Creating Business Structures with the Future in Mind

Photo by costi.

The unfortunate truth is that many people who attempt to go freelance fail. Of those who make the attempt, a smaller amount manage to brave the unknown and make a living for themselves doing what they love best. An even smaller number of freelancers are able to build their businesses to the point where they can’t handle the work they’ve got – let alone take on any more clients – and are doing very well for themselves, financially speaking. Sometimes these guys are happy to draw the line, cut back on the marketing efforts and keep going as is, but another group wants something more: to create a business that can expand, to work less and make more all while giving other deserving freelancers the chance to have more work.

It’s definitely possible to create a business from a small but successful freelance operation. There are many challenges – for instance, how do you transition from a personal brand to a business brand without losing recognition or customers? But perhaps one of the most important struggles is creating a structure that works. All too often, freelancers create their start-ups with all of the organizational structure that they had before – in other words, for most, none.

What’s this doing on a blog for freelancers? I believe every freelancer should have a plan of action for future expansion. If you know that you want to remain a solo freelancer no matter how high demand goes, that’s great: that’s a plan. If you want to expand into something bigger, and potentially more profitable, you should also have a plan for that, no matter how small you are now. That’s where this topic comes into play.

Start with the Future in Mind

When you step up from freelancing to running a business, you need to change the way you approach the system. A business isn’t just like freelancing with added delegation. It needs a structure. This prevents you from getting even more tangled into the business as it grows — so you can replace yourself and your roles more easily — and it prevents those you’re delegating to from having work overload or getting away with slacking off thanks to the poor distribution of tasks.

In short, it’s important to remember that a business is not about you doing all the work. It’s about you creating a system that gets the job done, with or without you, and makes money while delivering a high-quality product. Freelancing is like a job, but a job where you’re the one completing all the tasks of a whole business. While you might have a job inside your business, it’s important to remember that the business is not your job: the tasks of keeping it going should be distributed across a staff, each member of whom is skilled but ultimately replaceable, including yourself. It’s a difficult frame of mind to step into if you’ve been freelancing for a long time.

Do you have an organization chart? Do you have job descriptions and job manuals for everyone you work with (not to mention yourself)? Do you have an exit plan — how to step into the background and let someone take up your day-to-day roles without causing problems?

Start with the End in Sight

Starting with the end in sight might sound awfully similar to starting with the future in mind. The difference is that starting with the future in mind is remembering that you’re entering a different type of business and you need to plan and work to adapt to that. Starting with the end in sight is totally different. It means looking at what you want to achieve and where you want to be in a few years (or decades) and structuring your business in such a way as to get there the fastest.

If you know you’re going to need a marketing and public relations department in the future, and you want to publish print publications alongside web content after you hit a certain revenue milestone, plan for it. Of course, you shouldn’t go into print publications when that whole business is dying.

One tool at your disposable is the organization chart. This allows you to plan what you want the organizational structure of your company to look like when it is achieving its goals. You can even “borrow” one from an existing successful company. Then you just collapse the roles down so that everything is covered by the staff you have now, yet can easily expand back into the planned organization system as the company, and therefore the roles themselves, grow larger.

Business Structures Shouldn’t Be Evolutionary

Planning your business structure helps you get out of one prominent freelancer habit: allowing your business structure, and therefore business growth, to be too evolutionary. Some people misunderstand what I’m saying; the growth of most companies is an organic thing that comes with sticking with the plan, and they mistake “evolutionary” to mean “organic.” But you should know what sort of business you’re creating in advance — companies aren’t creatures that develop elegantly under the theory of evolution. Things get messy. Know where you are going, and you’ll get there quicker. You’ll get there with fewer headaches.

Here’s how evolutionary business happens: you can’t handle all the work alone anymore, and you start sub-contracting. But the sub-division of roles isn’t clear. You’re doing some of the work, they’re doing other parts, you’ve got increased admin time, so you bring on more sub-contractors. You ask them to handle some work and eventually you get a few of your guys to handle the client liaison themselves. Then your bookkeeping gets fuzzy because you don’t know what the expenses are for or where half the income is coming from, and you can’t get that information easily because you didn’t give your sub-contractors financial reporting guidelines.

It’s usually much worse than this in practice, but such confusing problems can be solved with a bit of forward thinking and planning. Why cause such a huge amount of teeth-grinding and heartache just by neglecting to map out some organizational structure and operational policies?

Starting now, even if you’re not yet making a profit, take the time to plan with the future in mind.