Freelance VS Starting an Agency

Summary

In this insightful discussion, Ronnie explores the transition from freelancing to agency ownership with John, CEO of AJ and Smart. Ronnie, considering scaling his successful freelance business, seeks advice on the financial viability and initial steps of starting an agency. John shares his experience, highlighting the challenges of reduced margins, the importance of building a strong team, and the long-term vision of creating a sustainable and impactful business. He also emphasizes the personal fulfillment of building something significant and the potential for future growth, despite the inevitable hurdles and stress of running a company.

Takeaways

• 😀 The speaker is considering starting an agency to scale their freelance business and increase impact, despite initial reluctance.
• 🤔 The speaker is concerned about the potential drop in margins once they start hiring and taking on office space.
• 💡 John, CEO of AJ and Smart, shares his experience of transitioning from a freelancer to an agency, emphasizing the importance of building a sustainable business.
• 📈 John advises that it may take at least six years to reach a significant income level while running an agency, due to the time required to build structures and systems.
• 💼 John explains that despite being a smaller agency, they have had to develop teams for sales, social media, and community to ensure business continuity.
• 💰 He admits that as a freelancer, he would likely be making more money, but the satisfaction of building something bigger and offering value to large companies is more fulfilling.
• 🚀 John believes in the long-term potential of the agency, even if it means lower earnings initially, with the expectation of significant growth in the future.
• 📚 He suggests reading 'Radical Candor' by Kim Scott for effective feedback mechanisms and 'Built to Sell' for creating an agency that can be sold for millions.
• 🔑 John emphasizes the importance of trust and gut feeling when hiring, as it can prevent future issues and the need for firing.
• 🛠️ The speaker acknowledges the need to master team management and growth as crucial skills for long-term success, which an agency can provide.
• 🤝 John offers to share his mistakes and learnings to help the speaker avoid similar pitfalls in their journey of building an agency.

Q & A

What is the main concern of the person considering starting their own agency?

The main concern is that they feel their current freelance business cannot scale further and they are looking to make more money and impact, but they are unsure if starting an agency is financially viable or the right next step.

What is the current annual revenue target of the person's freelance business?

The person is aiming to hit $300,000 in revenue for the year.

What is the hourly rate range the person charges for freelance work?

The hourly rate ranges between $250 to $300, and sometimes up to $1,000 per hour for value pricing on a project.

What is the name of the agency CEO that the person is seeking advice from?

The CEO's name is John, from AJ and Smart.

What is the person's fear regarding the transition from freelance to an agency?

The person is afraid that their margins will drop significantly once they start hiring people and taking an office, and they are unsure if it will be profitable.

What is the name of John's podcast?

John's podcast is called 'Product Breakfast'.

How long did it take for John's agency to start making a profit?

John mentions it took at least six years to reach a point where the agency was making a sustainable income, similar to what he could make as a freelancer.

What is the approximate revenue of John's agency?

The agency's revenue is just under five million dollars.

What is the main reason John believes he will become a millionaire in the next four years?

John believes that the strategic decisions they are making and the move into digital products, such as selling courses, will significantly increase their income.

What advice does John give about hiring for the agency?

John advises to hire slowly, trust your gut when it comes to hiring, and to do pilot projects with freelancers before officially hiring them.

What are the two books John recommends for someone considering starting an agency?

John recommends 'Radical Candor' by Kim Scott and 'Built to Sell' as essential reads for building an agency.

What is the current state of John's ability to take a vacation and have the business run smoothly in his absence?

John admits that while he takes a one to two-month vacation every year, the business still feels a bit shaky during his absence, and he attributes this to not having built proper structures in the early years.

What is the person's additional business venture called, and how does it relate to their freelance work?

The additional business venture is called 'Prosper'. It is a product business that the person considered would take off, at which point they would stop freelancing. However, they are now considering integrating it with their potential agency.