Growing from a freelancer to agency owner is an exciting transition. It usually means that you had so much success as a freelancer, that you now have the option to expand.
Congratulations!
And while you should celebrate, success as a freelancer, doesn’t guarantee success as an agency owner. Working as a freelancer and being an agency owner are two very different roles, and require two different mindsets.
Being a freelancer means you’re working on all aspects of your business. You’re responsible for all client work and admin work. You’re also the only one impacted if you make less or take on less work one month compared to months prior.
An agency owner hires other people and delegates these tasks to them. That doesn’t mean you have no impact. In fact, you have more impact than anyone you hire. Every decision you make regarding this agency will affect everyone on the team. You’re no longer just responsible for yourself, you’re now responsible for your team members as well.
The jump from freelance to agency owner is a big one, but that shouldn’t discourage you from taking it! To help with that jump, we’ve compiled a list of items that will show you how to start a design agency.
Figure out what services you’ll offer
The list of services you offer as an agency might be the same as when you were freelancing. It doesn’t necessarily have to change or expand.
It might actually benefit you early on, to stick with what you know. And as you grow and hire more talent, you can add new services to your list.
Just because you’re now an agency, you’re not required to offer a bunch of different services. If you’d like to specialize in one or two services that’s completely fine. If you find that you’re consistently getting clients asking you for a service you don’t offer, you can partner with other agencies or freelancers and refer those clients to them, where you receive a small percentage of the revenue generated or just a flat fee.
By establishing what services you’ll offer early on, you’ll know exactly what types of clients you’ll want to work with and how you’ll be able to help them.
Find a niche
Who would you like your ideal client to be? What type of clients do you want to work with? These are questions you should be asking yourself before starting an agency. Some things to consider are: the industry you’d like to be in, the size of businesses you’d like to work with, whether they’re B2B/B2C etc.
Being in a niche that’s profitable and in demand is important as well. You might already have a niche as a freelancer, but if that niche isn’t big enough to support an agency it’s probably best to find a different one. One that is more in demand and has higher profit margins.
It’s important to find a niche as an agency, because it helps you build credibility and authority in an industry. You’ll have an easier time proving that you’re an expert in one industry and type of business, than trying to prove you’re an expert in multiple different industries and types of businesses. The more credible you seem, the easier it is for people to trust you and want to work with you.
Another way you benefit from niching down is that every client of yours will be a lot more similar than they will be different. Because they’re all in the same industry, they’re overall goals and how they operate will be similar. So you will have less of a learning curve from client to client. You won’t have to spend time learning about how each of your clients’ business operates because they’ll all be similar.
Determine a structure for your agency
What positions do you want to hire for, and how involved do you want to be? It’s important to have an answer for these questions. Figuring out what you struggle with is a great start. If you know that finding leads and closing deals is not your strong suit, your first hire might be a sales person. Or if you need help with design work, hiring a designer would be best.
A lot of agency owners are not very involved in the everyday activities of the business. That’s one of the benefits of hiring talent. But some agency owners still prefer to be heavily involved in the business. Deciding how involved you’d like to be is important because it’ll help you better understand who to hire.
It’s also important to know who you can afford to hire. Different positions and experience levels bring different salary expectations. You may only be able to afford to hire junior level talent which may mean that you’ll have to be more involved in the business, at least to start. But if you can afford to hire senior level talent, you can leave more responsibilities on their plate.
Deciding if you want to hire full-time employees or independent contractors is another choice you’ll have to make. There’s no need to commit to one or the other right away, but it’s important to at least understand the differences. From there you can work on building a team full of employees or contractors, or a mixture of both.
Establish pricing structures
Pricing structures are pretty similar for freelancers and agency owners. So if you have a pricing structure that worked from when you were freelancing, you can bring that same structure to your new agency and see if it works.
But remember, running a freelance business is very different from running an agency. So it may be wise to at least consider different pricing models.
Hourly is the most common for freelancers, but they don’t always work for agencies. Because agencies typically have multiple projects going at once, it’s harder to track time spent on a project. Especially if there are multiple team members working on the same project.
Flat fees are also common for freelancers, and they can work for agencies as well. This is when you receive a sum of money in exchange for your services. This number is typically set at the beginning of the project and does not change.
Retainers are also common with freelancers, and common with agencies as well. Clients pay you a monthly fee for ongoing services. This can include SEO, A/B testing, marketing etc.
Revenue/Profit sharing and equity are not very common with freelancers, but can be common with agencies. Depending on the size of the client and industry, it might be worth looking at receiving equity, or a revenue/profit share in exchange for your services. For clients that are in the early-stages of their business, with limited revenue, this model makes a lot of sense. It’s also a great way to build solid long-term relationships. Your success is directly tied to their success.
Compile a list of software you’ll need
The right collection software can help you run your business more smoothly. Here’s a list of software that will help you keep things running as smooth as possible:
CRM
To help you manage client relationships. CRM’s keep track of all client interactions, sales, and leads.
Accounting Software
Keep track of all revenue coming and expenses going out, so that when tax season comes around, you’re not scrambling to find receipts and records. All your financial information will be recorded on this one accounting software.
Marketing Software
Mailchimp, Convertkit, and Hubspot are all examples of marketing software. They help you create marketing campaigns, convert leads, and measure how effective a campaign was.
Project Management Software
It’s exactly what it sounds like. As an agency, you’re going to have multiple projects going at once, so having software to keep track of these projects and individual tasks is important.
You may already have a list of software that worked for you as a freelancer, which is great! But it’s important to keep in mind that you might need more features if you’re an agency, which means you’ll have to budget for higher monthly subscription fees.
Starting a design agency should be fun
Embrace these early moments. You’re most likely in this position because you experience success as a freelancer. That’s hard enough to do. Now you’re getting ready for the next step!
The transition is a big one, but big doesn’t mean impossible. And if you come from a freelancing background, you already proved that you are capable of working with clients and delivering quality results.
Before you go, we’d be remiss if we didn’t mention that if you’re looking for multi-purpose HTML templates for your agency, Webplate has you covered! Click here to view our entire catalog of HTML templates.
