Growing From a Freelancer to an Agency Owner

Many freelancers struggle to keep their businesses afloat. They often work on a per-project basis, which means that they continually have to hunt for new projects. One way to solve this issue is to grow into a small productized agency that completes projects instead of billing working hours as a freelancer.

Those who enjoy the flexibility of working on their own time often realize that the elephant in the room cannot be ignored any longer: the constant hunt for new projects. Not only does it take many hours away from work that could’ve been spent on projects, but it also takes a lot of time and effort.

On top of that, freelancers are often stressed out that the next month might not be as fruitful as the previous one. The constant fear of not knowing if the cash will run out dampens the joy of working from home at your own pace.

Transitioning from freelancing to managing an agency

One thing needs to be clear: nobody can start an agency overnight. You can slowly grow into an agency, or launch a product. Let’s look at both paths to find out what kind of challenges await you:

Many freelancers would like to take on more projects, but simply lack the resources to do so. What they can do is outsource a part of their tasks, or start hiring part-time help at first.
Launching a product is much more complicated. It can be a course, an ebook, or a software. While the passive income dream sounds good, most people are not successful.

That being said, it’s certainly not impossible to launch a successful product. Those who are successful often combine their services with products. Let’s look at an example from this list containing productized services examples:

Dropship For Sale mainly sells turnkey dropship websites that can be customized with your own logo and domain. The only thing you have to do is purchase one of the ready-made templates. While this is the core business, they also offer custom store designs as a service at a higher price point.

Productizing your existing services

A much better option to make the switch from freelancing to building and scaling an agency is called productizing. Productization is not just about putting a price on services and selling those as an a-la-cart product. It’s all about niching down your core services, optimizing your processes, and running an efficient business with a high return on investment.

A big advantage of running a productized agency is that you:

know who your ideal client is, and
that you can easily build marketing campaigns.

This eliminates the need to constantly hunt for projects/new clients as they should find you via your marketing efforts. Marketing can be anything from a referral system to content marketing and paid ads. One thing that is uncertain is which marketing strategy works best for you. However, you can take a look at competitors, and then experiment with the chosen strategies.

Deciding what to productize

With the theory out of the way, which part of your services should you productize? One thing is clear, not all of them. You’ll invest a good amount of time analyzing your current services and need to decide which ones are worth keeping, and how to bundle them.

Let’s assume that you are a designer, and you’ve been focusing on the travel niche until now. Most of your clients are travel agencies, some are travel bloggers. They usually hire you to create stylized graphics for blog posts, sometimes you need to create an infographic.

The good news is that you already have a niche: travel companies. This helps you market yourself as the designer for everything travel related. Maybe you’re even a traveller yourself who loves taking pictures. In that case, you can leverage your own portfolio of picture assets, and use it exclusively for your clients. This sets you apart from designers who heavily rely on stock images.

Next, try to bundle your services into packages that give the impression of good value, for example:

monthly package with graphic design for blog posts
one-time creation of a detailed infographic
one-time custom illustrations

Make it clear what each service contains so there’s no room for interpretation, refund requests, or disputes. Also, link to your refund policy, and experiment with discounts for yearly subscriptions.

Why recurring revenue is important

The above example mentions recurring services, and that is something anyone should focus on when productizing. It eliminates the aforementioned fear many freelancers have, that their cash flow is unreliable and runs out.

The best recurring service is one that is long-term, either billed quarterly or annually. It makes investments for agency owners much easier because they can calculate their monthly recurring revenue. With that data, they can decide if it’s worth hiring new talent and expanding the agency. Or, they can invest in marketing activities to bring in new leads.

That being said, recurring services do often require a bit more work. You’ll have to think about subscription management, and if you want clients to handle it themselves. If so, they could cancel at any time, but also up or downgrade their package. Some subscriptions also require detailed task management including revisions. A good client portal software can take care of all these aspects for agency owners.

Final thoughts

Making the jump from freelancing to owning an agency is a daunting task. Freelancers will need to adapt to the fact that they’ll no longer work alone, but instead lead a team of like-minded people. This requires a lot of effort, management skills, and patience. However, an agency can also bring a lot of security to your life as its business is easier to predict.