How to step up from freelancing and become a creative agency

You could hire other freelancers, but that doesn’t always work out and can become more expensive than necessary, so why not consider taking on your first member of staff and growing your agency?

It might seem like a big leap forward, but really – you’re just evolving the business into something different with new challenges and responsibilities, and most likely, more rewards.

Besides, the transition from independent freelancer to agency owner is something you’ll naturally adapt to as you go along, but here are some top tips to help you get started.

Set up a private limited company

If you’re currently operating as a sole trader, then you might want to consider becoming a private limited company. All limited companies must be registered (‘incorporated’) with Companies House. To do this, you’ll need:

• a company name - there are rules on what it can and can’t include
• an address for the company
• at least one director
• at least one shareholder
• the agreement of all initial shareholders (‘subscribers’) to create the company - known as a ‘memorandum of association’
• details of the company’s shares and the rights attached to them - known as a ‘statement of capital’
• written rules about how the company is run - known as ‘articles of association’

Once the company is registered, you’ll get a ‘Certificate of Incorporation’. It confirms the company legally exists and shows the company number and date of formation. More information is on the UK Government website.

Market the business instead of yourself

Switch your marketing to focus on the business rather than yourself. It will ensure you’re seen as a bona fide company with credibility.

If you’ve established a new company name after registering as a private limited company, then you should consider a new brand identity along with a website and associated business stationery.

At this stage of your business, you should have enough budget to call upon other freelancers or suppliers to create everything you need. Just try not to skimp on your branding as your marketing is crucial to your ongoing success.

For further advice, read these tips on 60 ways to create a successful website.

Rent an office space

Working from home or hot-desking suited you perfectly as a freelancer, but now you’re an ‘agency’ - you’ll need an office to call your own.

Check out your local council to see if they offer any affordable space to help you get started or consider searching the property listings of rental firms in your area.

Don’t go for an office that is too small, but ensure you have a sensible space that will suit you for at least the next 12-18 months. Just don’t be seduced by something that’s out of your price range, as you’ll want to keep your overheads low and manageable at this early stage. Particularly as you’ll also have to consider the cost of hiring staff and kitting out your office with new furniture and computer equipment.

Also, don’t get tied into a lengthy, inflexible rental contract – you should always seek to negotiate terms and have a ‘break’ clause that allows you to get out of a lease prematurely. Bottom line, keep your options open.

Hire your first member of staff

When you worked alone, you were in complete control of the quality of your output. Now you’re becoming an agency; your staff will play a crucial role in maintaining that quality.

It’s down to you to ensure standards remain high, so effective recruitment is crucial.

The first step in your recruitment process should be to prepare a job description that can be used for both hiring and employment purposes. When creating a job description, keep the following in mind:

• List the duties and responsibilities of the job, moving from general to specific. Example: “Will assist agency in creating promotional materials for clients. Duties include editing copy, writing press releases and contacting industry experts and media”.
• State job qualifications and pre-requisites in an objective manner. Examples: “Must have bachelor’s degree” or “Must be proficient in PowerPoint and Quark”.
• Include language indicating that you are an “Equal Opportunity Employer” and that nothing in the job posting or description should be construed as an offer or guarantee of employment.
• Do NOT use language that states or suggests a preference for a particular gender, race, age or other such quality. Example: “Looking for a young, energetic team player.” Both the words “young” and “energetic” suggest an age preference and is likely illegal. Better: “Looking for a hard-working team player”.

Next, you’ll want to find potential candidates. These can be found from several sources, including job fairs, local colleges and universities and online jobs boards.

Finally, when it comes down to the interview process, there are many things to remember. Most importantly, you must not ask candidates about protected characteristics and:

• their health
• if they’re married, single or in a civil partnership
• if they have children or plan to have children

For further reading, check out the UK Government’s advice for Employers on preventing discrimination. Recruitment firm Monster also has some great tips on recruiting and hiring.

Get the proper insurances in place

We all make mistakes. Which is why you must take out adequate insurance to protect your business, should anything go wrong. Professional Indemnity, for example, will cover you if a client sues you because they are unhappy with the work you have done or advice you have given.

In fact, as a business, you're required by law to have specific insurance policies in place. The cover you need to take out depends on the type of business you are, and your industry. You might also want to have the reassurance of other optional insurance covers.

If you employ another person, you are legally required to take out Employers' Liability insurance. You will need cover of at least £5 million, and you must display your certificate of insurance where employees can easily read it. You can expect a hefty fine for failing to have a policy in place.

Public liability insurance is another essential. Especially if your customers visit you on your premises or if you do work on theirs. It will protect you if a third party injures themselves, or damage is caused to property because of your business activities.

Delegate your work and free up your time

When you’ve hired your first member of staff, make sure you use them. If there’s one thing that freelancers find most challenging when growing an agency, it's able to let go of control and allow other people to help.

Learn to delegate and handover as much of your work as possible. That way, you’ll free up your time to concentrate on expanding the business and developing processes to increase efficiency and profitability.

Just make sure your clients know you’re still involved in the business, and attend all meetings until they’re entirely comfortable with your new staff member. After all, they hired you before you became an ‘agency’ and might want to keep it that way.

For effective delegation and project management, use helpful software such as Teamwork PM. It’s a powerful platform, as you can also benefit from its time-tracking feature, allowing you to keep an eye on where staff are spending their time.

Get a healthy cash flow

When it was just you, working alone – cash flow wasn’t an issue. You could juggle things around. But now you’ve got added responsibilities and salaries to consider; cash flow could make or break your business.

In which case, get a better handle on your funds and start setting aside some money into a separate business savings account every month. Bottom line, try to keep as much money ‘in the business’ at this stage.

You'll also want to save for your corporation tax, so you're not hit with an unexpected bill at the end of the financial year. Use the HMRC's handy Ready Reckoner tool, which shows you, depending on your profit, roughly how much money you need to save each month, or year, to pay the taxman.

If clients are an issue when it comes to paying your invoices on time, then read these tips on how to prevent late payment and also how to make sure you get paid in the first place.

Concentrate on your marketing

Now that you’re an ‘agency’, you’ll need continued business growth, and that means marketing is now an essential daily push.

Consider putting together a marketing strategy and explore your strengths and weaknesses. Work out how you can improve those weak areas while exploiting where you’re doing great. Establish what makes you stand out from your competitors and strive to offer something that your target audience needs. More than anything, look at where you can solve problems, add value and make a difference. Agencies that go beyond ‘churn work’ will have a better chance of survival.

Consider our simple tips on how to put together a marketing plan. Although a little basic, these tips show that you don’t need to make this complicated. Some effective research and understanding of your business, your customers and your market is all you need to get you started and on the right track.

Bear in mind that even the biggest creative agencies might not have gone through this process yet. It’s not an easy thing to consider. But if you’re self-aware and prepared to put in an ongoing effort to improve, you will be able to shape a successful business that continues to survive for many years to come.

For further reading, check out these 100 inspiring ideas to market your business.

Consider expanding your services

You started as a freelance web developer, and now you’re a digital agency. Perhaps it’s time to redefine your whole offering by considering other services you might be able to offer? Because the larger your agency becomes, the higher the possibilities.

If you’re in the field of web development, for example, why not expand into all those services that people need once a website is launched? Such as content generation, social media management and digital marketing?

Or if you’re in the field of design, then how about expanding to web development? Anything is possible; you need motivation and good people to help you get there.

Once you’ve expanded your services, you can offer these to all your existing customers, organically growing with them to win more work. You should consider all other possibilities by reading our tips on how to grow your current clients.

Invest in your staff

Your staff are your greatest asset. Make sure you look after them by investing in training and resources that will help them to progress in their respective careers.

Establish regular ‘appraisals’ to sit down on a one-to-one basis with each staff member and seek ways to not only increase their performance and efficiency but boost their motivation and ensure they’re developing their skills and achieving their goals.

Further reading is over at Smallbusiness.co.uk, where you’ll discover these helpful tips on how to conduct staff appraisals.

One final note

Still not convinced? If you’ve survived freelancing and you love what you do, then running an agency will be just as rewarding and challenging.

Yes, there’ll be times when you struggle. That’s expected and completely normal. But please know this. Every agency owner always starts in the same boat. It’s a journey, not a destination – as they say. You’ll learn as you go along. You’ll make mistakes, that’s inevitable. But these mistakes will prove to be the lessons that help you progress to the next stage of your business. And you’ll love overcoming each challenge and seeing how far you’ve come.

The fears you face now, as you transition from freelancer to agency will seem like child’s play once you hire your 10th member of staff and reach a turnover you never thought possible. But it will be well worth the adventure.