There may come a time you get too successful as a freelancer and must decide if you prefer sleep, money, or headaches. The step up to becoming a studio with more than one person can be a nightmare... or very rewarding. Not everyone can do it and not everyone wants to do it. So, what happens if you are forced into expanding your business?

When I'm handed a business card from someone I know is a solitary freelancer and they list their position with their "design studio" as "CEO," I have to laugh: sure, there's a board of directors for your desk-sized design studio. These are the people who dream big of fame and fortune, but can't quite see the business end of the design industry. It's not an easy transition once you are responsible for another person you have to pay, deal with, and collaborate. Throw in increased business responsibilities and the increasing loss of creative time and you have the conundrum many successful freelancers face.

The transition

For me, my first foray into the world of forming a studio from being a simple freelancer was not a tale of being too busy, but a purposeful trade-off of involvement and a unique twist on design/illustration studio and a creative representation firm (being an agent for other creatives). The idea was born in a simple bitch-session in a pub with a couple of fellow board members of a creative organization we volunteered for.

The executive director for the organization overheard us talking about a group project for several board members that would make us all some money. He confronted us and demanded we turn over the project to the organization, so the income would go to the organization. We weren't too pleased by that idea and as a couple of weeks went by, with more insistent nudging from the director, we decided to take the time we put into volunteering to help other creatives—many of whom we had met and felt they were not deserving of any help—and we would put the time and effort into the idea we had been discussing.

In those days, in New York City, portfolio books were still the preferred method of showing one's work and it had to be dropped off in the afternoon and picked up the next day. I had five portfolios so I could cover ad agencies with 100 or more art directors a little faster. If one portfolio was called in for a drop off, then I had more to drop elsewhere. It took a lot of time and effort and bike messenger fees to have them carry portfolios to different drop off points were not in our budget. My simple idea: if I have to run around dropping off and picking up portfolios, I might as well include a collection of designer's and illustrator's work. If I didn't get the work, then maybe someone else in the group would and at least I would get 25% fee for being the agent.

With two other former board members, a designer and an illustrator, we set up our business, printed cards, rented a mailbox in the Flatiron building and put together three portfolios with the work of 14 designers and illustrators. It didn't take long for one partner to crap out by never taking a portfolio anywhere and missing partnership meetings. The other partner bailed, thinking it was too much work (he was retained as an illustrator and became one of the biggest producers). So, I inherited the studio… and the headaches.

Being the boss

It didn't take long for the 14 creatives represented by the studio to be carved down to 10… and then 8. After months of portfolio drops offs, calls, lunches and begging, I managed to win over Ogilvy and Mather advertising. It took one illustrator ten minutes to destroy it all. One designer decided he could do better on his own and started contacting all the clients I had gotten so he wouldn't have to pay a commission. Another illustrator needed a friend every day and would call in the morning to find out if he was going to get any work that week, and one designer kept calling a regular client directly to make sure he got the work, which caused major resentment from other designers in the studio. These, unfortunately, are not the most painful memories.

Eventually, the number of creatives, which had been overblown from the beginning, even with three partners to handle everyone, dwindled to a manageable number and those that remained were truly professional. Still, there was the running of the business that took up most of my time. I had worked out a deal with a large publisher that had an entire department empty due to layoffs and made a deal, exchanging rent for design work. I had to install my own phone lines and supply my own equipment but that worked out well and there was plenty of space for the other designers and illustrators.

I had to deal with accounts, taxes, payments, billings, collections, PR, drop offs, pick ups, client service and taking out the trash. I was trading my own design time for money, hoping eventually the studio would grow and I could hire assistants and other personnel so I could get back to being creative.

Several larger creative agents talked to me about a merger… or rather absorbing me, but what killed my studio was I ended up taking an offer with a large corporation that drove a dump truck of money up to my house, so I'll never know if I would have ever gotten back to being creative and giving up some of the un-fun responsibilities.

Lessons learned… the hard way!

When you are a boss, when you can hire, and are forced to fire people, when your decisions have to be based on the entity of your business and not friendship, compassion or favors, then you will know why some freelancers don't want to run a business. When you are screwed by an old friend and lose a lot of income, or have to apologize to a client for your friend's behavior, or even have to fire them and see the friendship end right then and there, you will know why some creatives want to stay in their own little creative dominion.

Design is the only professional business where the professional is not respected (for the sake of this argument), payments need to be torn from the unwilling hands of some clients, fees are negotiated after the fact, an eight year-old girl who won a finger painting contest is suddenly the taste filter the client has placed over the creative's abilities, and must deliver a product usually designed-by-committee but take all responsibility, not for success, but for failure. ‘Tis a wondrous magical place! Do you want to increase the amount of that you get every day?

Going to take the leap?

After I was booted from my last big corporate position, I had to figure out my strengths and what did I want to do with the rest of my career. I had great luck freelancing and working staff positions. I had my corporate position for seven years. I was used to a certain rhythm in my life. I had some heavy hitter contacts and the thought of starting up the old studio was tempting. Technology, however, had made it easier to do so. There were no portfolio books to carry, no need for FedEx in most cases and plenty of business apps to help with the un-fun stuff of running a business. I called it a "Virtual Studio" comprised of photographers, designers, illustrators and animators I had met throughout my career. This time, I wasn't going to fool with commission percentages. I would quote, negotiate and traffic the projects. I was shooting for 50% this time around.

Unfortunately, for the same reasons I was booted, my contacts—all peers in age and experience—were also getting the boot. Then the recession blew out of control and I consider myself lucky to have survived it on a singular freelance basis. The lesson from that is:

Timing and tough luck

It's not just watching trends for design inspiration when you are in business—freelance or studio. The economy shifts will let you know what kind of year you are going to have. When the economy starts declining, the creative industry is the first hit. It's also the last to recover, which is opposite to basic business rules of increasing a business' advertising and social media when business drops.

Who you know

It's people who know you and trust you who will give you projects. If they are looking for work, too, then you are going to have to try to gain the trust of the new replacement person as well as keep in touch with your friends as they try to establish themselves again.

Learn business basics

Other fun lessons you will face if you venture to expand your business have to do with very non-creative things… and that's what kills the fun of being creative. If you can hire an accountant to meet with once a month to pay bills, balance the books and send out invoices, then that's a big part of the un-fun stuff gone!

An accountant will also know the legalities of using freelancers on-site and other regulations for employers. You should also start by talking to an accountant to see if you can afford an employee. There are many costs involved with employees.

Have a vision of your future

One studio owner I met years ago ran her business out of her home. She had a staff of five people, including a secretary that did accounting and other administrative duties. She set up her basement to be comfortable and that's where they worked. At lunchtime, she cooked a meal for everybody. I believe she now has a professional space downtown, a larger staff, is not cooking lunch, hates commuting and misses the "old days." Sometimes you need to weigh how big you want to get.

Dedicate yourself

If you decide you want to expand your business and you've considered how it will affect your family life, kill any free time, suck every bit of juice from your veins and are going to do it, then do it all the way! Make the commitment, get financing for the first year in business (estimate your expenses and make sure you can cover them even if you have no clients the first year) and get started on day one.

Don't hire friends

This is a tough one because everyone loves a free ride to success and there are friends you really want to help. Now, this isn't always the case, but a good general rule (see "Lessons learned… the hard way"). You need to see the spark of the desire to achieve in your employees. They should be people you consider great enough to be a partner, because one day, in consideration of their dedication to your business, they may be. That's what a great employee is hoping.

The closeness you share with someone may just end up being a hinderance to working together. It's better to steer clear unless you are willing to put your life into that friend's hands… preferably you already have and lived to thank them.

In conclusion

Most nations still allow individuals to strive and succeed in their own businesses. The rule of working hard and reaping the rewards is true. The hours are long, you sweat buckets and you lose a little bit of your soul. Even though this is a creative business, which you love and enjoy, it is a business and the bigger the business the more business you have to do. Eventually, you may be able to rightfully have "CEO" on your business card.