Do you work for others?
The service industry has a class of attitude that involves smarts when it comes to dealing with people. Launching a software company takes time and commitment and is 100% dependent on your customer service. Most service providers started as a freelancer – doing clones of Hallmark’s E Cards platform for $475.00. It was gruesome but gets you through college.
The correlation between freelance work and company standards is far between. As a freelancer entering into a software developing firm (or design studio) you might say that the only difference is price and increasing work hours per project, ie the project is larger.
But lets ask what is the difference between a freelancer and a company service provider? Is it the amount of analytic SEO software packages you know? Is it your experience? Did you move away from theme customization? In hindsight, it depends on what your service is. We broke it down into six big points that offer lessons learned in scaling from a freelancer to contract provider:
1) As a freelancer know your work is under priced – scaling up to a contractor means mark-up:
It is okay at first to charge your minimum wage because you are learning. Doing is the best learning method than any of the other methods. In doing tasks you find how to make things work and what makes thing break. The essence of going from a freelancer to a company is finding a particular niche that excites you. Once you scale up, you charge a premium for this expertise.
Photography, UI design, ect. At first you will do it all. Diversifying your portfolio, and charging the bare minimum; and thats okay! But once you find what your good at, brand yourself and up-charge (at least 30%).
2) As a freelancer, you don’t think about Taxes. But, taxes are higher than you think, and you have to set aside a sum of cash for these taxes:
Remember the Middle Ages where tax was only 10%? Today, for example in Austria, the value is currently at 70% (50% income + social security, and 20% vat). And it’s getting higher, thanks to the politicians and the economic ‘crisis’. In the US, it is more along the lines of 34%. Anyway, you will have to pay this, and especially for a startup company, those taxes are incredible high which is not that easy in the beginning (NOT THAT EASY).
3) As a freelancer, right now your great at everything. In scaling, your niche focused:
You can’t do everything. We promise. We’d like too! But, like grade school, you are good at math and science. Your not good at language arts or writing. So, outsource this content and be proud to have an overarching amazing end result that is designed to your expertise, functional to your liking and content driven with the use of an expert. It is about the end result and get your clients there always. Using Fiverr, freelancer.com and other outsource task rabbits is your first step in scaling your freelancing.
4) Here’s a big one. Track your hours:
Seriously, nobody will tell you that you need to work X hours per day and focus on the most important things. We personally love working those all-nighters into the day; waking up at 3pm and doing it over again (Not, but in the early day’s as a freelancer that was our life). Tracking your hours means that your work is started at 7:00 AM and you clock in until 5:00 pm and make a document that can paid. As a contractor you write yourself a check every week. If you aren’t doing this or charging enough – work for someone – it is better pay down the road.
5) Your success will eventually come from hiring:
Despite creating a great product or implementing a unique feature by yourself, you will by all means not be successful alone. It takes a team. Each project we take on takes a team of amazing designers, developers and most of all idea driven founders.
Take a look at the market: In most cases, the most successful software is not the best functionally or best designed software. There are a lot of articles and books about why that’s how it is. Not even 10% of all software created is commercially successful. The ones that are have an amazing team behind them. In the 20+ startups founded by friends and people that we have worked with, the 2 that have successfully “taken the cake” have been with individuals that have unite in one common drive – and have a relaxing attitude to make the changes necessary to enter their market “beautifully”. Working with people is the essence to making the greatest amount of change.
6) The competition is not sleeping but knowing this competition is not everything either:
I actually enjoy working with ideas that are 100 years old – The ones that are semi crafted but need a helping hand entering into the 21st century. Regardless of what you are doing, there will always be other companies in your sector which do a similar thing but have more money. Way more money. Bootstrapping your service comes with great advantages – but you have to be crafty. You have to find the right people and you have to deliver JUST what you customers are needing and nothing more.
It is easy to launch a startup on-line and get a presence but keeping it and running it is another story because there are a lot of obstacles. Working with people and their ideas, is something you could never replace. And in working with the right people – well, there lies the secrete. Bottom line, the art of scaling from freelancing to a 2016 software company is all about building that team, whether in-house or outsourced and charging a premium for it.