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Advice for 'evolving' from sole trader

Discussion in 'General Business Forum:' started by @GCarlD, Aug 12, 2016.

  1. @GCarlD

    @GCarlD Well-Known Member

    Hi Everyone,

    I would love to hear from anyone who has experienced making that transition from being a registered sole trader, to registering as a company, whether it be Ltd or other...

    What tips/advice would you give to someone like me who has been mulling over the idea for the past 12+ months. When is the best or 'right' time to make that kind of commitment? Is there a bad time to do so? Or does it not really matter. For example, is it best to have a large on-going client base beforehand, or is this not really a factor? (Bare in mind, I am not looking to literally go out and rent a building to open my own studio...yet!)

    What effect has being a registered company had on your business in comparison to a prior sole trader? Has it helped to grow your client base at all, whether that be in number or a higher caliber of clients so to speak. I think what I'm getting at with this question in particular is, do new clients feel more comfortable hiring you as a registered business/company, as opposed to a sole trader?

    Thanking you in advance for your words of wisdom!
  2. Levi

    Levi Moderator Staff Member

    you can actually trade under a business name as a sole trader.....
  3. @GCarlD

    @GCarlD Well-Known Member

    That's what I currently do
  4. @GCarlD

    @GCarlD Well-Known Member

    Anyone care to share their two cents?
  5. scotty

    scotty Well-Known Member

    What about?
  6. Mr Geek

    Mr Geek New Member

    I currently run 2 businesses as a sole trader under business names. I must admit from my experience my clients like my ability to be a little more flexible :)
  7. @GCarlD

    @GCarlD Well-Known Member

    Yeah, I get that too but I'm curious as to the difference with setting up and establishing yourself as an 'officially' registered company, in the way that it affects business. Does it encourage 'larger budget clients' (for lack of a better term) to feel more 'secure' to work with a company; with a company registered number that they can look up etc, as I sometimes get that impression when I approach large companies / corporations.

    Over the above
  8. Paul Murray

    Paul Murray Moderator Staff Member

    As you know I'm kind of in the same boat as you, so probably not best placed to offer actual advice. What I'm doing now is seeking new, larger clients at a studio day rate, rather than trying to bump up my rates for existing clients. Chances are they work with you because they like your work and the price is right, so it doesn't make much sense to try and double or even triple what they normally pay you.

    I have a friend who's been an account handler and project manager for over 10 years, and rather handily she's staying with me for a few months, so I'm able to run stuff past her about how clients would normally expect to be charged by a client. She's also got me writing estimates, which I've never done (FreeAgent does them). Just last night I spoke to a potential client and went over what they wanted. Just this morning I've finished the estimate including time for design, development, as well as printing from Stationery Direct (of course), which shows what they want is just slightly over their budget based on my costs. I'm now in a position where I can discuss this with the client whilst also knowing exactly where we can and cannot cut costs.

    Normally I'd just accept the cost and probably find I run over and end up working an extra 2 days, which could be detrimental if you're working as a team and have to pay someone other than yourself.
    @GCarlD likes this.
  9. Mr Geek

    Mr Geek New Member

    It is a tricky situation.

    Just this morning I've woken up to many emails from a client (large independent builder) but as hes got so big he emails his admin assistant who emails the 2 people who need to answer the question. As there is only me dealing with my side of things i have sorted my stuff in 2 minutes, The other supplier is emailing his technicians and getting back to them.

    This has then delayed the job by one more day (3 if weekend is counted) all due to large business having to go through multiple staff.

    I have have built up my client base now for both business and they pay me the same if not more for my work as i manage to outperform the bigger guys while offering personal service. It is a double edge sword though as i'm finding my AV business is growing fast and i may need to add staff or join forces with another small firm I work with regularly.
    @GCarlD likes this.
  10. @GCarlD

    @GCarlD Well-Known Member

    Great food for thought guys.

    I feel when the time is right to register as a company, it will happen naturally and we'll know, rather than doing it for the sake of it and hoping for the best.

    This time will probably be when we can afford to rent our own little studio and hire full time staff...
    Mr Geek likes this.
  11. Mr Geek

    Mr Geek New Member

    Thats what i think too :)
  12. @GCarlD

    @GCarlD Well-Known Member

    That's really interesting, as I don't use FreeAgent or anything like that, I do all my own estimates / quotes and send out my own invoices, contracts etc. FreeAgent sounds handy though, but I'm used to the way I work I suppose, plus I rarely charge by the hour.

    When you say you just accept the cost, do you mean you work to a client's budget? (As long as it's reasonable of course). I think we all run over time every so often; it is difficult to predict how long the simplest of jobs may take in design. I feel for Illustrators as it must be even worst for them!
  13. scotty

    scotty Well-Known Member

    It's a pain in the arse to be honest.
    Probably the hardest part of being an Illustrator. :(
    @GCarlD likes this.
  14. bigdave

    bigdave Moderator Staff Member

    The biggest diffeence between being a freelancer going after work from SMEs and being a company going after big clients isn't being registered, it's the proposal. You tend to find that an SME will look for a supplier, to offer a pice which they will either accept or reject. Big organisations on the other hand will put the job out to tender (often with a fixed budget) and will accept detailed proposals from any company that feels they can compete. Companies I know (both one man bands and agencies) will spend days writing proposals chasing the big jobs, for example the proposal for a recent project I worked on took over a week to put together and ran to about 75 pages.
  15. Paul Murray

    Paul Murray Moderator Staff Member

    I use FreeAgent as it's quicker. I can create invoices in seconds, specify payment terms, send them out via FA and it will tell me when it's overdue. I mainly use it for tracking my expenses but the other tools are starting to creep into my working day. Once a week I upload a bank statement, tell it what the transactions are (money in and money out) and at the end of the financial year I submit my accounts in seconds.

    It was more of a gut reaction, either the client's budget sounded about right or I'd pick a number out of thin air based on past jobs. This is fine when getting paid form one job will see you through the next month or so, but your profits can slip if you haven't accounted for things like stick imagery costs that you end up having to pay for out of your payment.
  16. Mr Geek

    Mr Geek New Member

    This is quite common in many Industries my AV Business quite often hits the tender issue and its very frustrating, You sometimes get out done by the smallest amount. Also with the tender process your are held to the price so over run can kill all the profit you might make.
  17. @GCarlD

    @GCarlD Well-Known Member

    Oh yeah I know of course, what I mean is more about the mindset I suppose. Using your Tender example, I have gone after a couple in the past, but I don't think I stood a chance as a one man band (even though I wouldn't of been working on my own), simply because I get the impression that these big organisations would feel more inclined to go for an up and running company/business. I'll give you another example, up until a couple of years ago, most of the designs I worked on was for tv shows / ads, film & movies. This was when I working at local studios, freelancing as a graphic designer. Now, if I wasn't part of that studio team, and I was the one man band I mostly am today, I doubt I would've even got one of those jobs. I just feel (sometimes) that large companies feel 'safer' working with an up and running registered business. I was more or less told this a couple of months ago after reaching an agreement with a franchise to re-design their website, they stalled when it came to paying the deposit; they basically said they are happy to sign the contract but did not want to pay the 50% deposit, once they see some of the work completed, they would then consider paying some of the deposit. Why? They said it would be different if I was a registered company with my own studio / office / building, but I am someone they do not know and have never worked with before, and they have been burnt in the past by other designers not delivering after they paid the deposit... Safe to say, I said thanks, but no thanks and left... (not literally).
  18. bigdave

    bigdave Moderator Staff Member

    An established 'business' will hold more gravitas than the guy who does design from his bedroom but there are really easy ways to achieve that agency feel...


    Look at the team section of my website, Artel Creative is made up of 2 company founders employing a branding consultant and a copywriter. Yes I work with all of these people as and when I need them but I dont employ any of them. Make sure your 'team' all have email addresses associated with your business to corrispond with clients when theyre working on projects for you.

    A non domestic office address may be important to some clients and hiring a hot desk or small studio space can be a cheap way to achieve that. For £75-100 a month you can buy a hot desk space in a fully serviced office. It may seem like a lavish way of spending money (especially if you don't use that desk) but if you've had a prospective client tell you they would have worked with you if you had an agency feel, then it may well pay for itself.

    Refer to we rather than I. Quite often these guys will be used to dealing with heads of companies who will have a team under them to delegate to so why spoil that illuson? Don't ever use your office space, a pub, a cafe or your front room for meetings, if you're hiring an office then use the meeting room at that office. If you dont rent an office, you can hire a meeting room for a morning for £25-30.

    As previously mentioned big organisations will expect a hefty proposal which will be 75% your eligability for the project, past work of relevence, client testimonials and generally blowing smoke up your own arse. Then 25% conceptual ideas, sketches, timelines, workflows and budget breakdowns.

    The sure sign an organisation is dealing with a one man band is when the invoice for 50% up front arrives with the contract. It's fine when we deal with sme's but large organisations work on purchase orders and they're very unlikely to give you 50% before you've sarted. The best you'll get is negotiating milestones and the release of PO's based on those milestones. This is worth remembering when writing proposals, in the budget breakdown create some early expenses such as a research budget, then agree a milestone of 2 weeks to collate and present your research and initial ideas.

    It's all a big game at the end of the day.
    @GCarlD, Paul Murray and Wardy like this.
  19. Wardy

    Wardy Well-Known Member

    I think BigDave sums it all up there, as it was getting a bit off-topic I think. Basically, you are already registered as a business if
    you are a sole trader and paying taxes etc. The only difference is in the name, and I don't think you are helping yourself by openly being
    seen as a one man band, as it may put off larger companies if they have large projects and want them doing quickly.

    Oh, and Carl, it's 'wouldn't have', not wouldn't of. Been bugging me that. :)
  20. @GCarlD

    @GCarlD Well-Known Member

    Oh no, it's not off topic at all, this is exactly the discussion I was hoping for. To use Daves term, I'm a one man band in the sense that I do not own my own studio and pay x-amount of employees to work for me. I do have my own illustrator and web developer that I hire on an ad hoc basis, who specialise in areas I am less skilled at, but they are also freelancers working for themselves.

    Wardy, incorrect grammar I know, I'm sorry but the annoying edit time expired and I was stuck with it! Read through my other posts, you'll find lots of typo's that will have you reaching for your bug swatter :LOL:

    I really like what you have done here, this could be key for me to add something like this in the near future, as it does give the impression that they are your 'employees' so to speak, but who's to know otherwise unless you tell them?

    Luckily, when it comes to studio space, I'm more or less covered and there is a section of the studio that we use for meetings, although it may be beneficial to rent a standard office space for meetings elsewhere to separate the two. At the moment, I tend to go to wherever my clients are based for meetings, it is usually more convenient for both myself and the client; saves them time and gets me away from my desk for a few hours, win-win.

    Very good point, I have come to realise this.

    Now this is where I have a bit of an issue, although it would totally depend on the company in question. The company I was referring to, was basically taking the p***, without going into too much detail, I could 'have' (? sorry Wardy :p) earnt more money from a new start-up than what I would of been paid by that established company, I gave so much away during negotiations, and they weren't even willing to meet me halfway. Due to this, I was not willing to work without some form of deposit (I never do tbh), I was happy to negotiate a smaller deposit, as I don't need 50%, but they weren't having it. As it stands, their website is exactly the same, it hasn't been touched, so safe to say they haven't been able to find a decent designer, that is willing to work with a 0% deposit. Literally their site is so bad it can't be found on Google unless you search for their url word for word. The title of their business on the search result is *Comany Name* '| Just another Wordpress site.'

    Superb info, thanks! (y)
    bigdave likes this.

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