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Starting a translation agency - what are the pros and cons?
Thread poster: MariusJacobsen

MariusJacobsen  Identity Verified
Norway
Local time: 05:23
English to Norwegian
+ ...
Jan 5, 2009

I have worked as a freelance translator for a long time and now I am thinking of taking it to the next level by starting a translation agency. I have been toying with this idea for about 6 months and can't seem to decide whether or not I really want to do this.

I have a Bachelors degree in International Business Administration and have always wanted to run my own business. Something tells me that running an agency could yield more profits than working as a translator (even though I can't complain about my current income).

What do you think are some of the pros and cons in this scenario? Off the top of my head:

Pros
Multiple sources of income
Networking
A more administrative approach to the field (personal preference)

Cons
Longer hours
A lot of preparation (e.g. building a database of freelancers)
Dealing with unsatisfied clients on behalf of sloppy freelancers
Need to be available during vacations

I would love any input on this. I'd also appreciate any advice in terms of getting established as an agency. What are some of the potential pitfalls?

All the best,

Marius


[Subject edited by staff or moderator 2009-01-05 14:38 GMT]


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Heinrich Pesch  Identity Verified
Finland
Local time: 06:23
Member (2003)
Finnish to German
+ ...
Talk with your bank first Jan 5, 2009

Look at this post:
http://www.proz.com/forum/money_matters/124127-two_sides_to_every_story.html

As an agency you have obligations towards your subcontractors that need substantial funding. It has to be seen how the current financial situation is effecting outsourcers in our industry. Let's hope for the best.

Regards

Heinrich


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Samuel Murray  Identity Verified
Netherlands
Local time: 05:23
Member (2006)
English to Afrikaans
+ ...
Do some shadowing Jan 5, 2009

MariusJacobsen wrote:
I have worked as a freelance translator for a long time and now I am thinking of taking it to the next level by starting a translation agency.


I'm sure there are translation agencies in your region. Contact a few and tell them that you're thinking of starting an agency of your own, and that you'd like to visit their offices and shadow some of their people for a day or so to see what it entails. You might make some friends, too (friends are good, if you're starting out).


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Astrid Elke Witte  Identity Verified
Germany
Local time: 05:23
Member (2002)
German to English
+ ...
I don't agree with your pros and cons Jan 5, 2009

Your cons:

Longer hours? Longer than what? Longer than up to 17 hours per day as a freelancer? How is that possible? Surely with skilled organisation and a couple of staff it would be possible to work less hours than a freelancer does?

Dealing with unsatisfied clients on behalf of sloppy freelancers? Can you not, for example, gradually get to know the work of a few colleagues first, over a period of some years, and make sure that the translators you engage can be trusted to carry out the work professionally? I am not an agency, but I sometimes outsource. Outsourcing on a small scale, and sporadically, gives me the opportunity to get to know the work of colleagues in a situation where I can look at it properly and assess it. I would expect to extend this activity to becoming a full-blown agency only when I am thoroughly familiar with the work of many different colleagues - which also takes care of the subject of "building a database of freelancers".

Need to be available during vacations? Hmmm, I would think it is easier, in the circumstances of having an agency, to organise holiday cover. As a freelancer it is very difficult.

Your pros:
Networking - This begins at the stage of being a freelancer, and you really need to build up your network as a freelancer before you go starting an agency.

Multiple sources of income?
Freelancers have that too, surely? Isn't it a multiple source of income if you deliver 5 different translations of varying sizes, and invoice them, within the space of one day?


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MariusJacobsen  Identity Verified
Norway
Local time: 05:23
English to Norwegian
+ ...
TOPIC STARTER
Maybe i wasn't clear Jan 5, 2009

I guess the pros and cons I posted were based on the way I work. It might not apply to everyone:

Longer hours:
Get the agency on it's feet, marketing, client acquisition, etc.

Dealing with unsatisfied clients on behalf of sloppy freelancers:
Anything can happen. A translator can get sick, have technical problems and more. The point is, no matter what happens (and things can happen), I am the middle-man and I deal with the clients.

Availability during vacations:
I was considering a one-man-op during the initial stages, so yes, I would have to be available during vacations until everything was up and running and I knew I could afford to hire help.

Networking:
As a translator, I mainly deal with agencies. As an agency, I would deal with clients and translators (and possibly other agencies).

Multiple sources of income:
Ok, this was probably unclear, but what I meant was that I could be generating revenue by outsourcing and translating (if I had the time).

Hope that clears things up.


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Alyona Douglas  Identity Verified
United States
Local time: 21:23
Member (2007)
English to Russian
Shadowing??? Jan 5, 2009

I am a little bit surprised by Samuel's post. Do you really think that other translation agencies in the area will be happy to hear that soon there will be another competitor, and will be happy to provide this competitor with all the necessary information???


[Edited at 2009-01-05 19:42 GMT]


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Lawyer-Linguist  Identity Verified
Portugal
Local time: 04:23
Dutch to English
+ ...
Yes Jan 5, 2009

Alla Douglas wrote:

I am little bit surprised by Samuel's post. Do you really think that other translation agencies in the area will be happy to hear that soon there will be another competitor, and will be happy to provide this competitor with all the necessary information???


I found the idea surprising myself. Maybe when Samuel logs in again, he can elaborate.


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Astrid Elke Witte  Identity Verified
Germany
Local time: 05:23
Member (2002)
German to English
+ ...
Yes, you were perfectly clear Jan 5, 2009

Now you say that you would fill those long hours with different activities, and not only spend them translating. Well, what freelancers run is also called a "business", and a freelancer also has to attend to marketing and client acquisition, along with many other activities that translation agencies also participate in, such as preparing documents for translation, using and getting to know CAT tools, keeping terminology databases, thinking of ways to increase productivity and juggling bank accounts.

Networking: You are definitely not on the point of turning into a proper agency if your networking to date consists mainly of corresponding with translation agencies. It sounds like you might need to take that middle position first, namely of being a freelancer who outsources, and then eventually one who regularly outsources, before you think of becoming an agency.

The other point I would like to make is that you should also have built up your stock of end clients before you turn into an agency. I have a handful of end clients - luckily, enough to keep me from having to work too regularly for translation agencies - and I sometimes have to outsource on their behalf if they send me work in the opposite language pair or in a different language pair altogether. I make it known to them in the first place that they should come to me with all their translation needs, and that I am willing to outsource for them. In this way I correspond with colleagues and find out which ones produce professional work, and also for what price.

The reason why I am not an agency is mainly due to the fact that, in Germany at least, it is much more advantageous, from a tax perspective, to be a freelancer rather than an agency. Also, according to my accountant (Steuerberater), it is possible to outsource to up to about 5 colleagues at a time, on an ongoing basis, and still retain the benefit of freelancer status, so that might be something that you want to think about. Perhaps you should carry on in that way, and only become an agency when it becomes inevitable, i.e. when the scale of your operations becomes too big for you to be allowed to continue under freelancer status. That is just another perspective on the matter, but a thoroughly practical one.

Astrid

[Edited at 2009-01-05 19:41 GMT]

P.S. I just took a look at your profile and CV, Marius. Another good idea would be to create your own web site first, and have your own e-mail address at that web site.

[Edited at 2009-01-05 19:50 GMT]


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MariusJacobsen  Identity Verified
Norway
Local time: 05:23
English to Norwegian
+ ...
TOPIC STARTER
Enlightened Jan 5, 2009

Thank you Astrid. Your input is actually really helpful. Thanks

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Samuel Murray  Identity Verified
Netherlands
Local time: 05:23
Member (2006)
English to Afrikaans
+ ...
Yes, shadowing Jan 5, 2009

Alla Douglas wrote:
I am a little bit surprised by Samuel's post. Do you really think that other translation agencies in the area will be happy to hear that soon there will be another competitor, and will be happy to provide this competitor with all the necessary information?


No doubt some agencies will be paranoid and rather unwilling to help, but Hesse is a large region and I'm sure some of the agencies there will be willing to show the ropes to a newcomer.

Remember, agencies need friends too. They also network among their own kind. A colleague is a competitor, yes, but he can also be a good contact. In any business-to-business business, but also specifically in the translation business, a competitor is only a threat if there is not enough business to sustain both of you, or if the competitor becomes a poacher.

A good agency doesn't wait for clients to contact it (unless you're talking about these new generation go-between agencies that really only work for other, larger agencies). A good agency goes out and finds work. A successful agency creates work where work does not exist yet. In our kind of business, a competitor can actually be a market stimulant.

Besides, making a success of the agency business requires lots and lots of hard work. Knowing a few secrets and avoiding the mistakes others had made, will help, but it alone won't assure success. An established agency will know this.


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Alyona Douglas  Identity Verified
United States
Local time: 21:23
Member (2007)
English to Russian
- Jan 5, 2009

Samuel, do you have a translation agency yourself, or have you at least worked as a PM in any translation agency? Just curious, because by what you write it seems that you don't know the "kitchen" of a translation agency, and especially about the way they have to "fight" to get a new customer (and keep an existing customer) at all.

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Oleg Rudavin  Identity Verified
Ukraine
Local time: 06:23
Member (2003)
English to Ukrainian
+ ...
Not pros and cons but differences! Jan 5, 2009

In fact, these are two absolutely different pairs of shoes! Besides, I'd suggest a change of termnology: 'pros' and 'cons' - just as 'good' and 'bad' - is a matter of perception. As Ukrainians say, it's not that bad that my cow died; the worst thing is that my neighbor's cow is healthy and gives a lot of milk! :~

MariusJacobsen wrote: I have worked as a freelance translator for a long time and now I am thinking of taking it to the next level by starting a translation agency.

As Astrid rightly pointed out, outsourcing is indeed an attempt to try on your agency's hat. Try it and in a while you'll see whether you feel more comfortable in this position than you were as a freelancer.

I ... have always wanted to run my own business

Good reason
Something tells me that running an agency could yield more profits than working as a translator

Not necessarily. I know a few colleagues of ours with steady six-digit annual income calculated in $US, € or £; outsourcing can increase the revenues without getting oneself involved with the risks inherent to runnung an agency.

Pros...
Cons...

Rather, the differences, and the primary difference is the level of responsibility.
A trasnaltor is responsible for the quality of translation while the agency is responsible for the quality of the final product which is a result of collectibe work (translator, proofreadier/edotor, QA/reviewer).
A freelance translator is basically a structuire consisting of a single element (oneself). An agency would counsist of multiple elements, and the risks increase geometrically.
...A translator can get sick

What happened when you got sick yourself while working on a project?
And are the chances of someone - any of the above elements - getting sick in a multi-component structure? What inplications will it have for the overall quality of the final product?

Yet another basic difference is that translators have to care about the quality - well, at least the best ones.
A translation agency is a for-profit company. A conpany is successful when it generates income; the latter often becomes the main and frequently, the only parameter to measure the efficiency of the company. As a result, for the most part, translation agencies are not about translation - they are about making money, and that's one of the greatest pitfalls.

I could be generating revenue by outsourcing and translating (if I had the time)

You'll have to have clones of oineself to combine management/administration with translation.
I am the middle-man and I deal with the clients

And with translators - when a client goes bankrupt or disappears or simply doesn't like the translation because there's soneone in the office who believes it should have been done differently...
Another slippery area is getting together a team of reliable translators, both/either for working inhouse and/or remotedly. Here's my experience (I decided against turning into a full-scale agency and am now both a freelancer and outsourcer): I screened, in one way or another, seven or eight hundred translators, and now I'm working with probably a dozen or so of them. There are reasons to that, the rate being only one of them...


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Lesley Clarke  Identity Verified
Mexico
Local time: 22:23
Spanish to English
I would take it slowly Jan 5, 2009

Especially in this economic climate.

But I think an agency needs direct clients, plus high quality translators, proofreaders and project managers. You also need a good cashflow, because you will not keep the best translators if you don't pay them when promised.

I am cautious by nature, but my plan would be to start collecting direct clients and outsourcing the work to reliable translators. I would go for the quality end of the market and never pass on a translation that hadn't been properly proofread.

Then as the work builds up, start to hire office people and all the rest of the administrative stuff that being an agency implies.


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Stuart Dowell  Identity Verified
Poland
Local time: 05:23
Member (2007)
Polish to English
+ ...
Business plan Jan 6, 2009


I have a Bachelors degree in International Business Administration


I would think that with such a background you would be able to prepare a business plan with revenue and profit forecasts, a comprehensive marketing plan, costs etc.

It would then be obvious whether it is something worth doing.

My own view is that a translator (or maybe a small translation office rather than an agency) can make very good money by focusing on quality and specialising.

This seems infinitely more rewarding than simply setting up as a file shifter.

Stuart


[Edited at 2009-01-06 07:14 GMT]


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KSL Berlin  Identity Verified
Portugal
Local time: 04:23
Member (2003)
German to English
+ ...
Business plans Jan 6, 2009

Stuart Dowell wrote:
... prepare a business plan with revenue and profit forecasts, a comprehensive marketing plan, costs etc. ... It would then be obvious whether it is something worth doing.



Not just in his case. I believe in this approach for any serious freelance translator too (see http://www.proz.com/translation-articles/articles/1607/ for example).

The time spent carefully analyzing one's business, revenue flows, expenses, risks and opportunities always yields useful insights, and if you need to go to the bank some day for a business loan or a mortgage, it is difficult to get far without such documentation, especially in the current economic climate.


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