Business coach

OK well I don’t entirely believe you should never use a freelancer but agencies often try to scale up by hiring freelancers yet I believe this is the wrong strategy for building and growing a sustainable business, so read on to find out why and what I believe are the solutions to staffing a growing agency.

Let’s start with a story. I worked with a 10-man design agency about 5 years ago. They had 2 full time staff (the MD and a great admin person) and 8 quality freelancers. The MD approached me because he was frustrated that he couldn’t get his business over the hump – to grow beyond 10 staff and increase profits. It didn’t take me long to establish the issue lie with the large use of freelancers to man the business. Not surprisingly he was investing quite a lot of time and money in freelancer use yet had a high turnover so constantly felt like he was ‘starting again’ and having to introduce new people to clients (the bane of every agency’s life!). He felt this was his business model and had been a good approach to getting to the stage he was at. After some discussion, my client agreed he needed to change his approach. He took the leap and offered all the freelancers a full time job. 2 accepted, 6 didn’t. He put those 6 on notice and recruited full time equivalents to replace them. 5 years later and his business now has 22 staff and 3 times the revenue.

Building a business with freelancers is like building a house on quick sand

It seems like a great idea when an agency is small to safely scale up by hiring freelancers, and indeed this is true. But there comes a point that a freelancer should be replaced with a full time equivalent (which should cost you less).

Freelancers have a different agenda to a business owner and an employee. They’re doing a fixed amount of work/time for a fixed fee. The will aim to do a good job but will often not go the extra mile because their time is allocated elsewhere. Nor will they be interested in professional development with you and it’s hard to build a culture when you’re business is predominantly made up of freelancers.

The only time to use freelancers

Now this blog isn’t meant to be a downer on freelancers. Indeed I know many great freelancers and often recommend them to my clients. They provide a vital role and offer the ability for someone who goes freelance to have greater flexibility, control and higher earning potential.

I believe that for an agency there are 2 times when you should use freelancers:

  1. When you have capacity issues – i.e. the business is super busy and your full time staff are working at capacity. Note though, this should only be a short term solution (if it’s a long term issue and if you working efficiently then you should consider hiring more in house staff)
  2. When you need to bring in specialist skills that you don’t have or don’t want to have, in house. For example, an adwords expert, a specialist copywriter or a developer with skills in a certain application.

So there is an important role for freelancers to play in agencies but they should not be considered a long-term solution to running a profitable and growing business.  Love to hear your views and experiences.

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