How to make the transition from freelancer to business owner

The transition from being a freelancer to a full fledged business owner is indeed fascinating, and the progress can be pretty quick, provided you know how to play the rules of the game.

The Scenario

A freelancer starting his own business with a team of freelancers.

The events leading up to the scenario

Freelancers normally get their work from European countries and the USA. The events that began this scenario are also pretty interesting – Western companies wishing to expand their portfolio would require extra personnel to manage their projects. Hiring in-house teams would often be very expensive and time consuming. The frequency of work delegated to them would also be dependent on the projects won. If a European company hires a group of ten developers on a permanent payroll to do a series of projects, they would have to retain them even when the projects are finished. Sometimes the company would have to pay regular salary even when there is no work. This leads to a drain of company resources leading to poor management of funds. This is where freelancers come in because they are hired only when there is work. The freelancers would be paid upon the completion of their project and then they would rehired only when the company needs extra manpower. Additionally, the employer does not have pay for health benefits, vacation time and retirement benefits to freelancers, thereby saving on their infrastructural costs. This has prompted several companies to form a steady cohort of freelancers who work independently, and, who would deliver according to demand.

Benefits for the freelancer

A freelancer who has about 10-15 regular clients would always find a steady stream of work from one source or the other. A talented and certified freelancer, who works as a graphic designer, web developer, virtual assistant or content writer will no longer have to hunt for a job once he is able to service the steady stream of clients. Once work is steady, he can form his own team of freelancer workers, whom he can train and handle, and allocate work to. His team has to be selected carefully because he cannot afford to have anyone in his team who would provide mediocre work.

Now here comes the catch

Freelancers can be hired from anywhere in the word. Normally, western countries prefer to hire freelancers from India because labor cost is cheaper here than in their own countries. If you are hiring a native freelance web developer for $160 for an hour, imagine what the cost would be if he is hired for a 100 hours. This proves that hiring a freelancer in the native country is very exorbitant. The rate in India would be considerably lower and the quality of work, excellent. India has talent; you only need to tap them at the right places. Initially, European countries were not so keen on sending work to India or any other country because they had preferred to concentrate on local talent and other norms. But eventually, things have moved on and work had started to trickle in from Europe. This is because Indian outsourcers have begun to accommodate themselves to conform to the standards demanded by them, especially the Netherlands, Germany, Switzerland and the Nordics.

The time to move on from a freelancer to a business owner


Once work is good and pay is equally excellent, you can grow from a one-man army to a business owner, by hiring a team of freelancers as well. The number of employees that you should hire for your work would depend on the number of projects you have in hand and are likely to get. In every freelancing career, there would be a lull period where there would be less amount of work, but when you are a business owner, you would have to pay your employees and churn billing hours.
There are freelancers waiting on the sidelines ready to make the big leap, but they often do not know when or how. The best bet would be to start with something small and then build it up to a company where you can easily accommodate freelancers and pay them. You can also partner with other freelancers and start a company where you can jointly do projects and make profit from them. Perhaps, you are a web developer and you know a graphic designer and a content writer, with whom you can team up and start a company. It is true that such companies are nine a dozen, but not many of them are really good at they do or they don’t know how to win projects. As a freelancer you can have a number of side projects which would have a life of its own as time moves on. With careful planning, these side projects which initially earned some money would gradually move on to something that becomes bigger and you would need employees to handle them.

As conclusion, you must know that transitioning from a freelancer to a business owner has a couple of benefits as well

  • You are free to handle other projects

As a freelancer you were juggling projects, but now since you have incorporated yourself as a company, you have a team to handle more and more projects. You can hire freelancers to complete projects on a part-time basis.

  • Most outsourcing companies prefer to work with companies rather than freelancers

Certain companies prefer to outsource their work to companies because it lends credibility and sense of seriousness. They don’t believe freelancers can be equally competent or serious at their job.
The most demanded freelance gigs are IT, programming, technical and creative streams., a company in India provides these services at excellent rates and impressive turnaround times.

Interesting Links:
Freelance to Small Business
How to make the transition from freelancer to business owner

Pictures: Sebastiaan ter Burg/ Patrick Q/ innovate360

The author: Reema Oamkumar is engaged as a thought leader at which is a part of the YUHIRO Group. YUHIRO is a German-Indian enterprise which provides programmers to IT companies, agencies and IT departments.

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