turning freelance work into a sustainable design business

25 Jul 2008 - 1:26pm
6 years ago
15 replies
1026 reads
Wendy Fischer
2004

I'm at the point where I am looking for a job, but also doing a lot of contract/freelance work. In regards to the job front I'm not finding what I want or I find something and the position gets put on hold.

I'm trying to figure out how to turn my freelance work into a sustainable business, something that can provide me with a steady stream of revenue and income. When I was younger, I tried freelancing but didn't turn it into a sustainable business. I was not charging enough for services nor was I at a point where I really understood how to run a business (nor did I really want to).

I think the biggest issues for me are 1) marketing myself 2) business development and 3) contract rates.

Can anybody share their experience of how they went from freelancer and built themselves a business? I'd be interested to hear people's stories. What are the pain points, how did you solve them?

-Wendy

Comments

25 Jul 2008 - 2:35pm
Ron Edelen
2008

There is very little difference between freelancing and having your
own business, especially when you freelance from home. Making the
transition is not hard, but requires you to maintain simple business
habits.

Here's what worked for me.

1) Maintaining a killer reputation with the firms (or clients) you
previous freelanced with. Referrals from these contacts are critical
to keeping a flow of work.

2) Occasionally take work that you may not like to do, as long as it
is within your ethical boundaries and minimum budgetary needs. This
will keep work flowing in and expand your market/network of clients.

3) Use contracts. Protect yourself, your client, and your ability to
represent your work to prospectives. AIGA has a good, free starting
point. Look specifically at the Basic terms and conditions, and
Supplement 2: Interactive-Specific Terms and Conditions. (http://www.aiga.org/content.cfm/standard-agreement
)

4) Keep up with all the latest trends in advertising/design/marketing.
Even if you are tech-focused and have little interest in campaigns -
Starbucks Ideas for example (www.mystarbucksideas.com), which is no
more than a blog with a rating system - it is good to be able to know
the market, the successful trends, how to apply your knowledge to
solutions that have high ROI probability, and be able to sell (talk it
up) your abilities to prospective clients.

5) If you are starting a company, think about working with a business
partner who can add similar or complimentary offerings to your own.
This has been a critical ingredient for me. Your business will grow
faster, and you won't go insane trying to do it. Example: someone who
can bounce absurd client request (good cop - bad cop), share the day-
to-day business tasks, and continually provide alternate perspectives
to challenging circumstances. More often than not, a problem can't be
solved by the person who created it.

You have to weigh the pros-cons between freelance and running your own
shop - of which I will let someone else chime in on. I was told that
any new business won't see profit for first two to five years. This
model is slightly obscured in the internet-service industry, which is
relatively low risk and requires very little overhead. In others
words, all you need is a computer, a few pounds of vanilla-nut coffee,
and air conditioning.

:) Ron

On Jul 25, 2008, at 2:26 PM, erpdesigner wrote:

> I'm at the point where I am looking for a job, but also doing a lot
> of contract/freelance work. In regards to the job front I'm not
> finding what I want or I find something and the position gets put on
> hold.
>
> I'm trying to figure out how to turn my freelance work into a
> sustainable business, something that can provide me with a steady
> stream of revenue and income. When I was younger, I tried
> freelancing but didn't turn it into a sustainable business. I was
> not charging enough for services nor was I at a point where I really
> understood how to run a business (nor did I really want to).
>
> I think the biggest issues for me are 1) marketing myself 2)
> business development and 3) contract rates.
>
> Can anybody share their experience of how they went from freelancer
> and built themselves a business? I'd be interested to hear people's
> stories. What are the pain points, how did you solve them?
>
> -Wendy
> ________________________________________________________________
> Welcome to the Interaction Design Association (IxDA)!
> To post to this list ....... discuss at ixda.org
> Unsubscribe ................ http://www.ixda.org/unsubscribe
> List Guidelines ............ http://www.ixda.org/guidelines
> List Help .................. http://www.ixda.org/help

26 Jul 2008 - 2:46pm
Christine Boese
2006

There's one calculation that is helpful, to figure whether you can
actually live as a freelancer. I was a freelance photographer back in
the 80s, for instance, and it would have helped me immensely to do
this little piece of math, but I was young and had no clue.

Figure out what you're gonna charge, on average, per job. Figure out
how many jobs at that rate you could conceivably do/finish (depending
on time frame) a month. Subtract monthly expenses. Multiply by 12.

That's just a quick and dirty reality check, not actual accounting.
When the bottom fell out of the photography market, when photos
started appearing on CD-ROMs for less than pennies an image, I knew I
was destined to lose, no matter what I did, even in best case
circumstances. Same for newspaper shooting, killing yourself with long
hours, nights and weekends, for something people will throw away every
day, if they even see it. No resale value whatsoever.

Granted, wedding shooters have benefited from a neo gilded age
acceptance of massive charges for wedding photography, a black box
combo of both skill and puffery. They make money, and pump the volume
in and out the door. The puffery side of the business sort of made me
nauseous, as did the feeling that I'd be scamming people out of their
money. That's what I get for growing up blue collar. I thought less
wealthy people deserved nice wedding pictures too (and fellow grad
students, as that was how I made extra money in grad school, doing
weddings--if you're working together scraping up beer money, are you
going to charge $5K-$10K per wedding? It just felt exploitive, but the
shooters who made that shift from the $1K wedding to the $5-$10K
wedding got rich--fleecing people, if you ask me). But even if you are
in the $5K wedding shooter club, you gotta shoot at least 12 weddings
a year to make $60K (before expenses and taxes). The actual shooting
takes up the least amount of time in the entire wedding job.

But the hard part is, you have to realize that whatever you are
wanting to do has to be converted to a unit that multiplies into an
annual income. (I applied this test for a friend who was wanting to
start a video production service for real estate agents, for instance,
and it sobered her up real quick to realize that even pumping the max
number of paying jobs in and out the door in a year that any one human
could conceivably complete (without relying on subcontractors and
increasing expenses), she'd at most be able to clear about $30K a year
(a major pay cut for her), for the price she was thinking of
charging.) And that's not factoring in a freelancer's dry time between
clients, and the fact that there is only so much space in any person's
head to give to creative projects at one time, or you have a stress
breakdown.

Chris

On Fri, Jul 25, 2008 at 3:35 PM, Ron Edelen <ron at myjive.net> wrote:
> There is very little difference between freelancing and having your own
> business, especially when you freelance from home. Making the transition is
> not hard, but requires you to maintain simple business habits.
>
> Here's what worked for me.
>
> 1) Maintaining a killer reputation with the firms (or clients) you previous
> freelanced with. Referrals from these contacts are critical to keeping a
> flow of work.
>
> 2) Occasionally take work that you may not like to do, as long as it is
> within your ethical boundaries and minimum budgetary needs. This will keep
> work flowing in and expand your market/network of clients.
>
> 3) Use contracts. Protect yourself, your client, and your ability to
> represent your work to prospectives. AIGA has a good, free starting point.
> Look specifically at the Basic terms and conditions, and Supplement 2:
> Interactive-Specific Terms and Conditions.
> (http://www.aiga.org/content.cfm/standard-agreement)
>
> 4) Keep up with all the latest trends in advertising/design/marketing. Even
> if you are tech-focused and have little interest in campaigns - Starbucks
> Ideas for example (www.mystarbucksideas.com), which is no more than a blog
> with a rating system - it is good to be able to know the market, the
> successful trends, how to apply your knowledge to solutions that have high
> ROI probability, and be able to sell (talk it up) your abilities to
> prospective clients.
>
> 5) If you are starting a company, think about working with a business
> partner who can add similar or complimentary offerings to your own. This has
> been a critical ingredient for me. Your business will grow faster, and you
> won't go insane trying to do it. Example: someone who can bounce absurd
> client request (good cop - bad cop), share the day-to-day business tasks,
> and continually provide alternate perspectives to challenging circumstances.
> More often than not, a problem can't be solved by the person who created it.
>
> You have to weigh the pros-cons between freelance and running your own shop
> - of which I will let someone else chime in on. I was told that any new
> business won't see profit for first two to five years. This model is
> slightly obscured in the internet-service industry, which is relatively low
> risk and requires very little overhead. In others words, all you need is a
> computer, a few pounds of vanilla-nut coffee, and air conditioning.
>
> :) Ron
>
> On Jul 25, 2008, at 2:26 PM, erpdesigner wrote:
>
>> I'm at the point where I am looking for a job, but also doing a lot of
>> contract/freelance work. In regards to the job front I'm not finding what I
>> want or I find something and the position gets put on hold.
>>
>> I'm trying to figure out how to turn my freelance work into a sustainable
>> business, something that can provide me with a steady stream of revenue and
>> income. When I was younger, I tried freelancing but didn't turn it into a
>> sustainable business. I was not charging enough for services nor was I at a
>> point where I really understood how to run a business (nor did I really want
>> to).
>>
>> I think the biggest issues for me are 1) marketing myself 2) business
>> development and 3) contract rates.
>>
>> Can anybody share their experience of how they went from freelancer and
>> built themselves a business? I'd be interested to hear people's stories.
>> What are the pain points, how did you solve them?
>>
>> -Wendy
>> ________________________________________________________________
>> Welcome to the Interaction Design Association (IxDA)!
>> To post to this list ....... discuss at ixda.org
>> Unsubscribe ................ http://www.ixda.org/unsubscribe
>> List Guidelines ............ http://www.ixda.org/guidelines
>> List Help .................. http://www.ixda.org/help
>
> ________________________________________________________________
> Welcome to the Interaction Design Association (IxDA)!
> To post to this list ....... discuss at ixda.org
> Unsubscribe ................ http://www.ixda.org/unsubscribe
> List Guidelines ............ http://www.ixda.org/guidelines
> List Help .................. http://www.ixda.org/help
>

26 Jul 2008 - 4:09pm
Vytas Gaizutis
2008

Wendy,

You didn't mention what area you'd be freelancing in. Is it

- visual design for web and software?
- marketing communications?
- branding, corporate identity design?
- packaging?
- IA?
- Interaction design?
- A combination of the above?
- Something else?

Some of these areas lend themselves better to freelance work that others. Some can easily be done 100% off-site. Others involve lots of client face time and working directly with teams (deep brainstorming sessions and iteration).

In addition, there's a greater demand for some of these specialties than for others. There's also cheap, offshore competitors to consider. Many clients are clueless with respect to quality. Case in point: Those schlock logo shops that spit out clip-art-looking corporate identities for $99.99. Many business owners think these are such a deal :-)

Also, some larger companies won't contract with you unless you meet certain criteria, such as having a liability insurance, etc. Plus, from my own experience, larger companies tend not be be timely payers (a generalization, I know). Often, your invoice goes into Accounts Payable hell where it can sit there 90 days and beyond. You have to plan for this.

You may wish to consider partnering with someone you can focus on getting new business. When I did freelance work in the past I found that when I was deep in designing I wasn't setting up my next gig. Then when the assignment ended, I went dry for awhile until I could secure new work.

26 Jul 2008 - 5:59pm
SemanticWill
2007

I would say just as important, perhaps, as those things mentioned so
eloquently above, is having a clear purpose about what exactly you
want to do.
"Only a clear - even idealistic - purpose can provide the direction,
unity and mutual respect that bind a company to itself and its
customers and creates a truly unique and exciting brand [...] Purpose
becomes the moral engine of the company, the source of its energy"
~ Nikos Mourkogiannis

Your purpose should be a true re%uFB02ection of why you do what you
do and why you think you can achieve your personal purpose better as
a freelancer or as your own company than within a larger
organization. It should live at the intersection of what you truly do
better than anyone else and what your clients truly care about, and
where that is best served.

I'd love to continue this dialogue, but I challenge you with - what
is your purpose - what really is your passion and vision that lives
at the core of why you wake up every morning and do what you do - and
what are the ideas and motivations leading you to consider becoming a
freelancer, or starting your own business. The ideas behind your
purpose should transcend your company. The truths of your idea should
exist whether or not you do it as a freelancer, consultant, or within
an organization. What matters is what vehicle is best to get you
where you want to go.
My humble 2 cents. I have been on my own since last November, by the
way - as a consulting user experience architect.

I love it!

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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27 Jul 2008 - 12:17am
Vytas Gaizutis
2008

Well said, Will.

27 Jul 2008 - 3:33pm
Marilyn Matty
2008

A book I found very helpful when freelanced for awhile in the wake of 9/11 -
Cameron S. Foote's "The Business Side Of Creativity." It's available at a
discount at Amazon, Barnes & Noble, etc. It's got a lot of helpful no
nonsense advice, and some points I found critical are:

Put together a business plan, including a roadmap with benchmarks you need
to accomplish, as well as figuring what you need to charge rather than what
the rate for particular jobs might be. Something I found out the hard way -
don't waste time on badly paying jobs; a company that isn't going to pay
what you're worth isn't worth having, and a company that nickels and dimes
you going in has a good chance of looking for every opportunity to chisel
something off the bill.

Get a good % upfront for each fee based project (I shot for 50%, but for
highly paying jobs with reputable clients that pay on time, I'd accept 33%.
Build in a kill fee to your rates, as well as charges for overtime, more
iterations, etc. Don't transfer rights or use of your work until you've got
the final payment in hand.

Sketch out marketing plans as part of your business plan, and a lot depends
on your specialty, the type of companies you'll be pitching, who you know
and/or who you might team up with, and how you best sell yourself.

Don't do any spec work - even as part of a proposal.

Know when to walk away when a client is difficult, is demanding too much of
your time for too little money if it's a fee rather than an hourly, or isn't
a good payer.

Most important - have a good lawyer, and don't ever use boilerplate
contracts - they need to stand up to state and local laws to hold up in
court. And be prepared to go to court or yank work for bad payers.

Ask the list when you need business advice, there are lot of use here who
are, or have, freelanced.

HTH,

Marilyn

On Fri, Jul 25, 2008 at 2:26 PM, erpdesigner <erpdesigner at yahoo.com> wrote:

> I'm at the point where I am looking for a job, but also doing a lot of
> contract/freelance work. In regards to the job front I'm not finding what I
> want or I find something and the position gets put on hold.
>
> I'm trying to figure out how to turn my freelance work into a sustainable
> business, something that can provide me with a steady stream of revenue and
> income. When I was younger, I tried freelancing but didn't turn it into a
> sustainable business. I was not charging enough for services nor was I at a
> point where I really understood how to run a business (nor did I really want
> to).
>
> I think the biggest issues for me are 1) marketing myself 2) business
> development and 3) contract rates.
>
> Can anybody share their experience of how they went from freelancer and
> built themselves a business? I'd be interested to hear people's stories.
> What are the pain points, how did you solve them?
>
> -Wendy
> ________________________________________________________________
> Welcome to the Interaction Design Association (IxDA)!
> To post to this list ....... discuss at ixda.org
> Unsubscribe ................ http://www.ixda.org/unsubscribe
> List Guidelines ............ http://www.ixda.org/guidelines
> List Help .................. http://www.ixda.org/help
>

27 Jul 2008 - 11:17am
stefanie kraus
2006

When I made the leap from employee to running my own business, this book helped me a lot: http://www.amazon.com/Talent-Not-Enough-Business-Designers/dp/0321278798/ref=pd_bbs_6?ie=UTF8&s=books&qid=1217087479&sr=8-6

It's
very practical and focuses on design specific items such as hourly
rates vs. project based fees, billable hours and how to protect your
work.

Good luck!
Stefanie

28 Jul 2008 - 2:19am
SemanticWill
2007

Here is a brief little test. See it as a proxy variable for turning
freelance work into a sustainable business. It's just an exercise.
Set your alarm for 3am tomorrow. Get up with your alarm at 3am for the next
week.

Report back.

On Sun, Jul 27, 2008 at 12:17 PM, stefanie kraus <stefaniekraus at yahoo.com>wrote:

> When I made the leap from employee to running my own business, this book
> helped me a lot:
> http://www.amazon.com/Talent-Not-Enough-Business-Designers/dp/0321278798/ref=pd_bbs_6?ie=UTF8&s=books&qid=1217087479&sr=8-6
>
> It's
> very practical and focuses on design specific items such as hourly
> rates vs. project based fees, billable hours and how to protect your
> work.
>
> Good luck!
> Stefanie
>
>
>
>

28 Jul 2008 - 7:57am
Christine Boese
2006

That presumes getting up is more productive than staying up!

One of the things that both helps and hurts my regular work
productivity is that I frequently get my best work done from 11 pm to
2 am. That turned out to be very helpful in the 16-hour days I used to
put in on my dissertation, or any kind of work that required extended
concentration (I know many programmers who work best that way too).
However, co-workers attached to the early morning scrum meetings are
less impressed.

Chris

On Mon, Jul 28, 2008 at 3:19 AM, Will Evans <will at semanticfoundry.com> wrote:
> Here is a brief little test. See it as a proxy variable for turning
> freelance work into a sustainable business. It's just an exercise.
> Set your alarm for 3am tomorrow. Get up with your alarm at 3am for the next
> week.
>
> Report back.
>
> On Sun, Jul 27, 2008 at 12:17 PM, stefanie kraus <stefaniekraus at yahoo.com>wrote:
>
>> When I made the leap from employee to running my own business, this book
>> helped me a lot:
>> http://www.amazon.com/Talent-Not-Enough-Business-Designers/dp/0321278798/ref=pd_bbs_6?ie=UTF8&s=books&qid=1217087479&sr=8-6
>>
>> It's
>> very practical and focuses on design specific items such as hourly
>> rates vs. project based fees, billable hours and how to protect your
>> work.
>>
>> Good luck!
>> Stefanie
>>
>>
>>
>>
> ________________________________________________________________
> Welcome to the Interaction Design Association (IxDA)!
> To post to this list ....... discuss at ixda.org
> Unsubscribe ................ http://www.ixda.org/unsubscribe
> List Guidelines ............ http://www.ixda.org/guidelines
> List Help .................. http://www.ixda.org/help
>

28 Jul 2008 - 8:49am
kimbieler
2007

Wendy,

Lots of good advice here. Ron's suggestion about finding a partner is
a good one, however a partnership is like a marriage -- not to be
undertaken lightly. Make sure that any prospective partner is
someone you can live with every day and who shares your philosophy of
work.

I think the most important thing about freelancing in the creative
services industry is that you have to think of yourself as a
consultant, and charge accordingly. There is absolutely nothing to be
gained by having low rates, no matter what the current economic
climate is like. In my experience, women have more trouble charging
what they are worth than men, so keep that in mind. Begin as you mean
to go on and you'll be much happier. Running your own business
requires a lot of overhead time -- in a 40-hour work week you might
bill as few as 25 hours, so it's important to factor that in.

For calculating project costs, I'd refer you to Andy Rutledge's matrix:
http://www.andyrutledge.com/calculating-hours.php

At least 90% of your business will come from referrals. This means
that traditional marketing -- advertising, cold calls, direct mail --
is largely a waste of time and money. You will see the most bang for
your buck by marketing to existing clients. Here's a quick list I put
together for myself:

- Get to know clients personally
- Face time counts, take them out to lunch
- Keep them informed—documentation
- Keep abreast of their business & industry—Google alerts, business news
- Up-sell your services
- Tell them what you're up to lately—completed projects, new hires,
new competencies
- Ask them for referrals

Other good sources of referrals are friends and family. The hard part
with these folks is they often have no idea what you do for a living,
so they can't describe it to others. So, make sure you have a snappy
elevator pitch and that you can clearly and specifically articulate to
others who your ideal client is.

I don't know if this needs to be said, but professionalism is the key
to success. Keep regular business hours, return calls and emails in a
timely manner, keep your work and private lives separate, create
standard processes and documentation, manage expectations with clients
through frequent and clear communications.

Good luck!

-- Kim

+ + + + + + + + + + + + + + +
Kim Bieler Graphic Design
www.kbgd.com
Office: 301-588-8555
Mobile: 240-476-3129
+ + + + + + + + + + + + + + +

28 Jul 2008 - 12:04pm
Benjamin Ho
2007

Never go into business alone. Always have a business coach or someone
who's been in business before to guide you.

Also, read up on this book:

E-Myth - Revisited - By Michael Gerber

There are several others I can recommend.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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28 Jul 2008 - 1:17pm
jrrogan
2005

All good suggestions here, I'd add/extend a couple of them:

IF you get 1 + partner(s) Spend time getting to know them and their desires.
Come up with exit strategies, buyout clauses, other leaving clauses as soon
as you start talking about partnerships.

Note "3" partners are NOT a crowd, but 2 can be cramp your style.

Split your personal and business lives in finance and life style, and don't
confuse the two. Don't get enamoured by your own business, if your business
can't pay you market and/or what you're worth, (given ramp up time), fire
your business.

Pay yourself a consistent amount, let the business coffers rise and fall
with the tide.

Just a few ideas.

Rich

--
Joseph Rich Rogan
President UX/UI Inc.
http://www.jrrogan.com

28 Jul 2008 - 1:16pm
Laura Hansen
2008

Talk in person with as many sole practitioners as you can in your
specialty to learn how they made it. The largest pitfall for me was
not understanding adequate cash flow and planning for the lean times.
I'd say the challenge area for most is financial management and
adequate capitalization.

You can't charge what you think the job is worth as though you were
paying for it from your own wallet. Talk to others to learn what they
charge. Do some research. I used contracts and ask for a healthy
deposit up front to begin work. That helped me get better clients and
reduce cash flow problems.

I believe in doing your own bookkeeping so you understand your
expenses and overhead. Be aware if you set up a partnership, you have
more liability if the partnership doesn't work out. A corporate
structure is worth set up if you want the tax advantages. If you
aren't good at business administration, hire an accountant to help
you.

Figure out what is your area of strength and focus. Draw in support
and resources, realizing you may spend half your time running your
business and getting new business.

Take time to network out of your office on a regular basis. Also take
time to regularly assess where you are going, how you spend your time
and if it's worth it.

Personally I love freelancing, and did it for more than a decade. By
choice now that I'm a parent, I have a day job, benefits and go home
to my family at 5 pm. I still freelance part-time to do select design
projects.

Here's a good way to boost your confidence: Spend a few hours line
up all your best work you ever did and look at it.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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28 Jul 2008 - 1:23pm
Laura Hansen
2008

For me the difference between freelancing and having my own design
business was the kind of projects I received. When I had my own
business I could pursue the kind of work I wanted to do, and the type
of clients I wanted to work for. This built my skills and portfolio to
strengthen me toward those goals.

Also I had more freedom to work from my own office. When I freelanced
I often fixed other people's mistakes, did a lot of "grunt"
production, and worked in other people's shops with no benefits and
no guarantees for my own future.

Taking the risk of running a business was worth it to me. Educate
yourself about money, taxation, corporate structures, and sales. You
might spend half your time selling and running your business. I find
it very rewarding. The biggest challenge is planning for times of
zero cashflow.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Posted from the new ixda.org
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28 Jul 2008 - 1:24pm
Laura Hansen
2008

Oops it looks like I posted twice. LOL. Editor please have at it!

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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