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How to Evolve from Freelancer to Agency

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Read Time: 8 mins
This post is part of a series called Evolve From Freelancer to Agency.
How to Structure a Creative Agency

Most freelancers are ambitious. We have to be if we want to build up a solid client roster and bring home enough income to justify not getting a day job. But that’s not the end of the line — in the grand scheme of things, it doesn’t take a freelancer all that long to build up a full-time income. Then we have to ask ourselves what we want to do next. There’s not a clear career path that we can follow, like one might climb up the corporate ladder.

One of the options that appeals to many freelancers is building an agency, which can allow you to keep working on the types of projects you like in a much larger quantity. Running an agency isn’t exactly something to jump into without prep work, but if that’s the direction your freelance career is evolving into, it’s a surprisingly practical option.

Make Sure You’re Agency Material

Before such an evolution can take place, you need to explore whether you even want it to. While forming an agency can be a logical next step for most freelancers, it’s a strategy that requires the right temperament and priorities, just as freelancing does.

While forming an agency can be a logical next step for most freelancers, it’s a strategy that requires the right temperament and priorities, just as freelancing does.

If your main reason for freelancing is to be able to take on different types of creative work, think twice about diving deep into agency work. You’ll still get to handle a lot of creative stuff, but you’re going to have to focus on specific types of projects to be able to appropriately dole out the different elements of a project to any team you put together. And if you’re running an agency, that means that you’ll often have to prioritize administrative tasks over creative work. If you know that you already struggle with the balance between creativity and business development, running your own agency may not be the optimal way to move forward.

You’ll also need to make sure your communication skills are up to the task. Not only will you need to continue to manage client communications effectively, but you’ll need to make sure that you can keep things rolling with anyone on your team. Depending on the particular mechanics of your agency, there can be some serious bottlenecks if not everyone is up to communicating with multiple people effectively.

Start Small with Multiple Test Runs

Don’t make up your mind on agency work until you’ve worked on a couple of projects that put you in the position to try out at least some of the work that’s associated with running an agency.

It’s easy enough to start on the path to subcontracting out at least small pieces of work. Depending on your preferences, you have two options: you can look for tasks that you can delegate to a virtual assistant or you can look for portions of the projects you typically take on that can be handed to another freelancer.

The benefits of handing off different tasks to a virtual assistant is that you can start by delegating non-client work — like some of your to-do list for marketing. That means that you don’t have to stress about making sure that your client is happy with whatever your subcontractor is doing: you just need to make sure that you and the virtual assistant are on the same page.

Even better, many virtual assistants will offer small blocks of time that allow you to work with someone regularly without a big price tag. There are a few cons. In particular, it can be less than ideal that you need to make sure that your budget has enough to cover what you owe your virtual assistant, especially when you can just make sure that an estimate for a client project includes enough to cover the expense of another freelancer.

When working with a sub-contractor for at least part of your project, you get a chance to see more of how an actual agency situation will work out. You will get more experience in dividing out projects between yourself and someone else and experience the potential communication problems first hand — but on a scale that is much more manageable. But you also need to tell your clients that you’ve got someone working on at least a small part of their project. As long as you bill yourself as a freelancer working on your own, clients will assume that you’ll be handling their entire project on your own. While you could generally get away with telling a client, it’s only appropriate to let them know who has touched their project.

Using this approach, you can just keep taking on more work and bringing in more contractors until you’re ready to change the name on the door. At that point, you’ll be an agency. There are plenty of other ways to wind up at the same location, but most of them require you to evolve the way you work at the same time.

Codify the Way You Operate

It’s likely that you will have to make some major changes in your workflow, if not the ways you actually complete a project for a client. Before you can figure out what you’re going to have to adjust, though, you need to know what you’re doing now. Most freelancers have a routine that they follow with every project — but it’s not actually written down anywhere. We just do things by habit.

As you’re working, start writing down your workflow. It can take multiple projects to actually get your full workflow down on paper.

If you’re going to have other people work on your projects with you, though, you need to know exactly what you’re doing: What do you need to give your sub-contractor so that he can complete the work? When will you need an element completed so that you can fit it in with the rest of your work? How do you even figure out what elements of your projects can be pulled out and done on their own?

As you’re working, start writing down your workflow. It can take multiple projects to actually get your full workflow down on paper. Most of us don’t notice what we do automatically, but if you try to work through a new project using your workflow, you’ll notice things that you’ve missed.

Once you’ve got your workflow in place, you can start examining what parts can be handed off to someone else more easily. You may also note opportunities to make your process more streamlined: on-boarding clients, for instance, is often a place in our workflows that we can make smoother when we follow a repeatable process.

Investigate What Goes Into a Bigger Business

Freelancing is often considered to be a particularly easy way to get into business. I would disagree with that description, if only because a freelancer has to learn everything from bookkeeping to marketing to be successful. The only reason it might be considered easier is because there aren’t any other people you have to deal with internally. But when you’re talking about building an agency, you’re going to have to start thinking about those other people.

Before you can make a lot of the key decisions that go along with opening an agency, you need to learn about those parts of operating a business. Take those sub-contractors you may already be working with. On the agency model, you have to choose between hiring them as employees or keeping them as contractors — the price often works out to about the same, but contractors represent a double-edged sword. You can limit a contractor’s hours to when you absolutely need them, but they also have the freedom to go find other work, leaving you in the lurch if you need help when they’re busy.

Research and Seek Out Advisers

You don’t need an MBA to make these kinds of decisions, but you may need more business education than you already have. As you run into questions that you can’t immediately answer, start noting them down. At the bare minimum, check out a book on the topic from the library and take some serious notes. But because many business decisions change dramatically depending on circumstances, it’s worth taking such questions to mentors and advisors.

Advisors might include your accountant and lawyer, if you’ve already connected with such people during your freelance career. If you haven’t, you’ll probably want such people on your team to handle steps like setting up payroll or incorporation anyhow, so start looking for them.

It’s also a good idea to line up at least one mentor, preferably someone else who has grown a creative business already. Such a person won’t be able to give you universal advice, but she can describe what worked for her and why. Such information can be just as valuable as broader advice.

There are numerous organizations around the world dedicated to connecting mentors to mentees; if you don’t have anyone in mind who you’d particularly like to ask about their experiences, such organizations are a good place to start. Otherwise, it’s a matter of checking with the person you’d like to mentor you if she’s able to do so. Not everyone will say yes, but most will be pleased to be asked.

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