There are many extremely rewarding benefits when making the difficult transition from being a freelancer to running a small business. But, the challenges that managing your own company presents can be quite daunting.

It’s not necessarily an ‘either or’ transition. Typically it will happen gradually over time. A good time to switch to a small business may be when you are spinning too many plates and turning work away.

So, why make the switch from freelancer to small business?

Being a freelancer, you are your own boss. You do things your way and have total control over every aspect of the business. And, whilst this obviously has its perks, the problem is that operating as a freelancer is an extremely time consuming 360-degree approach.

You can only ever do a certain amount. You can’t grow extra arms or magic up additional hours.

You have to do everything yourself. Meaning, that it can be very difficult to keep on top of everything or experience growth without a ceiling.

It doesn’t matter how motivated you are, bringing in new clients, taking on the biggest projects and ultimately making more money will inevitably require a team around you to grow.

This is where transitioning to a small business can be really beneficial. It allows you to say ‘yes’ to the work you’d otherwise have to turn away. However, with it, comes risk.

How could freelancing lay the groundwork for expansion?

An experienced and successful freelancer will often possess the skills required to manage a small business. They’ll be self-motivated, able to look after all their books and tax returns and they will be a business development expert. This is all true to a degree.

However, the difficulties really aren’t in operating the output of the business. If your client list is long enough to require the expansion in the first place, then you’ve got the essential skills to run your freelance business covered.

What are the new challenges you are likely to face?

Coming from a lone-wolf operation, it will be managing your new staff that will be the primary new challenge. People management will likely be the largest gap in your knowledge.

Building a team that you can rely on to represent the brand you’ve worked hard to build, is an extremely time consuming process. Not to mention the significant amount of paperwork (you’ll need to register with HMRC for a start).

You’ll have to carefully select and interview candidates, and perhaps go through the intimidating and emotionally intensive prospect of firing an underperforming employee. It requires introducing a level of dynamic relationships which freelancing allowed you to avoid.

However, there are, of course methods of streamlining this expansion process and approaches that will at the very least make life a bit easier. Starting off by utilising the skills of other freelancers is one option.

Cloud based HR software can make keeping track of your personnel records and timesheets completely automatic. Recruitment solutions can help you find that perfect team member without you having to compromise your working schedule. Cloud based accounting and payroll can make things simpler too.

So, to expand or not to expand?

Of course, operating as freelancer allows for total control over your business, you are never reliant on anyone else and have total flexibility.

However, you are limited. Should you choose to expand your business with additional team members, your company’s work rate will dramatically increase in efficiency due to being able to take on multiple large projects and hence make more money.

It may be daunting, but if you’re spinning too many plates and turning work away, maybe it’s time to make the transition from freelancer to small business.


Are you considering making the leap from freelancer to small business? Please let us know your thoughts and concerns below.


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