So, you’ve got through the start-up phase, you’ve got a decent business going, and you’re still getting enquiries from prospective new customers. You might be earning enough to be thinking about optimising your tax situation or even going VAT-registered. What do you do now?
You have various options: in this post I’m going to run through the main ones, then in the weeks to come, I’m going to be featuring some expert advice from solicitors and accountants, business consultants and the like, who will talk us through the options, AND real-life examples from people who’ve been there and done it and can share their experiences.
In summary, here’s what you can do:
- Go full time if you’re not already
- Outsource tasks to other companies
- Turn yourself into a Limited Company
- Get VAT-registered
- Employ people
- Contract out to other freelancers
- Go into partnership with someone
- Expand into premises – an office or workshop
- Do nothing
Going full time with your business
If you’re not already full time, and you’re feeling pressured by having a day job and your own business, it can be very worthwhile going it alone. I’ve written a whole book on the subject, but I know lots of people who’ve done this: it can be hard to decide when to jump ship, but very rewarding when you do! Read Laura Ripper’s experiences of going full time here.
Outsourcing means getting someone else to do tasks such as
Outsourcing the admin and sales effort allows you to devote your time to working at the actual tasks that form the core of your work. More billable hours should mean more money coming in, and you can accommodate more clients. You can find articles on the Libro blog about tasks that you can outsource and how to work out whether it’s worth it. And here’s an article that includes real-life experiences of the values of ousourcing.
Becoming a Limited Company or going VAT registered
Both of these options have reputation and tax implications. Some clients in some industries find that dealing with a Limited Company or someone with a VAT number represents solidity and safety (of course, sometimes, it can be a disadvantage, for example, to be VAT registered yourself if most of your clients aren’t and won’t be able to claim the VAT back that they pay to you). Becoming a Limited Company can protect you legally and save you some tax (legally and ethically).
Employing people, contracting out work or going into partnership
These all involve getting other people into your business to share the workload. Some companies will contract out to people who do the same thing – for example, I work for a company that deals in proofreading for students, They send the work to me and pay me when I invoice them, and they invoice the customer for a bit more. If you go down this route, it involves a lot of admin on both sides, but means that you can have multiple people working for you without going down the employment route and bringing in profit on their work without doing that work yourselves (there are laws about when someone’s an employee, though, so it can get tricky). You can read more about employing people here and a case study here.
Going into a partnership involves a legal setup but can be useful if you have complementary skills.You have to think carefully about who you do this with, though, and issues like where you’ll work and who is responsible for what.
Employing people involves a lot of legal stuff and means that you’re responsible for other people’s income and taxes, but there are freelance HR companies out there that can help.
Added examples of this kind of area including offering franchises in your business to people and taking on an apprentice. Franchising has a lot of rules and regulations but allows you to replicate your brand and success with managers in place to run the businesses, and apprentices are given external training as well as working with you.
Moving into business premises
If it feels like you’ve outgrown your home office and you want more room for making the goods you sell, or you want to separate home and work life a bit better, then moving into premises can be the next step. This does involve costs, although there are offers out there that give you secretarial and reception support which can be very useful. It can look more professional if people visit you, too. Beware the treadmill that leads to getting more office space / employing more people / getting more space / employing more people, with your overheads going up and up, unless you have a steady head and a good accountant! But it does work very well for some people.
I have to admit that this is my approach. Why? Mainly because what I do is so linked to me, my style of editing, my relationship with my clients, and because I like being my own boss, beholden to no one and responsible for no one. I’ve also looked at what some peers in other businesses have done, and realised I’d rather keep my simple model (plus most editors work like this). But I have done this:
- Contracted out my accounting to allow me to devote my time to work, not admin
- Developed robust business routines for the same reason
- Optimised my customer base to give me a good mix of work and a good income stream (read more)
- Worked on developing passive income streams (read more)
- Developed a network of people to whom I can refer new business or the occasional bit of overflow work from regular customers
I’ve talked here about some ways to grow your business. I’ll be featuring tips from experts and case studies from people who’ve been down these paths over the coming weeks. I still have some slots free, and I’d love to have a range of opinions and experiences for each topic: if you’re an expert on these areas or a business person who’s gone down any of these routes, please have a look at this post on precisely what I’m looking for, and get in touch!