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Thursday, September 17, 2015

Considerations for those moving from freelancer to agency CEO

Business management
Managing a business boosts experience, know how and professional growth
By Gary Keeley

With more than 4.6 million people working for themselves, the level of self-employment in Britain is higher than ever before. Many self-employed people start out as freelancers as this offers people the opportunity to be their own boss without committing the money and time it takes to set up a company.

However, while freelancing may be less complicated than setting up an official business, it can limit the type and amount of work you are able to take on. As workloads and client lists increase, many freelancers start thinking about starting up an agency.

Setting up a limited company has lots of benefits. It can increase your capacity, enabling you to take on more and bigger projects, it can lend your business a greater air of credibility when dealing with clients, and it also offers you a greater degree of personal protection should the business encounter any financial problems.

However, while it may seem like the next logical step in your self-employed career, setting up an agency is not something that should be entered into without careful consideration.

Do you want to run an agency?

This is the most important consideration of all. Setting up your own company certainly offers many advantages – but it is not suitable for everybody. It often comes down to individual skills and preferences.

As a freelancer you are solely responsible for a project, executing the brief from conception to completion. As Director of an agency, your focus will instead be on strategy, sourcing clients and managing the day-to-day running of the business. For some people, this will be an exciting new challenge. Others may find it difficult and unsatisfying to prioritise business development over more creative work. If you fall into the latter category, continuing as a sole trader might be the best option for you. Similarly, if managing a team and delegating tasks is not something you feel comfortable doing, then managing an agency may not be for you.

Understand your obligations

Before going ahead and setting up an agency, it is vital that understand what goes into running a business. For example, you will need to think about obtaining office premises, hiring a team and setting up effective systems. It’s also essential that you are aware of and able to fulfil any legal responsibilities.

As head of an agency you will be managing people – and with employees come responsibilities. You will need to have a system in place to enable you to pay your staff accurately and on-time. You may wish to outsource HR and accounts to begin with, but as a company grows it can be beneficial to bring these tasks in-house.

You will also need to ensure that you are paying the correct amount of tax and National Insurance or you could find yourself facing a hefty fine.

Furthermore, from 2017 all UK businesses will be legally required to enter their workers into a workplace pension scheme (auto-enrolment) – so make sure you are aware of your obligations around this. As a freelancer you may not have thought about your own pension, but your employees will be entitled to a company scheme.

This all has cost implications for your business so you need to be confident that you can bring in enough income to cover these extra overheads.

Test the waters

If you’re still not sure if setting up an agency is right for you, why not test the waters by starting out small? If you’re working on a large project, think about sub-contracting out certain elements to another freelancer. Alternatively, if you are nervous about trusting client work to another person, you could always hire someone to take care of the day-to-day business tasks, such as marketing or administration, that you might not have time to do yourself. This approach will help you get used to sharing out work and will give you an insight to how an agency situation might work if you decide to go down that route.

Ask for advice

As you can see, setting up your own company can be a complicated process - so it’s always worth asking others for advice. With the many legal and financial requirements involved, consulting with a lawyer and an accountant is a must.

But it’s also worth speaking to people who have already taken the plunge and created an agency. Ask them about their journey – what they like and dislike about running a company, what they found difficult, what they would do differently and what advice they would give to a person just starting out. Their experiences could be invaluable in helping you make that next step from freelancer to agency CEO.

About the author: Gary Keeley is the founder of The Workplace Pension Consultancy, which provides advice and consultation for SMEs who are looking to set up auto-enrolment for their staff.

Image:  Geralt/Flickr; CC0, US-PD