comes with it—and most of that is related to running the business itself.
As someone who made the transition from freelance to small business recently, I can’t say I have all of the answers. But I can share some tips for avoiding the bigger land mines we detonated along the way. If you're contemplating the switch, watch where you step.
1. Know That Your Biggest Client is the Business
I run a design and interactive studio, and it’s amazing how little designing or coding I do sometimes. I spend most days managing projects, meeting clients, writing proposals, art directing my designers, and getting my team everything it needs in order to get the job done. Meanwhile, my partner pays our staff and vendors, writes contracts, and manages the books. Here we are, two designers doing almost everything except design.
Am I way more of a manager than I ever thought I would be? Yes. Do I still love what I do? Absolutely. For me, just being surrounded by the type of work we do is a thrill even if I’m not always the one punching it out. But it’s a tradeoff you need to be comfortable with. You have to love the content of your chosen profession enough to be OK not always being the doer.
2. Assemble a Team of Advisors
North Street's first "hire" was an accountant who advised us on everything from the type of business entity we should be to accounting software. Then, we sprang for a lawyer to put together our contracts, employee agreements, and other paperwork. This stuff is smart to have in place as a freelancer, but it’s essential as a business. You can’t pay employees or enter into high-stakes contracts with “legal” documents you crib from a Google search. Don’t try to do this stuff yourself—pay experts to worry about it for you.
In addition, seek out mentors—people you can call when you’re stumped about how to handle a particular client or situation. I was lucky enough to befriend the owner of a much bigger, much more successful interactive agency than mine. He’s faced the gauntlet of issues that can brutalize a business like mine and come out the other side smiling. I pick his brain as often as I can and don’t know what I would do without his insights.
3. Learn to Say No
When I was a freelancer, I took on every single job that came my way. If a tough client wanted an entire website built, on a bare-bones budget, by next Tuesday? It was money, and I’d take it. But, now that I have a business and a bottom line, gone are the days when I can pull a marathon of all nighters to finish a project I'm not being adequately compensated for. Turns out, all nighters are really expensive when you’re paying people.
There are plenty of clients out there who don’t want to pay a fair price, who don’t respect the amount of work required for a project, or who plain believe they know your craft better than you do. These clients will sink you. You’ll spend more time and energy than you’re being paid for (possibly at a loss), you’ll probably lose your cool and bark at the client once or twice (never good to do, especially in front of employees), and in the end you’ll likely wind up with something you’d never put anywhere near your portfolio. What’s the point? I’ve been burned by this type of job before. I can now spot them a mile away and have no problem politely steering North Street in the opposite direction.
It takes discipline to turn away money, but saying “no” will save your business.
4. Put Processes in Place
For the first year and a half we were in business, North Street operated like a bunch of different freelancers doing things very differently. You know the three-headed dragon from the Godzilla movies? That was us. With miscommunication and disorganization running rampant, we were inefficient and frustrated, and our work suffered.
It took a while, but we now have an infrastructure. We use services like Freshbooks for billing and Teambox for project management. We use Dropbox and Git to share Photoshop files and code. Spending time on process instead of the product can feel wasteful when you’re first getting it up and running, but I promise it’s worth the investment. We’re more efficient and cohesive than ever, and better at what we do as a result.
5. Question, Define, and Distinguish Yourself
North Street began as two freelancers with more work than we could handle on our own. Two years later, we hit a slow patch and realized we’d never stopped and asked ourselves what North Street is or stands for. When prospective clients wondered why they should hire us instead of the next guy, we didn't have much of an answer.
As a freelancer, you can go a long way skating from referral to referral. There’s no need for a mantra or mission statement when you’re the guy who did the website for the brother of the prospective new client who just called you out of the blue (and you’re the only person he’s calling).
As a small business, however, you are often one of many solutions a prospective client is considering. So, what makes you different than other businesses exactly like yours, and why should they hire your three-, five-, or 10-person team instead of the talents of a single freelancer?
Two years in, we took a bit of a pause to look inward and devise a set of instructions that would define our values and work. That became:
This mission statement—which evolves over time as we do—serves to keep the different pieces that make up North Street focused on why we do what we do. We are no longer a collection of freelancers. We are something bigger, different, and better.
About The Author
Tom Conlon is a graphic designer, web developer, digital media consultant and co-founder of North Street, a New York City-based creative services boutique that specializes in identity, web design, interactive development and custom social media hackery. His design work has been recognized by Pepin Press and the Society of Business Editors and Writers, and he has published articles in Wired, Popular Science, Boston, and Style.com. Tom lives in Lower Manhattan with his wife and daughter.