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What’s a contract company and the way can I construct one?

Discover what makes an agency different from the business of a solo preneur.

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27, 2020

4 min read

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Building a freelance agency might appeal to you as you make the choice between a company that relies on you as the principal to get the job done, and one that instead relies on a team of subcontractors to help you get it done to support customer projects.

Freelancers have an important decision to make about how they run their business from the time they are started. Most work as solo preneurs by default, which means that they are solely responsible for attracting clients and completing the client work.

A solopreneur freelancer can also use external support in the form of a subcontractor, e.g. B. someone who completes parts of the customer process or takes over the backend administration work. However, this does not mean that the freelancer has an agency.

Related: Employees or Freelancers: Which Do I Need?

What is the agency model?

The freelance agency model refers to the conscious decision to acquire one or more people as clients and act as project managers and other sub-contractors who do the actual client work. In this situation, it is the responsibility of the business owner to set prices high enough to account for the additional costs in the business. For example, a solo preneur freelancer only has to worry about paying his own taxes and business expenses. Hence, they can likely charge a lower rate than an agency.

The agency's value proposition is usually that they have access to verified experts. To account for the extra time spent on editing, project management, or other marketing expenses that the agency owner may have to spend, the price of agency work is sometimes higher.

However, this is not always the case. Freelance agency work may be cheaper than individual freelance work based on the costs the business owner charges their clients. For example, some established content writing agencies sell content for $ 40 per page and pay their authors $ 20 per page. You may need to find a qualified, freelance writer willing to accept this price tag.

Why agencies can benefit clients

The promise of a freelance agency is reliable work that will be delivered on time and likely in bulk with a pool of subcontractors behind the scenes to help with this. A freelance agency may make more sense for you as an individual if you don't want to be the one to complete the client work and have excellent leadership and management skills. You can adapt your existing freelance company from the solo model to the agency model and back whenever you want.

Agency vs. Solo: what is it for you?

It is important to think about your specific personality traits and what appeals to you most in this important decision. A freelance agency relies on someone at the top of the list to be responsible for attracting and setting up clients. This can be the owner of the business who does the main job of marketing and engaging these customers. At this point, it is the responsibility of individual subcontractors or a project manager to ensure that all tasks leading to a result are completed on time.

Individual subcontractors employed by an agency have structured their own payment agreement with that agency and may not even realize the amount of the mark-up between what they paid and what the agency charges the end customer.

With a freelance agency, you can in most cases scale a freelance business much faster than you as an individual. However, you also lose a lot more time on the management and leadership aspects of running the company. I've found from my own experience that the freelance agency model isn't the best for me because I didn't enjoy the process of engaging, training, and ultimately firing various freelancers.

Taking responsibility for getting the customer work done myself meant that it was always done on time and that I didn't have to deal with anyone else and wasn't able to get things done on time or to adhere to relevant guidelines previously set.

Related: 4 Ways To Improve Your Soft Skills As A Freelancer

The decision whether or not to establish a solo or agency model is ultimately yours. However, before making this decision, think carefully about what you want to achieve with your freelance business and your own personality.

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