Please note that this article has now been superseded by this excerpt from The Web Design Business Kit 2.0.
Just why are you starting out on your own? Why do you even work? All we really need is a couple of decent meals a day and some shelter, and we’ll get along just fine.
Why, then, do many of us put in long hours trying to build a business?
Think about this question: your answer is important!
Is it to have a bigger house, a better car and more jewelry than the next person? If you answered “yes,” then that’s fine. Is it to save for the future so you can enjoy a nice lifestyle? That’s fine too. Is it because you simply enjoy what you do, and putting in a good day’s work nourishes your soul? That’s great.
It’s important that you identify the reasons why you want to go out on your own before you begin. If you know from the start why you’re freelancing, you’ll be in a better position to assess whether your efforts have been successful later on.
So, what is success?
Case 1.1. Success? Or Failure?
I have a friend who runs a small Internet business that sells a product. He spends an hour a day on his business. Sometimes he misses a day … or three! He basically works whenever he wants, which isn’t often!
He lives in a modest two-bedroom unit about fifty metres from the beach. He plays golf three times a week, and has a long, leisurely lunch on Fridays. He takes himself off to sporting events whenever he wants, and he travels quite a lot. He always has enough money in his pocket to buy a beer.
Is he successful?
I have a client who owns a spectacular business that turns over many millions of dollars each year. He employs a staff of thirty-five and is setting up for international expansion.
He drives the latest Porsche, stars in his own TV commercials, and is well recognized for his wonderful business achievements. He works extraordinary hours and loves what he does.
Is he a success?
I manage a business that has a few divisions. We do quite a lot of Web development, market plenty of businesses, manage athletes, and own and manage a number of Websites.
I start work at about 8.30 each morning, and finish at midday. I then go to my local pool and swim a kilometer or 2, after which I go for a run or a bike ride. I might then spend an hour at my local beachside cafe thinking through a few business ideas we might have on the go.
Am I successful?
These are three very different businesses. And each business owner leads a very different lifestyle.
So, just what is success?
Success is whatever you want it to be! When I was a young fellow of twenty-one, my ambition was to make a million by the time I was thirty. Then I hit some tough times. I struggled to pay the bills and put food on the table. All of a sudden, my definition of success went from earnings in the millions to simply feeding my family.
Now that I’m older (and, hopefully, a little wiser!), my definition of success has changed. I still run my own business – I have for over six years. And with 80% of small businesses folding within five years, I think that means I’m successful at what I do.
Success is whatever you want it to be. Goals change. And your definition of success can change.
My friend with the Internet business makes enough money to have a comfortable lifestyle compared to many people. I’d say he’s successful. My client with the Porsche, the large business and the long hours he loves, would also be a success in many people’s eyes.
Success isn’t financial surplus. This is an important distinction to make. It might be your definition of success, but it doesn’t have to be. If you’re stuck in a boring, low-paid job right now, then running a freelance Web development business from home might be your definition of success.
Working from home, spending time with your family, running an interesting business, making a few dollars, and having fun? What could be better than that? Making $10 million a year might, but then that comes with its own issues, too.
Remember that only 2% of the population will achieve the major goals in their lives. Many people just hang around waiting for success to come along and smack them in the face. Well, it ain’t going to happen!
You have to get out there and grab life, grab your success. No one else will do it for you. It is completely up to you!
- Success is whatever you want it to be.
- Identify why you want to go out on your own, and what you’ll consider “success.”
What Business Are You Really In?
Are you the best Web designer around? The best graphic artist? Maybe the best copywriter?
Great! So that means truckloads of business, a fabulous income, and regular attendance at industry awards nights where you invariably pick up the prize. Right?
Let’s get this first misconception out of the way right now. The fact that you’re a wonderfully skilled designer or programmer or writer will not, by itself, determine your ability to achieve success. It’s your clients’ perceptions of those things that influences whether you sink or swim as a freelancer – and even then, they’re not the key to your success.
So if you’re not in the Web design and development business, what business are you in? You’re in the same business as every other business person on the planet!
You are in the business of selling.
When you begin to freelance, you’ll find yourself competing against others with the same or very similar skills. What determines who wins the job? Your sales skills! You need to sell better than the next person. It really is as simple as that.
Now that we’ve established that you’re in the business of selling, let’s ask the question “Why?”
First, have a think about what you’re selling.
Most people believe they’re in the business of Web design or development. Some take it a step further, and say "We’re in business to provide solutions for businesses needing a Web presence."
Here’s the first hint that will help you become more productive and win more jobs by changing the way you do business. It is a very simple thing.
Your business is to help your clients make more money.
The sites you design and the solutions you build must have a single aim – to help your clients make more money. They might do this by providing ecommerce functionality, or they might achieve it by reinforcing offline brand campaigns. Regardless of the nitty gritty of each project, the objective you must have for all the work you produce is to help your clients make more money.
This is the first realization you must make to survive as a freelance Web designer or developer. Let’s look at some others.
The Right Mindset
When you’re just starting out in your first business, you need to have a no-frills mindset. Your first business isn’t the time to buy the new photocopier, the latest and greatest fax, or plush office furniture. No new car, no new cell phone, no huge office space.
You need to focus on survival – and that means low-cost business!
Save On Equipment
Maybe, just maybe, you can’t use the fax machine at your local post office (or borrow your brother-in-law’s or kind uncle’s), and you actually have to buy your own.
If you buy a new fax with 100 number memory, the ability to call at selected times, and all the rest of the latest and greatest functionality, stop! Take two steps back. Now slap yourself! You’re wasting money!
You’ll have to work hard in the early stages of your business to get the cash in the door – don’t throw it straight out the window!
You do not need a new fax. You do not need a new photocopier. You do not need a new anything.
Visit the local auctions, scour the local newspaper ads, and visit secondhand shops. Ask friends if they have an old fax machine they don’t use anymore. I guarantee that with just a little sniffing around, you’ll find a perfectly good and inexpensive fax machine.
You may think this kind of frugality simply doesn’t matter in the long run. Understand that the fax machine really isn’t the point here. It’s your outlook and attitude we’re trying to get right.
Save a few hundred bucks here, another hundred there, a couple of dollars over there… and before you know it, you have the mentality of a businessperson intent on keeping expenditures tight and the cashflow positive.
In the end, that can be the difference between success and failure.
Save On Office Space
Now, just where will that fax machine go? Into your large and beautifully appointed office? Or into your back bedroom?
Don’t let your ego get in the way of your business’s survival. It’s very hard to start, establish, and grow a business. You’ll need everything in your favour, and having to come up with $1,000 each month for office rental is not a positive.
When I first started out, I ran my business from my back bedroom. It’s a fine place to start. I did most of my business on the phone, via email, or by visiting my clients’ offices. So the fact that I toiled away in the bedroom never mattered much.
I was initially reluctant to let clients know I worked from home. My perception was that if you worked from home, you were small fry. I thought my clients would feel that if I couldn’t afford an office, I would be too small to worry about; I thought it would damage my credibility. In hindsight, I think I may have been partly right. Many clients will want to know that you have ‘real’ offices, with staff and computers and faxes and an important-looking boardroom. But it’s a bit hard to squeeze all that into the back bedroom!
Indeed, the types of clients I was trying to attract wanted the reassurance a bigger outfit would supposedly provide them. So I avoided telling these customers that my “Web development and marketing firm” was simply me working from my bedroom.
Innovate With Less
With modern technology, your virtual office can be set up simply and easily. You’ll have a net connection and fax on one line. Your telephone calls can be answered by your ‘secretary’ – that’s the power of answering services. Your clients need never know.
I found as time went on that very few clients asked me where my offices were, and when they did I answered truthfully, with the name of my suburb.
But I will say this. The moment I moved into my office, my business really surged ahead.
I spoke with some clients after I took the plunge, and the general consensus among them was that once I had offices and staff, they could see I was serious about the business and not just testing the waters.
I’m not advocating jumping into an office. I’m suggesting you start off slowly. When I finally took out the office lease I had a regular income, and a fairly well-established client base from which to grow.
Now that I have the offices with the boardroom, break room, a reception area, multiple phone lines, a fax line, high-speed Internet connection and plenty of staff, I spend a fair amount of my time working from home on a laptop!
My offices do not contain a single stick of new furniture. All the desks (a total of six) came with the office, as did the furnishings for the reception area. Our two bookcases and the boardroom table came from the local secondhand store, at a cost of $350. The break room fridge cost $50 at a garage sale. The office chairs were all second hand, and cost $180 in total. And the boardroom chairs are my old dining room chairs!
Although I haven’t any research to back this up, I’m sure my clients look around my premises, see a new office with the best of everything and think, “I’ll be paying for all of this in my bill.”
Success is whatever you want it to be. I’ll make the big assumption here and assume you took the big step to work for yourself to gain a taste of freedom with the potential to earn great money, and for the challenge of it all.
The more expenses you have, the more income you need to generate. This reduces your chances of surviving in the tough world of business, and that is obviously not what we want. We want you to survive and build the business you deserve!
- You’re in the business of selling.
- Get the right mindset for success. Be frugal.
Freelancing Or Small Business?
Freelancing – it sounds so good! No more office politics! Bye-bye, boss! You’re out there on your own, the wind in your hair, no expenses, and clients aplenty. Every job is a new job, with a great hourly rate. Variety is the spice of life!
Then there’s the small business owner. You’re in charge! You can make good money as your business grows, and you reap the rewards of leveraging. Having one person generate $80 an hour is good – especially when you pay your employees $40 an hour! Having five people generating $80 an hour each is even better. That’s $200 an hour … and you don’t even have to be in the office!
But which is the option for you?
Both have established reputations for being unstable forms of employment. Many have the opinion that in your own business, the rug can be pulled out from under you at the drop of a hat.
I have the opinion that working for yourself is the most stable of all forms of employment. I’d argue that the freelancer with a couple of regular clients has more secure employment than the majority of desk jockeys in businesses across the world. With a salaried job, you’re at the mercy of the company. And what happens when the Board discovers there’s not enough money in the coffers to give the management a million-dollar bonus? It’s no problem! They just cut 500 jobs and pay the bonus from the money they’ve “saved.”
A friend of mine recently made the move from the corporate world into his own business. He is a qualified accountant, who now installs accounting software for small businesses and provides bookkeeping services. He looks upon this business as being far more stable than a job. Why? He sees that if one of his clients “sacks” him, he has lost just a small amount of business, and, as he’s very busy, it really doesn’t matter. In his previous life as the corporate money man, if he were sacked it meant an end to his entire income.
Life as your own boss is unpredictable. That’s the best and worst thing about it!
Whichever option you choose – freelancer or small business – you’ll be inspired by the variety and amazed at your versatility – and thrilled when someone actually pays you! Your time’s your own. You can take vacations when you want, nod off when you want, and work when you want.
But life wasn’t meant to be easy! It can be a struggle to survive as a small business or freelancer, and you can rest assured you’ll find yourself working some long, hard hours.
But as you work these hours, you’ll come to recognize something: you’ll recognize that the skills you’re using are salable. Now that’s exciting!
It’s not all merrily working and counting the money, however. With a small business, you certainly have greater potential to grow and generate more income. But the organizational effort is substantial. Who will do your accounting? Don’t forget to allow for taxes! Which staff members will take holidays, and when? Then there’s sick leave, insurance… You get the idea.
Whichever model you choose, be aware that, though it will be hard work, the rewards – not only in monetary terms – can be great.
- Freelance or small business? It’s up to you!
Good Advice And Where To Get It
In the great Internet boom a few years ago, every man and his dog tried to secure venture capital. As those great gods of finance flicked through proposal after proposal, one of the constants for which they searched was experience. They did that because they know experience helps – it helps a lot.
Does this mean you shouldn’t start a business until you have thirty years’ experience under your belt? No way! There are plenty of people and places you can go to for good advice. Let’s take a look at what’s on offer.
An accountant is the best source of accounting, finance, and budgeting advice. Find an accountant with decent experience, and with whom you feel comfortable; don’t settle for the one who lives closest to you. This is a person who can have a major impact on your business life, so take the time and trouble to find someone with whom you can work well.
Bankers are never the best source of financial advice. They have a vested interest in selling you their own products, so their advice is going to be biased and not necessarily in your best interests. Bankers often have almost no real business experience, but they have usually seen many people fail. So they can usually see the signs, and may be able to warn you in advance.
Solicitors are an excellent source of legal advice. Take their experience and opinions into account, but always remember the final decision is yours. Try to get a handle on all your legal affairs. For instance, learn how to read a contract. I find it beneficial to sit down with a contract and go through it point by point. I actually write my own notes in plain English about what the contract says, and then review it like that. Take responsibility for understanding your own legal position.
Friends are great for friendship. Friends will tell you what you want to hear. They’re usually a pretty unreliable source of business advice.
Mom Or Dad
As a marketing consultant myself, I can safely tell you these people are paid to lie! They’re always going to tell you your idea is great – that’s how they make their money. They should know plenty about marketing, but if they’re so great at business then why aren’t they out there running their own business, rather than consulting about it? OK, that’s probably a bit harsh, but I wouldn’t rely on a marketing consultant for pure business advice. Marketing advice? Certainly.
Other Business People
I’m not talking major business leaders here; I’m talking the lady who runs the corner liquor store, or the guy who runs a small trucking business, or the local florist. These people are in the trenches day after day. They know the importance of cashflow, they know how vital it is to keep costs down, and they know how to survive in what can be a pretty harsh business world.
One of the best things I do is have a brunch every Thursday with five colleagues who all manage their own businesses. Our little group includes a PR consultant, a resort owner, a computer store owner, a taxi driver, and an Internet business owner. We run ideas past each other, discuss cashflow situations, and generally get a different perspective on the issues we face.
That’s the sort of advice you need – non-biased and based on real-life experience.
- Good advice is gold!
- Gather a team of trusted professionals and refer your questions to them.
- Associate with other business people – their advice can be invaluable.
- Parents and friends will tell you what you want to hear. Don’t rely on them for professional advice.
Stepping Out On Your Own
As a consultant, I looked at a huge range of businesses over the years – from the inside.
It was a wonderful education.
I’ve heard many people say the Internet is too hard and too competitive an environment to give you any chance of success. I’ve heard many people say that many industries are too hard and too competitive an environment to give you any chance of success.
And I’ve heard many people talk about “now” not being the right time to build a successful business.
But I’ve seen business people succeed in recessions. I’ve seen business people succeed with Internet businesses. I’ve seen business people succeed in very competitive industries.
The reason for this is simple: these people would succeed anywhere. They put systems in place, they react to market changes faster, they sell better, they manage more effectively.
They do any number of things better than do the competition.
You can succeed in any place, at any time. Get your business right, and you can’t possibly fail.
So, where do you start with your business? Most people would say “start at the beginning,” but I’d like to offer you my own philosophy. I think you should start at the end.
Start At The End
As you step out on your own, your very first thought should be your exit strategy. You should know how and when you’re going to exit your business.
If your goal is to build the business for the next thirty years, and hand it over to your children, that’s fantastic! Plan for that.
Or is your exit strategy to build the business up and sell it in five years, when you’re grossing $1 million annually? You’ll have a different plan for that.
Identify Your Goal
When you define your exit strategy, you’ll have just provided yourself with a goal. Let’s say your goal is to build up your Web development business over five years to $1 million in gross sales. Great! To achieve that, estimate the value of sales you’ll need to make each year. Plan your business very carefully – don’t just wander along, hoping for the best.
Your sales figures might need to look something like this:
Year 1 … $250,000 in sales
Year 2 … $320,000 in sales
Year 3 … $560,000 in sales
Year 4 … $800,000 in sales
Year 5 … $1,000,000 in sales
To reach those targets, you’ll need to sell an average of $20,833 worth of work per month throughout the first year. That’s a touch over $4,500 per week. For a talented Web designer, that might mean attracting just one new client per week.
Plan To Achieve
You must plan to achieve! Your success depends on it! Let’s take a look at the two most critical factors you’ll need to consider.
Now that you have your goal, you’ll need to look at how you can generate this one new client each week. Maybe you’ll use PR; maybe you’ll network at your local business club; maybe you’ll send direct mail; maybe you’ll take out an advertisement in your local newspaper. That’s the start of a good marketing plan.
Then you could factor in ongoing work (content management, Website maintenance and marketing) from all these clients – another $1,000 per month. And the figures start to add up…
Expenses And Eventualities
Next, take a look at the sorts of things you’ll need in order to take on one new client a week: a telephone (and a telephone line), business literature (letterhead and business cards), a computer, a table and chair, maybe some support staff.
Note all these requirements down, and spread the costs over twelve months (evenly is fine, or you can spread them according to the way you think the costs might be incurred). Do the same to forecast the way you think your income might be generated.
Now, what if your computer is stolen? Did you think of that one? That would be annoying. Insurance! Don’t forget insurance. What if you need staff quickly? Have someone in mind to come in at a day’s notice. What if you’re sick for a week? Have someone you can outsource the work to. Keep thinking. What else do you need to cover?
Keep developing solutions for all these scenarios, and soon you’ll have a top quality plan of attack. Wait! What do you have? You have a plan. And that’s something the vast majority of businesses don’t have!
What Makes You Think You’ll Succeed?
Surprisingly, 80% of small business fail within five years. What makes you think you’ll succeed? Well, it’s simple. You will succeed because you are going to have what that 80% don’t.
- A goal
The vast majority of successful people have goals. Your goal must be achievable and you must wholeheartedly believe you can reach it.
- A plan
I don’t mean some little plan. I mean a plan that covers everything. Who is doing your accounting, and what package will you use? Exactly how will you market? What if your client sues you? What if you get hit by a bus? What if you make more than expected in the first two months? What if someone sends a letter asking for a job? What if the local newspaper approaches you? Think through all eventualities.
- A positive attitude
Are you yawning? I know, everyone says you need a positive attitude. But if I can get deep and philosophical for just a moment … you do need a positive attitude. You are about to be rejected by countless people. People will laugh at you. Others will sneer and scorn. Lots will refuse to answer your phone calls, and none will return them. People will be aggressive, adversarial, and downright rude.
The difference between your success and failure is a positive attitude. Every successful person I have ever met has a positive attitude. They’re optimistic. They know what they want, and they won’t let a few disappointments stand in their way. Stay positive. Over the years I’ve discovered that a negative personality in a business can very quickly destroy it.
I firmly believe you can never make a wrong decision. OK, you have a problem.
There are plenty of solutions you can use to deal with that problem, and you implement the option that you decide will be best. Let’s say it doesn’t work out. Does that mean it was the wrong decision? I’d say no.
It was a decision you tried. So it didn’t work out – try something else! And then, something else. Sooner or later you’ll find a solution to that problem. And the next time you have a problem like that, you’ll find the best solution even faster.
- Identify your goal.
- Plan to succeed.
- Maintain a positive attitude and believe in yourself!
Where To Next?
Now that we’ve covered the basics of why you’d want to freelance and what freelancing is all about, you’re probably wondering, “What’s next?”
Well, what’s next is the first section of this kit! It covers the information, advice, tips, and hints you’ll need to test the freelancing or small business waters. In Chapters 2 through 5, I’ll assume you’re taking your first steps as a freelancer. We’ll discuss the basics of understanding the marketplace, developing your professional image, getting out there, and finding your first Web development clients.
The second part of the kit will take you through the next stage of the small business life cycle – establishing your business. If you already have a freelance business up and running, or you manage your own small operation, skip forward to this section! In Chapters 6 through 9, we’ll explore the finer details of marketing, sales and client service. We look at how to take your fledgling Web development business and position it for
success in the longer term.
Part 3 of the kit deals with the day-to-day running of your freelance or small business. How will you ensure that projects are completed on time and on budget? What will you do when clients complain? And how will you grow your business over time? Chapters 10 through 12 will answer these questions and more.
Chapter 13 is where things really start to heat up! Together with subsequent chapters of this kit, it deals with growth, and answers the questions you might have about taking on staff, leasing office space, and financial planning for business expansion. We’ll cover everything from good leadership to briefing subcontractors in Chapters 12 through 14. If you have a mind to grow your small Web development business into a bustling agency, this section is for you.
We finish off the kit with some handy tools designed to put you in good stead for a successful business future. The final chapters of this kit, coupled with the appendices, contain tips, case studies, interviews, documentation, and resources that will see your Web development business thrive and flourish over the years ahead.
So, are you ready to jump in and start working towards (what I imagine is) your greatest life goal? Fantastic! Let’s do it!
/#l#/http://www.sitepoint.com/article/1200/#nlt#/Read Chapter 6 – Market Your Business/#enl#/.