The traditional advice that you'll encounter in many places online after establishing yourself as a freelancer is to scale up. For instance, you could hear a lot of individuals say that starting an agency is preferable to working alone.
You won't notice the additional stress that comes with expanding beyond a freelancing firm, though. Your management responsibilities will likely expand, and your operational expenses will increase. Additionally, you can find yourself forced to perform an undesirable task.
It's important to find your sweet spot as a freelancer; for some people, it means pulling back. Here are some justifications for and advice on how to scale back your freelancing company.
Reasons to Downscale Your Freelance Business
You may reconnect with the motivation behind why you started freelancing by dialling back your independent company. Here are a few of the most significant advantages in greater detail.
1. Build Better Relationships
One issue with growing beyond your capacity is that doing so frequently means sacrificing the level of your work. As a result, you run the danger of jeopardising the connections that you've worked so hard to establish.
Retaining existing clients is more time- and money-efficient than continuously seeking out new clients once you've established a steady revenue stream as a freelancer. Scaling back enables you to concentrate on assisting a core group of like-minded individuals and fostering trust in order to keep them around for the long haul.
You might use that time to expand your skill set and get better at what you do rather than looking for new clients. Afterward, you'll be able to provide better service to your current roster and exercise greater discretion when choosing the projects you work on.
2. You Don’t Need to Manage Other People
As your business grows beyond the freelance stage, expanding your team by hiring contractors and employees becomes necessary to handle the workload. However, this expansion entails not only financial investment in their salaries but also time investment in training and ensuring their successful completion of assigned projects.
If managing others aligns with your genuine desire, it won't be a problem. However, if you lack trust in the people you hire, it can lead to significant stress. In such cases, it may be more beneficial to stick to a one-person business model.
If you have a desire to collaborate with others but want to avoid the stress of managing a team, consider seeking freelance projects that involve smaller teams. Moreover, if you're uncertain about transitioning to a freelance career, certain signs can help you determine if you are ready to take that leap.
3. Lower Operating Costs
Higher running expenditures outside of staff compensation are frequently involved when expanding from freelancing to a larger corporation. You'll probably require new hardware and software, including top-notch project management tools. Additionally, you might need to employ legal counsel and rent office space.
Even though your business costs are frequently tax deductible, there may come a time when your earnings fall short of your revenue growth. It's important to consider whether you really want a "proper" firm because freelancing frequently enables you to retain a larger portion of your earnings.
4. Better Mental Clarity
If your primary objective is to climb indefinitely, you could discover that your mental ability is far less than it otherwise would be. You now have to complete more uninteresting activities in lieu of the work you intended to undertake. You'll have more obligations than you would typically like on top of that.
You may use downscaling to become crystal clear about the goods and services you provide and your target market. Other than the fundamentals, like submitting your tax returns, you may essentially disregard anything else.
How to Downsize Your Freelance Business
After discussing some essential advantages of scaling back your freelancing company, we'll present some practical advice to assist you get closer to your sweet spot.
1. Audit Your Existing Clients
You may use the 80/20 rule in your business. You've definitely heard of the 80/20 rule in productivity and other areas. If you audit your clients, you'll likely discover that a sizable portion of your income originate from a small number of companies.
If you already have a steady stream of clients, you can probably fire the ones you don't enjoy working with without having a significant negative effect on your income. You may choose to spend that time on anything else you love doing or elect to work more closely with the clients you enjoy working with.
You're considerably better off without the additional stress if your clients are particularly challenging to work with. If you're interested in reading our whole guide on working with challenging freelancing customers.
2. Increase Your Rates for New Projects
By raising prices for new tasks, a freelancer may easily downscale while still earning more money. You may make it extremely apparent on your website how much you charge for your services. By doing this, you will unavoidably turn away clients with less budgets and encourage those who are interested in working with you to ask how you can assist them.
You will require the expertise to support your pricing while raising your project charges. Take a few hours to assess your situation, the going rate, and the amount you believe is reasonable to charge.
3. Honestly Assess Your Business Expenses
Another strategy for streamlining your operations and boosting your earnings is to evaluate your company's costs. Coworking space memberships are an example of something that is OK to have if it adds value to your life. However, if you realise that they aren't as beneficial as you initially anticipated, you may want to consider getting rid of them.
Similar to this, if you don't require the commercial version, you might want to think about adopting free accounting software. Subscriptions to other tools that you might not use can also be cancelled.
For instance, the free edition of DaVinci Resolve is frequently more than adequate for your requirements if you're a video editor. By utilising one of the several Notion templates for independent contractors, you can keep track of your company spending.
4. List What You Do and Don’t Want From Your Business
Having a clear understanding of your business goals is vital to avoid pursuing growth merely for the sake of it. Here are some examples of meaningful aspirations for your business:
- "I aim to generate enough income to support a comfortable lifestyle while working only 25 hours per week."
- "I want my freelance work to finance my passion for traveling."
- "I desire to allocate one week per month to spend quality time with my family, taking time off from work."
Equally important is identifying what you don't want in your business. Consider these examples as a starting point:
- "I prefer not to work with clients who are overly demanding."
- "I want to avoid working excessively long hours, such as 60 hours per week."
- "I aim to steer clear of projects that drain my energy and enthusiasm."
To help you record your desires and dislikes as a business owner, various tools like Notion, Apple Notes, and Google Keep can be utilized for note-taking and organization.