As a freelancer, it can be fairly straightforward to manage growth and scale modestly. You can increase your rates, double down on the number of hours you work, or diversify your offering. But at some point, you will run out of time. Freelancers are ultimately selling hours. And as a freelancer, those hours are limited.
Determining if and when you should hire employees to scale your business can be a challenge. This post will arm you with the information you need to make those hard decisions.
Understand the limitations of freelancing
The absolute maximum number of hours that a freelancer can work in a day is twenty-four. But that is neither sustainable nor scalable. Take into consideration your life circumstances and how many hours you can reasonably devote to your freelance business, without radically compromising your sense of work-life balance.
Once you have determined how many hours you are prepared to work, you should also think about the maximum amount you can charge clients for the work you do. Scope out market standards and compare your rates with the competition.
Multiplying your maximum number of chargeable hours by your maximum rates will determine your freelance business’ maximum potential earnings.
You may decide that this is an amount you can live with indefinitely. Or you may not. But identifying those limitations is a critical first step in deciding if and when you want to hire an additional resource.
Consider contractors (vs. employees)
While employees help you scale your business, they reduce margins and necessarily bring with them certain headaches and costs.
Before you commit to hiring employees, you might want to consider outsourcing to contractors. This option provides flexibility as well as potential access to a greater level of skill and expertise.
Commoditize your services
Another way to scale your business, without having to hire employees, is to commoditize. Consider whether or not there is a way to add a product to your offering – a book, a video series, an automated e-learning course or a widget. This will provide an additional revenue stream that will not necessarily drain the same amount of time and energy.
Are you risk averse?
Taking on an employee involves some risk. You will have payroll to meet. You will have ongoing HR considerations. You will need to train your employees. They may not work out. These are all serious considerations, and you need to assess your appetite for risk against your desire to scale your business. The net gains may not outweigh the costs.
If you are thinking of growing your business and hiring an employee, contact Miller Bernstein today to help determine if it is the right decision.