What freelancers should know before they become agency owners

Agency Leadership Podcast

In this episode, Chip and Gini discuss the transition from being a freelancer to an agency owner. They delve into the common fears and challenges associated with hiring employees and emphasize the importance of having structured processes and systems.

The episode also explores topics such as the strategic direction of a business, handling pricing models, and the significance of building a team that you trust if your goal is to eventually sell the agency. Chip and Gini highlight the need to evolve business plans based on life phases and market demands, enabling freelancers to effectively scale their operations.

Key takeaways

• Gini Dietrich: “Your job as an agency owner is to put repeatable processes in place to be able to create consistency in the work.”
• Chip Griffin: “My advice is deal mostly in terms of the next one or two steps. Don’t think too far out and put yourself in a position where you freeze up on evolving because you feel so committed to that path.”
• Gini Dietrich: “There may be times where being a solopreneur is the right thing for you and you scale way back and then you build again.”
• Chip Griffin: “Most agency owners started out as freelancers. So just know that you are in a position that everybody else, in all likelihood, has been before you.”

Related

• ALP 11: Going from being a small team to an agency
• How to scale your agency and avoid common obstacles
• Get over your fear of hiring employees

View Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich: And I’m Gini Dietrich.

Chip Griffin: And first, as we record this, happy birthday, Gini.

Gini Dietrich: Thank you.

Chip Griffin: You do this to me on my birthday, so I’ll do it. You, you like celebrating your birthday more than I do, though.

Gini Dietrich: I do, I do. I love it.

Chip Griffin: You believe in holidays and fun and happiness.

Gini Dietrich: I’ve got, I’ve got 117 text messages today that I have not been able to get to yet, because I’ve been in back to back to back to back to back to back to back meetings.

Chip Griffin: Well, I held off because I knew we’d be talking anyway, so.

Gini Dietrich: Thank you.

Chip Griffin: I helped your inbox there, just, it was intentional on my part.

Actually, if I knew it was going to be difficult, I probably would have done it, just to have some extra. Alas, I will not sing to you. That is my birthday present to you and to our listeners.

Gini Dietrich: I was really hoping you would. I’m so sad.

Chip Griffin: No, you were not, but that’s okay. Alright, so why don’t we jump into our actual topic today, which is to dive into Reddit, your favorite place.

Gini Dietrich: I know! I’m really proud of myself. I have to say.

Chip Griffin: You have been thoroughly researching things on Reddit lately. You’ve taken one for the team and you have come up with a bunch of topics for Reddit posts that we’ll be having in coming episodes. But today we’re going to talk about one, about going from freelancer to agency owner and, and what you wish you had known when you started out that would have helped you in making that transition.

Gini Dietrich: Employees are hard.

Chip Griffin: Employees are absolutely hard. But I, but I, but I mean, I will say, I think that, that people get way too scared of having employees.

Gini Dietrich: Oh yeah, for sure. Yes.

Chip Griffin: And it holds people back substantially from where they could be because they are, they have this, I won’t say it’s an unfounded fear, but it’s an excessive fear of employees.

Gini Dietrich: Yeah, I think so too. And I think there’s you know, I, I think because of the remote environment that we’re in, and especially since the pandemic, there’s been this big shift to hiring contractors, 1099 employees, instead of hiring employees, and it seems less scary. And there are certainly risks to it as well, you know, but I like to use contractors when the job is, the job to be done is not full time, or I don’t have the skill set internally to do it.

And I think a lot of people rely on contractors to build their business because they’re scared of hiring employees. And there are some things to be scared of, for sure. But just like anything else, there are pros and cons. And, you know, I think the pros far outweigh the cons. But, and I say that in jest a little bit that employees are hard because they are, I mean, you’re working with people and you’re putting a bunch of personalities together that may or may not mesh.

But, there’s a lot of satisfaction and growth opportunities that you just can’t do with contractors.

Chip Griffin: Yeah, I mean absolutely and look I mean, contractors absolutely do have a place because as you say, they’re really good if it’s for a skill set that you simply don’t have and don’t need all the time.

It’s great if you don’t have you know, enough for a full time employee, or even a substantial part time employee. It’s great for short term projects. There, there’s a lot of times where it makes sense to have contractors. But I think as, as you think about making the move from being solely a freelancer into building an actual agency, there are things beyond hiring employees that you need to be thinking about because the mindset of building a, a real, quote unquote, real business as opposed to being a freelancer.

Not that being a freelancer isn’t a business technically, but the way you run it is very different. You really are functioning typically more as a part time employee, sometimes at a premium rate, but you’re not having to look at things in the same way that you do if you start thinking about whether it’s adding employees or contractors or other things.

You start to put more structure around it that you just don’t think about oftentimes as a freelancer.

Gini Dietrich: Yeah, I mean it’s there is certainly a lot of things to think about. We, just before this recording, I had a meeting with my senior leadership team and we were talking about, you know, strategic, the strategic direction of the business, and we’re certainly looking at the global climate and the U S environment and crafting plans for, for each, for different scenarios.

Like if, if everything goes according to plan, this is what it looks like. If everything goes to hell in a hand basket, this was what it looks like. And here’s sort of the middle. And those are the kinds of things that you’re doing when, when you have, when you’re growing a business, growing an agency versus being a solopreneur.

Because as a solopreneur to your point, you can have two or three really good clients who pay, pay you a premium, and that’s all you need. And you’re servicing two clients versus, you know, lots of clients and lots of employees and, and all those kind of things. So putting in the structure. And the process is really important.

And I am not a process person at all. Like I always feel like when process is put on me, I’m put inside a box and I can’t be creative. And so when I started my business, I thought everybody worked like that. And it turns out they don’t. And so you need process. You need that process in place to be able to make your service consistent, make your deliverables consistent.

You know, it’s sort of like, I always think about it from a McDonald’s perspective. If you go to McDonald’s and you order chicken McNuggets, they’re the same no matter where you are in the country or in the world. They taste exactly the same. French fries taste the same. They have the same process. And that’s the same thing that you want to think about from your business perspective is if somebody is working with an account executive or they’re working with your VP, the deliverables and the client service and everything is consistent.

And that, that’s your job is to put those processes in place to be able to create, to create that consistency.

Chip Griffin: Yeah. And it’s absolutely critical that you do that because otherwise it is so difficult to, to become more than just yourself. And, you know, I love the McDonald’s example. I, I’m a pretty good home cook and people in the past said to me, well, you should really start a restaurant or something like that.

And I said, well, the problem for me is. I wouldn’t want to do it exactly the same way every day, but you have to, right? Because if someone orders your dish on Tuesday, they want to be able to come back on Friday and have it the exact same way. And so that means you have to write down a recipe and actually follow it.

And I don’t like to do that. It’s why I don’t bake. And instead I cook because I can kind of just go with whatever ingredients I have and wherever the mood takes me. As a freelancer, you can do that too. If you’re building an agency business, you can’t do that because you need to build systems and processes that allow other people to do it your way.

And it’s not your way or the highway. It’s your way so that you have a real brand reputation to build. And that people can expect that consistency, whether they’re working with you or with Sally or with Jane or whomever on your team, whether it’s a contractor or an employee, all of that matters to provide them with that experience that will help you to then continue to sell to new clients and retain the ones that you have.

Gini Dietrich: Yeah. And one of the other things I’ve learned over the years is, and, and I learned this one, especially sitting on the boards of a couple of companies that have sold, is that you, when you’re building a business, unless you’re, you’re building, unless you have a lifestyle business that’s, that’s supporting you so that you can live the lifestyle that you want, which is great.

And for many years, I’ve had a lifestyle business as well. If you’re building something that you want to sell, for instance. Not, no, not only are the processes important, but you have to build a team behind you that somebody would want to buy. Because there almost no one’s going to buy a quote unquote agency that’s reliant on you.

If, if that’s the case, they’re, they’re hiring, they’re buying an employee, right? They’re not buying, they’re not buying a business. So you also, in, on top of the processes, you have to think about who’s the leadership team that’s behind you that someone would want to buy and are they delivering the same things that you can as, as the owner?

And in some cases, are they better than you, which is also really hard when you’re building a business to hire people who are smarter and better than you at some of the things that you do, but it’s really important if your end goal is to sell.

Chip Griffin: Well, I think that also points to one of the other key skills that you need to refine if you’re going to go from freelancer to agency owner, which is you need to have the ability to let go. Yes. You need to have the ability to say, It needs to be done my way, but not down to the last T and I. Like, I mean, you really got to have the ability to say, I trust my team.

Gini Dietrich: Yes.

Chip Griffin: They’re going to achieve results. And again, as a freelancer where you’re doing everything yourself,

it’s fine if you want to take the time to get it exactly right and do it exactly the way you want to do it. I mean, you still need to be careful because, you know, you’re selling your time at that point. Sure. You still want to make money, but, and you want to have perhaps a real life outside of work. Yeah.

But you need to think about it even more in terms of that letting go, because whether you want to just have a lifestyle business that you keep in and use for as long as you can, or whether you want to build something to sell, you need to have something where you are not so in the weeds on everything that it’s impossible to grow.

Gini Dietrich: Yeah. And I think that’s a really good point too, in that you have to really think about, first of all, what kind of business are you growing? Are you building? And what are the things that are going to help you get there? So if it’s, if it’s a lifestyle business, and like I said, I think that’s great because there, there are certain points in your life where you may need that kind of business because you need flexibility or whatever it happens to be.

Maybe you have, you’re raising kids and your parents are, are, you’re taking care of your parents. Or, you know, there could be lots of reasons that you want a business that supports the lifestyle that you have in the moment. And that’s fantastic. But knowing what that is, I think is the difference.

And then saying, okay, well, I want to shift from the lifestyle business, for instance, and build something that I’m going to sell. Because my kids will be out of, out of college in 10 years and I’ll be ready to go on to the next phase of my life and so I want to start building toward that. So understand where you are in your phase of life and what kind of business is going to support that at the time.

And also what that looks like strategically down the road, right? You don’t have to build a 5,000 person firm. You don’t have to be the biggest and the best. You don’t even have to build a 10 person firm and, and if you think that you want to sell something. It just has to be something that people want.

And like with us, we’ve built this PESO model framework that everybody wants, right? So we’ve taken our intellectual property and built a business around it, which we’re going to continue to grow and to scale and hopefully sell at some point. So that has shifted. You know, when I started my business, we did media relations.

That’s what we did. And it’s completely evolved with my phase in, in my life and also what we’ve been able to accomplish for clients. So I guess the point is it’s going to evolve, it’s going to change and you may decide right now on something and three years from now, you’re like, this is not what I wanted. And that’s okay too. But have the ability to plan and to think it through and understand that right now, this is what I think I want.

And so I’m going to build that. And understand that it might change. My life circumstances might change. And so my business will too.

Chip Griffin: Well, I think that’s, that’s important to remember. That the evolution process of a business is so much different from being a freelancer. As a freelancer you may need to hone some new skills and those kinds of things, but, but typically most freelancers, their evolution is much,

much more slow, much less dramatic. If you are running an agency business, the likelihood that you are going to need to evolve, to pivot, as we talked about a few episodes ago, those things are all going to, to require a bit more. And I think you need to, to have the flexibility to keep yourself open to that evolution.

You need to, you know, not be changing on a whim every day, but you also can’t get so set on something that you, that you thought you wanted that, that you have no way of evolving into what is now needed for you or for the marketplace or whatever. And I, I see too many times where people get hung up because they said two or three years ago, I don’t ever want to have employees. Or, you know, I want to be a 50 person firm or a 500 person firm.

My advice is deal mostly in terms of the next one or two steps. Don’t think too far out and put yourself in a position where you freeze up on evolving because you feel so committed to that path. And I think the two biggest ones are wanting to be a certain large size. Or wanting to remain super small and not have employees.

I think those two extremes are the most dangerous and the most likely to hold you back or cause you to make bad decisions.

Gini Dietrich: Yeah, I totally agree with that. And it’s, it’s really I think it’s really important for you to remember to give yourself some grace, you know. And, and there may be times where being a solopreneur is the right thing for you and you scale way back and then you build again and then you scale back and then you build again.

Like there, and that’s okay too. So just understand that the type of business that you’re growing for the phase of life that you’re in is what’s the most important.

Chip Griffin: Absolutely. I think one of the other areas that you need to be thinking about if you are making this transition from freelancer to agency owner is pricing. And we talk a lot about pricing here and how much difficulty agencies generally have with it. But the pricing models that you use, if you even want to call it that when you’re a freelancer, is very, very different from the way that you need to be thinking about pricing as an agency business.

You need to be thinking about how do you support additional people working on the same things that you are. You need to think about how do you grow in such a way that you are not pricing yourself out of things because you’re pricing it all as if you are the one doing it personally. And it is a real balance that you need to strike there.

So it appears as we’ve been going along here that Gini’s power has suddenly gone out. So I’m going to do my best to wrap up this episode as we move forward here. And so I, I think that you need to be thinking about pricing as I was talking about, you need to be considering how to, to, to position yourself so that you are pricing so that the work that needs to be done can be done by other people.

And that means really thinking through things in a different way than that you would as a freelancer. And so, as you’re thinking about potentially making this transition from being an independent freelancer to running a full fledged agency business, you want to be thinking about all of these things that we’ve been talking about. How to put in processes and systems in place. How to judge your own decision making and be ready to evolve. How to manage pricing and expectations. How to handle some of those challenges that come up with the, the mental obstacle, or the psychological obstacle of hiring employees and balancing employees and contractors.

There are a lot of things to think about. But most people who have been agency owners started out as freelancers. So just know that you are in a position that everybody else, in all likelihood, has been before you. And so while it may be scary in the moment, while it may be difficult in the moment, it is absolutely manageable.

And there are lots of places, including Reddit, where you can go and get advice. Just be careful with some of that Reddit advice. We’d like to think that we offer some of that better here. So, with that, I will sign off for, Gini, and I’m, of course, Chip, and that wraps up this episode of the Agency Leadership Podcast.

Thanks for joining us, and, remember, it depends.