One of the biggest challenges of being self-employed is doing everything yourself, from the actual work to accounting to marketing your business. Eventually, the self-employed want to become successful enough to get a steady workflow and make their ideal income.
Some self-employed freelancers or business owners stop there, but others want to reach higher. Their reputation is established, and they are getting so much business that they cannot do all the work themselves. Here is an opportunity to double or triple their yearly income.
Eventually, instead of being a one-person business running every department, they might hire employees. However, some business owners may not want the headache of managing several people to multiply their income. They may want to continue as an independent freelancer.
Hiring employees isn’t the only option for increasing one’s income, although it is the first one that comes to mind. Here are three ways to increase your income if you’re self-employed and the pros and cons of each method.
1 Hire employees
You’ve always wanted to become your own boss. That’s why you started your own company and became self-employed. The next step is to scale up your company by hiring employees.
Depending on the nature and size of your business, you could step back and hire people with the right expertise to manage the company. You could hire an accountant and human resources person. Or you could continue with a hands-on role in the company.
When you hire employees, you have resources dedicated to getting your work done. You control their time and schedule because they signed a contract to work part-time or full time, at specific hours of the day for you. If they want time off, they must let you know first.
Having a dedicated team allows your business to scale. You can provide the same services you did before or add more services now that you have the cash flow and resources to hire experts to provide those services.
Once you hire employees, you are expected to provide a specific number of work hours for your employees each month. It becomes more crucial that your lead flow is steady to ensure you continue to operate at a profit.
You’ll have more management details to look after. Whether you manage your business yourself or hire someone, you will deal with work contracts, tracking employee hours and pay, and other details related to human resources and taxes.
2 Subcontract your work
It’s a wonderful milestone in your career when you have so many clients that you can pick and choose which ones to keep by raising your rates or ending contracts. However, you may want to keep all your existing clients and add new ones instead of turning them away.
One way to scale up your business is to work with subcontractors. For example, if you write articles for your clients, subcontract your work to writers who are building their portfolios and writing experience.
You will be able to take on more clients and work assignments by working with subcontractors. They provide the same service as you so, in a way, you are duplicating yourself. You charge your clients your usual rate, keep a percentage as a management fee, and use the remainder to pay your subcontractors.
If you enjoy management, you will coordinate what assignments need to be done, which subcontractor needs to complete them, and get the assignments to the client on time.
Most likely, your subcontractors are developing their writing experience or cannot steady clients themselves. Part of your time is spent managing their work, from assigning to checking what they do. If you dislike management, you could hire someone to look after these details.
Another challenge is if the subcontractor’s work isn’t up to standard, you’ll find a lot of your time is spent editing their work. However, when your subcontractor gains more experience over time, they will charge higher rates and want to work directly with their own clients.
3 Collaborate with businesses that offer complementary services
You are highly talented at what you do, but what if your clients need services related to what you do – but are beyond what you offer? For example, you offer writing services and you notice that your clients often want graphic design as well. You could become a jack of all trades. Or you could start an agency or hire employees.
Another option is to collaborate with other freelancers or business owners that offer services that complement yours. Partner up with a graphic designer or website designer so your clients can find the services they need in “one place” instead of looking for them independently. When you refer a client to your collaboration partners, you get a commission based on a percentage or rate that you’ve both agreed upon.
If you’re very talented but building up your clientele as a freelancer, working with successful collaboration partners will help to get you clients. Their clients already trust them, so they are extending that trust when they refer business to you.
Whether you’re referring or receiving business, this partnership expands the services you can offer to your clients without learning those skills yourself. You also don’t have to deal with learning how to manage a company or employees.
The relationship relies on a certain degree of trust. When you refer a client to a collaboration partner, the client’s trust in you is on the line. If that partner doesn’t provide the quality of service your client is expecting, your reputation will also be affected.
Another challenge is your partner’s availability. They may not be available at the time that your client needs their service. When that happens, your client may work with another service provider so you won’t be getting a commission.
Accounting is also a consideration. You’ll need to figure out how much commission (or referral fee) to give to your partner for each contract and how to keep track of those amounts.
It’s a sign of success to be faced with this decision: turn away clients or keep accepting new ones although you don’t have enough hours in the day to do the work. At this point, you can scale your business by hiring employees or subcontractors. Or, you can rely on your client’s trust in your reputation to recommend them to your collaborator partners. Any of these choices can increase your income and your ability to provide more to your clients.
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