If you’re a freelance creative toying with the idea of starting a company, you’re not alone. We’ve entered the age of entrepreneurship, where the “lean startup” is glorified and its trials are handsomely rewarded. Working for someone else, particularly in creative circles, can be seen as capitulation of ambition, a near failure. And freelancing, especially when you’re expected to schlep into an office, can appear a step shy of the freedom and financial prospects that “real” entrepreneurship holds.
This is our modern fairy tale, and it’s one we’re all too quick to romanticize. The unglamorous realities of building a business are often glossed over for sexier stories of brilliant exit strategies. In truth, we’ve come to think of starting a business as a culmination of effort. In reality, it’s more like a trip that has no end.
This is what I wish I’d known from the start.
On paper, the transition between “freelancer” and “boutique creative studio” can be just a single hire, or easier yet, just a shift in how you present yourself (the “royal we” with some smoke and mirrors approach.) Practically, making the leap from lone creative to full-fledged entrepreneur is much more complicated.
For me, this leap was my New Year’s Resolution for 2005. My (now former) business partner and I settled on a name for our design services firm and got a certificate of incorporation. It was a symbolic start, and we would remain only symbolically a company. In fairness, our startup capital was roughly $500. We weren’t interested in loans or outside investors. Our plan was to stay within the limits of our accounts receivable, even if this meant our business would grow at a snail’s pace.
We were overly optimistic. Despite our best marketing efforts, we continued to function mostly as independent freelance artists, working for separate clients, doing whatever came along—motion graphics, illustration, design. We only occasionally collaborated, and sometimes still commuting to other design studios to work on-site. We couldn’t identify the “secret sauce” that would propel us ahead enough to operate as a full-fledged studio, reaping whatever rewards we thought came with this distinction.
Things weren’t terrible as they were, but eventually we drifted. Each partner moved further in whatever direction their clients were taking them. Parting ways wasn’t a surprise. The surprise was what’s happened since.
In deciding what to do next, I found myself at the same crossroads. Do I just go back to freelancing, or do I reboot this, alone? Examining a five-year trajectory of my first company, I found we succeeded in paying the bills and we failed at running a real business.
I had gone into it knowing how to be creative and not afraid of being managerial. I believed that would be sufficient. Like many, I too thought that “freelancing” was a natural gateway to “entrepreneurship,” and while they’re not unrelated, they’re worlds apart. Essentially, I had sold myself on a fantasy, but now I knew better.
It came down to a deceptively simple question: what really made a “company”? Was it having more employees, or a fancy office, or something else that was currently unaffordable? The answer was my “secret sauce.”
That’s when my experiment with small business finally evolved from a “one-, sometimes two-person band” into a studio that could find, land, and produce work, on both the scale and in volume that befits the “company” label. Now, coming up on 11 years of “being a company” in various incarnations—as solo entrepreneur, equal partner, employer—and with varying degrees of success, I firmly believe two things really separate a freelancer’s approach and a business owner’s approach: Adapting and selling.
You may consider yourself driven and self-managing, and that’s a good start. But, freelancing, especially on-site, forces you to answer to a superior. Someone, on a regular basis, ensures you’re moving along and in the right direction. Now, if this “someone” is a pain in your ass, it could be one reason for wanting your own business. But hating to work for someone else doesn’t automatically make you capable of working for yourself. How good of a pain in your own ass can you—will you—be when the situation calls for it?
You may be great at disciplining yourself while you work. How disciplined can you be about bills, payroll, taxes, or insurance? The IRS doesn’t care if you don’t collect sales tax, you still need to file. Getting through Workers’ Comp alone can be a day’s worth of research and forms! Even the more creative stuff, like project briefs and estimates, takes up a lot of time, especially when bidding on a larger job.
From the start, I handled all admin by default, as the more “organized” of the partnership. I won’t lie—I resented it, but my partner and I never agreed on hiring help. At least, it never interfered with my creative output. But, when my own business finally took off, I was shocked to see my real workday begin at 4 p.m., after a day of creative calls, estimates, invoices, contracts, and managing freelance artists. It took weeks of late nights and weekends before I hired full-time help (my Executive Producer) and weeks more before she and I were all caught up.
Be honest as you think this through, because exaggerating your capacity and patience for non-creative “crap” won’t serve you well. Otherwise, your very first hire needs to be someone to handle it, if only part-time. Can you afford that hire?
What about the freedom? The freedom you think you’ll enjoy will only happen if you teach yourself to enjoy it. In fact, you’re likely to have a lot less free time. Fear of missing out on a project can be paralyzing. It’s tempting to try to do as much billable work as possible without hiring help.
If you’re starting solo, smoke and mirrors and the “royal we” can carry you for a little while, provided you can pull off whatever you’re pitching. But, even if you plan to stay small, at some points you’ll have to manage a team and a production calendar. Eventually, it’s very likely you’ll want full-time managerial help. Just as likely, you’ll still need to have your hands in a bit of everything anyway, since it’s your ship to steer.
From the 99U Conference: Basecamp founder Jason Fried on the benefits on building a business slowly.
If you think being the boss automatically means you work on what you want, think again. You’ll have to be willing to hand off projects to freelancers if it better suits the big picture, even if you’d rather work on it yourself. You may need to adapt to several workflows and be willing to develop new ones as needed.
I didn’t get my first company far off the ground because I was simply far too rigid in my vision of creative entrepreneurship. My attitude boiled down to this: I wanted to do the work I loved, and all we needed to succeed is to keep doing good work. But doing “good work” wasn’t enough.
As two creatives at the helm, we desperately needed a manager and here, our DIY attitude actually hindered progress. I handled managerial “crap” efficiently, but I resented having to do it. My partner was in denial about the amount of managerial “crap” there was. I was in denial about other necessities of running a business. I didn’t want to manage people. I wanted to create and remain 110 percent hands-on in every aspect of production.
However, there was yet another serious flaw. Deep down, I was unwilling to accept a simple fact: to reach my entrepreneurial goals, I had to finally learn to sell.
The creative entrepreneur’s dream is to have someone else do the selling. Yet, if you’re bootstrapping, you may not be able to afford a salesperson, let alone an account team. And, even if you do, after 10 years of trying to reassign that “dirty work” to someone else, I’ve begrudgingly accepted that no one can sell my company’s services better than I can. Are you ready to be a salesperson?
You may believe that you already sell your services as a freelancer, but there is a world of difference between what, how, and to whom you’ll be selling as a company.
Consider this: As a freelancer, you’re going after smaller budgets and scopes of work. You may be dealing with other small business owners, or creative leads in larger companies. Regardless, the amount of convincing you have to do is trivial in comparison.
You may have experience with big pitches, but remember: You’ll no longer have the track record, the portfolio, or the ready-to-go team of an established shop when you’re trying to land a project.
For a long time, I felt constantly caught up in a Catch-22: I didn’t have the work to show in order to get the work I wanted. No amount of after-hours “portfolio-building” projects could add up to a proven track record with real clients. Of course, I had past examples of work I’d done while freelancing at other design companies, but there are ethical (not to mention possible legal) implications of passing off such work as part of your new company’s portfolio.
The gap between what you’ve done in the past and what you’re bidding on can grow exponentially too. The reason financial opportunities expand when you’re a “company” is often because you’re no longer chasing just one part of a project. You’re providing a more complete service with greater requirements. Maybe you’ve designed a hundred websites, but now you must prove you can do it all, from copywriting to beta-testing.
So, while you may be great at selling your own skill set, there is a massive difference in learning how to sell a team, especially if that team won’t exist unless the project is awarded. It’s far harder to convince a dozen people across departments that you’re the right person to run with a large job than it is to get a creative director to give you a shot on a two-week assignment.
This is where it gets really tricky. Sure, you may be great at convincing the client. Then, you may be equally great at convincing yourself. Neither guarantees you can deliver on what you promised. An equal part of being great at selling yourself is knowing how to refrain from over-selling. This means having access to all resources required to produce what you’re selling and full confidence in your ability to handle it without sacrificing quality.
A no-less important facet of sales is budgeting. Once you’re billing as a company, you’ll likely work on project rates, as opposed to hourly/daily. You have to study your market and understand your out-of-pocket expenses. You must be able to approximate scope of work outside of your expertise, or to have resources ready to help you. You must be good at reigning in your own imagination to keep things realistic. If your creativity goes into overdrive on a project, and misses a deadline or seriously jeopardizes other commitments, that’s a massive business fail, even if it’s a creative win.
Client relations also get trickier. The satisfaction of every client is 100 percent your responsibility. You will never again have the luxury of letting someone above you deal with a difficult client. There is no one above you. You must be able to manage their expectations and revision requests, and you must remain tactful no matter how ridiculous those changes may be. Sure, you’re doing a lot of this as a freelancer, but the stakes, and potentially even your legal liability, are now much higher.
All this may not sound like “sales” to you right now, but knowing how to put together a budget that is fair to you and attractive to your client is what will keep your business running. In the creative industry, a good sales pitch is talent meeting economics.
Figure out who will sell for your company before you jump in. You? Your partner? Someone you can afford to hire right away? If you’re willing to practice and master a new set of skills (or “adapt” to another reality of entrepreneurship), you’re a better candidate for learning to sell on your own. If the word “sales” makes you permanently uncomfortable, do consider a hire if you can afford it. At the least, devise a sales plan you can live with doing: email marketing, cold calling, networking events, etc., and educate yourself about every detail of the rates, budgets, legal implications, and fine print of your industry niche.
Now, here comes the encouragement.
I went freelance aiming for a wider range of projects and “A-list” clients. When I decided to start a company, sure, I worried about money and freedom, but my greatest concern was banishing myself to low-exposure, “C-list” jobs.
My concern was both very real and very wrong. Very real because, indeed, without a dedicated sales staff, building up a glossy client list took time. Very wrong because once my studio landed a project, even the smallest job brought more pleasure than working for someone else. It wasn’t just pride in my work. I was quite simply happy to be working.
Utterly different from my earlier definition of professional success, I now see real achievement not in the work per se, but rather in the collective trust of our clients. Behind every project we’ve landed, someone else’s career is on the line. Gaining clients’ faith in our ideas and execution, and seeing our reach expand via professional referrals are my biggest entrepreneurial rewards. Nothing sounds sweeter than someone simply saying they love working with my company.
I now run what I consider a successful small creative business. We’ve had a few profitable years in a row. We’ve gotten some flattering press coverage. We even scored a shiny award that I’ve coveted for a long time. We have our processes in place. We’ve got confidence and the portfolio to back it up.
But, it’s taken me nearly 11 years to get here.
So, why do you want to be a company? Where do you dream the gain will be? Be wary of its downside, because for everything you gain, there’s something to adapt to. Just because you want to evolve your freelance efforts into a company, doesn’t mean you can – and it may not mean you should.
Unless you’ve got financial cushion, an amazing network, or tons of luck, a small business is two steps forward, and one (two, three…) steps back. Success is an attitude, and for many, it’s an attitude learned. It’s a renunciation of fear, or at least of the kind of fear that paralyzes instead of empowers. Success is being absolutely certain in that, no matter what, you’ll always make it work, even if that means gracefully accepting defeat and moving on. It’s calmly resolving yourself to uncertainty in everything else.
Now, if that sounds exciting, welcome to the entrepreneurial dream–I hope you dream big.