Very few people will ever achieve their greatest life goals. How many people do you know who have achieved their dream?
People fail to achieve their goals for many reasons, but the most common explanation is that we simply don’t try. Why not? Trial naturally involves the risk of failure. A lot of people believe it’s safer never to try; that way, they’ll never fail.
The same can be said for taking the plunge into business, doing it on your own. Who doesn’t long to be their own boss, but feel safer with the devil they know? Throughout the course of this kit, you’ll often be prompted into action, to try. After all, you’ll need to have a shot, to take risks, if you’re ever to escape wage slavery.
In The Web Design Business Kit 2.0, from which this chapter is excerpted, I’ll show you how to start, build, and expand your own freelance or small web business. We’ll meet some interesting characters by way of anecdote, and, at times, deal with less-than-glamorous topics — unless you’re someone who finds breakeven analyses glamorous! You can download this chapter — along with three others — for offline reference.
Now, you can simply read this information, absorb it, and mull it over, or you can take action — immediate action — while it’s still fresh and inspiring. Many people will simply read it and pop it on their bookshelf. But others, like the steady stream of people I’ve had email me over the years to thank me for writing the first edition of kit, will implement what they’ve learned and reap the rewards.
Here’s one of the first notes of feedback I received about the kit when it was published in 2003:
Example 1.1. First Edition Feedback
“You wouldn’t believe the impact The Web Design Business Kit had on our business. The first month we had the kit, our business income was double what we’ve made at any time in the last three years of business. We achieved this success by simply implementing a few of the business strategies on pricing, presentation, and follow-up we read in the kit.”
The key point of that snippet of feedback is the simple implementation of a few of the business strategies. It really is all about simply implementing, so don’t just read this kit, put it away, and gradually forget about it. Write notes to yourself as you go through the chapters. Detail how you can apply the lessons I’ve learnt to what you do. Most of all, put the ideas into practice — action will lead to success. There’s no time like the present to ramp up your business, and this kit will be there to help you each step of the way.
You’d like to be one of the special few of the population to achieve your life’s greatest goals? Carpe diem! Let’s make a start.
Why Be your Own Boss, Anyway?
Just why are you starting out on your own? Think about this question: your answer is important.
Why do you even work? All we really need is a couple of decent meals a day and some shelter, and we’ll be just fine. Why, then, do many of us put in long, hard hours trying to build a business? Is it to have a bigger house, a better car, and more jewelry than the Joneses? If you answered “Yes,” then that’s fine. Is it to save for the future so you can enjoy a nice lifestyle one day? 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. You’ll also have that bit of extra motivation to get you through the tough times — and tough times come to us all as we struggle to bring the cash in the door.
So, what is success?
Defining Success and Failure
I have a friend who runs a small Internet business that sells one product. He spends an hour a day on his business. Sometimes he misses a day … or three. He basically works whenever he wants. He lives in a modest two-bedroom unit about 50 meters from the beach. He plays golf three times a week, and enjoys a long, leisurely lunch on Fridays. He takes himself off to sporting events whenever he feels like it, 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 35 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, but he 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 web sites. I start work at about 8.30 each morning, and finish at midday. I then go to my local pool and swim a mile or two, after which I go for a run or a bike ride. I might then spend an hour at my local beachside cafÃ© thinking through a few business ideas that we might have on the go.
Am I successful?
These are three very different businesses. Each business owner leads a very different lifestyle. So, just what is success?
Success is whatever you want it to be. Yes, that’s a thoroughgoing clichÃ©. But, like all cliches, it became a cliche via its essential truth.
When I was a young fellow of 21, my ambition was to make a million dollars by the time I was 30. Then I hit some tough times where I struggled to pay the bills and put food on the table. All of a sudden, my definition of success went from earning millions to simply being able to feed my family. Now that I’m older (and, hopefully, a little wiser), my definition of success has shifted. I still run my own business — I have for over a decade — and with large numbers of small businesses folding within their fledgling years, I think that means I’m successful at what I do. 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 call him 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 merely financial surplus, though. This is an important distinction to make: it might be your definition of success, but it doesn’t have to be. If you’re currently stuck in a boring, low-paid job that takes an hour’s drive to reach each morning, then running a freelance web development business from your spare bedroom that provides you with the exact same income 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 seem a bigger deal, but then that comes with its own issues, too.
Remember that only a tiny fraction of the population will achieve their dreams and major goals in their lives. Many people just hang around waiting for success to come along and smack them in the face. Well, it’s so unlikely to happen as to be out of the question. You have to get out there and grab life, reach for success. No one else will do it for you — it’s completely up to you!
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 biggest prize. Right?
Er, no, actually. It means nothing of the sort.
Let’s banish this first misconception 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 abilities that dictates whether you sink or swim as a freelancer — and even then, they’re not the sole key to your success.
The best designer I’ve met in ten years of doing web development went out of business recently because he couldn’t generate enough profit to keep the business afloat. He told me a few months later that he’d analyzed his profit for the previous two years and found that he’d been working for less than $5.00 per hour. It so happened that I subsequently picked up one of this designer’s old clients, who said to me, “I can’t believe how cheap they were and I can’t believe how slow they were at asking for payment.” We recently redeveloped the client’s site and charged five times what that great designer had charged — and the client didn’t bat an eyelid.
You see, it’s not enough to be a great programmer or designer or whatever — there’s a lot more to it than that. 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 businessperson on the planet — the business of selling!
Realizing that you’re 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 are you in business?”
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 exists to help your clients make more money. That’s the only thing you must be thinking about. The sites you design and the solutions you build must have a single aim — to help your clients to prosper.
They might accomplish this aim with your help 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. If you don’t help your client make more money, then they won’t want to work with you.
This is the first realization you must make to survive as a freelance web designer or developer. Let’s look at some others.
Freelance 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 owning the small business. 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 a $200-an-hour profit … and you don’t even have to be in the office!
But which is the option for you?
Both freelancing and running a business have established reputations for being unstable forms of employment. Conventional wisdom suggests that in your own business, the rug can be pulled out from under you at the drop of a hat. Actually, I’m of the opinion that working for yourself is the most stable of all forms of employment.
I’d even 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. What happens when the board discovers there’s not enough money in the coffers to give the management team a million-dollar bonus each? It’s no problem! They just cut 500 jobs and pay the bonuses from the money they’ve “saved.”
A friend of mine recently made the move into his own business from the corporate world. He looks upon this business as being far more stable than having a job. Why? Well, he sees that if one of his clients fires him, he has lost just a small amount of business, and, as he’s very busy, it really doesn’t matter. If he’d been fired from his previous life as the corporate money-man, it would’ve meant an end to his entire income.
Life as your own boss is unpredictable, it’s true. That’s the best and worst aspect of it. There’s total authority to make decisions, but no one else to take the blame if everything goes down the toilet.
In a sense, especially as a freelancer, your time’s your own. It’s true that you can take vacations when you want, nod off when you want, and start work when you want. Life wasn’t meant to be easy, though — it can be a struggle to survive as a freelancer, and you can rest assured you’ll find yourself working some long, hard hours. Sometimes those vacations are determined by the work you have to do unexpectedly, and it can be difficult to plan ahead. But as you work these hours and postpone those vacations, you’ll come to recognize that the skills you’re using are salable. Now that’s the exciting bit.
It’s not all merrily working and counting the money when you’re running a small business, either. 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, office-space rent … you get the idea. Suddenly that $40-an-hour profit for each employee is dwindling down to not so much.
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. I actually had my photo taken with the first-ever check I received from a client, and yes, I can still remember its amount and whom it was from! Be aware that, although it will be hard work, the rewards — not only in monetary terms — can be great.
Stepping Out on your Own
As a marketing consultant for a few years, I looked at a huge range of businesses — 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 also heard many people make exactly that same argument about any other industry. And I’ve heard many people talk about “now” not being the right time to build a successful business.
However, I’ve seen businesspeople succeed in recessions. I’ve seen businesspeople succeed with Internet businesses. I’ve seen businesspeople succeed in all sorts of other very competitive industries. The reason for this is simple: these people would succeed anywhere, with any venture. They put systems in place, they react to market changes faster, they sell better, and they manage more effectively; they do everything better than their competition.
You can succeed in any place, at any time. Run your business the right way, and you can’t possibly fail.
So, where do you start with your business? Most people would answer “start at the beginning,” but I’d like to offer you my own philosophy. You should 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 30 years, and hand it over to your children, plan accordingly. If your exit strategy to build the business up and sell it in five years, when you’re grossing $1 million annually, you’ll need a different plan.
Plan your business very carefully — don’t just cruise along, hoping for the best.
Identifying 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 outcome, estimate the value of sales you’ll need to make each year. Your sales figures might need to look something like this:
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 slightly over $4,500 per week. For a talented web designer, that might mean attracting just one new client per week.
That’s easy to do — we’ll be running through the best ways to attract new clients a little later in Chapter 5, Pitch, Quote, and Win your First Client.
Planning 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, web site maintenance, and marketing) from all these clients — another $1,000 per month.
Expenses and Eventualities
Next, take a look at what you’ll need in order to take on one new client a week: a telephone, business literature such as letterhead and business cards, a reliable computer, a table and chair, maybe some support staff.
Note all these requirements down, and spread the costs over 12 months. Spreading them evenly is fine, or you can spread them according to the way you think the costs might be incurred. Repeat the same exercise to forecast the way you think your income might be generated.
Now, consider as many eventualities as you can, short of Earth-threatening meteors and species-jumping avian influenza. What if your computer is stolen? That would be … annoying. Insurance, don’t forget insurance. Don’t forget to organise backup of all of your files offsite, whether you use an online service or simply burn to a CD and take it home. 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 to whom you can outsource the work. Keep thinking. What other eventualities do you need to cover? Listen to other people, and the problems they’ve experienced, to help you predict the unpredictable.
Keep developing solutions for all these scenarios, and soon you’ll have a top-quality plan of attack: a weapon the vast majority of businesses don’t have.
Forming 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 right time to buy the new color photocopier, the latest and greatest fax, or plush red office furniture. No new car, no new cell phone, no huge office space with city views. Don’t spend money on things that don’t help generate money. Buying this kit was a wise investment; signing a three-year lease on a 200-square-meter office when you’re just starting out, is not.
You need to focus on survival — and that means running the business with as much frugality as possible.
Saving on Equipment
Maybe, just maybe, you can’t keep running down to your local post office to use the fax machine, or borrow your brother-in-law’s, and you actually have to buy your own. If you’re rushing out to buy that 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 and slap yourself. You’re wasting money!
You’ll have to work hard in the early stages of your business to bring cash in the door — don’t throw it straight out the window on stuff you don’t need. It might be exciting setting up your new business, but do not let it go to your head. 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 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 austerity simply doesn’t matter in the long run, and that a clicking, flashing, and beeping fax machine will impress clients. Understand that the fax machine really isn’t the point. It’s your outlook and attitude that is the crucial element. Save a few hundred here, another hundred there, a couple of dollars over there … and before you know it, you’ll have the mentality of a businessperson intent on keeping expenditure tight and cashflow positive.
In the end, that can be the difference between success and failure.
Don’t worry — I’ve fallen into the trap of buying expensive gadgets for the business I didn’t really need. It was only after a few years, when I’d gained some confidence in what I was doing, that I relaxed about needing to keep up with everyone else and stopped buying stuff I didn’t really need.
Saving on Office Space
Now, just where will that secondhand but perfectly functional 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 favor, and having to produce thousands of dollars 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. 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” — acquaint yourself with the power of answering services. Your clients need never know.
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. 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 comprised simply me working from my bedroom. 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.
The other aspect is that larger firms (and they’re the ones with the bigger budgets for web development) felt far more comfortable in dealing with a business with offices, staff, and a higher profile. Having said all that, I don’t advocate signing a five-year office lease — I suggest you start off slowly. When I finally moved into an office, 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!
Innovating and Making Do
My offices do not contain a single stick of new furniture. All of the six desks 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 secondhand, and cost $180 in total. The boardroom chairs are my old dining-room chairs.
Remember that success is whatever you want it to be.
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’s obviously not what we want. That’s one of the reasons most businesses fail — and you’re not going to fail.
Finding Good Advice
In the great Internet boom of 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 30 years’ experience under your belt? No, of course not. That would make life dull, and you’d be ancient before you had the chance to enjoy the fruits of your success. What you need is good advice from others who already have that experience, which will set you up well to go forward without a whole lot of your own — even if it doesn’t convince your bank manager!
There are plenty of people and places you can go to for good advice. Let’s take a look at what’s on offer in building a team of trusted professionals, how far to trust them, and in which areas to trust them. With a combination of all these resources, you’ll be able to build some excellent advice for how to run your business.
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. The accountant you choose to work with 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. Recommendations from other business owners are a good way to find the right accountant, so ask around those you know.
First of all, bankers are never the best source of financial advice. They have a vested interest in selling you their own products, so their advice is always likely to be biased and not necessarily in your best interests. Knowing that, you can still approach a banker for some advice.
While bankers often have almost no real business experience, they have seen many people fail in business. This is where they can come in very handy — they can usually see the warning signs of a troubled business, and may be able to warn you in advance. Many banks offer small business advisory services.
Solicitors are an excellent source of legal advice. Take their experience and opinions into account, but always remember that any final decisions are yours.
That said, try to gain a handle on all your own 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 and Relatives
Friends are great for friendship, relatives are there to care; both are usually an unreliable source of business advice. Friends and relatives will tell you what you want to hear, believing their role is to offer encouragement, no matter how inadvisable your venture or crazy your scheme. By the same token, you’ll have well-meaning friends and relatives who are fearful for your sake; they can be discouraging about your perfectly sound business ambitions.
Unless you know them to be objective and knowledgeable about your area of business, don’t confuse sound friends with being sound businesspeople. Borrow their fax machines, not their advice.
I’m not talking about major business leaders here; I’m talking about the woman 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 quite a harsh business world.
One of the most useful things I do is have a brunch every Thursday with five other small business owners. 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 gain different perspectives on the issues we face.
That’s the sort of advice you need — non-biased and based on real-life experience.
Arming yourself for Success
There’s a daunting percentage often trotted out when the failure rate of new small businesses comes up in discussion: it suggests that 80% of small businesses crash and burn within their first five years. While the origin of this finding is unknown and seems to be an exaggeration designed to dissuade the faint-hearted from taking the plunge into business, there is certainly a large number of small businesses that fail in their first few years. What makes you think you’ll succeed? Well, it’s simple. You’ll succeed because you’re going to be armed with several weapons that unfortunate contingent won’t be:
The vast majority of successful people have specific goals. Your goal must be achievable, and you must wholeheartedly believe that you can reach it.
I don’t mean some vague little generalization written like a prayer on your office whiteboard — I mean a detailed plan that covers everything. Who’s doing your accounting, and what package will you use? Exactly how will you market your offering? What if a client decides to sue you? 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, I know; having a positive attitude has become a truism and a new-age mantra. But if you’ll allow me to be deep and philosophical for just a moment, you do need a positive attitude.
You are about to be rejected by countless people. Some will laugh at you; others will sneer and scorn. Many people will refuse to take your phone calls, and few will return them. People will be aggressive, adversarial, and downright rude, but you must stay positive. A positive attitude is the difference between your success and failure.
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. 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. Okay, you’ll come up against problems. There are plenty of solutions you can use to deal with those problems as they occur, and you implement the option that you decide will be best.
Let’s say that option doesn’t work out. Does that mean it was the wrong decision? No — it was a solution 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. The next time you have a problem like that one, you’ll find the best solution even faster.
I read a few years ago the big differences between the successful entrepreneur and the not-so-successful one: the successful ones don’t care what others think of them, and they can’t really imagine themselves failing. This indicates to me that fear of failure, and the resulting stigma attached to that failure, is the main barrier holding most people back from achieving their dreams.
You have to believe in yourself. You can do this. There’s no doubt about it.
We’ve seen that a tiny minority of people have the self-belief and motivation to take the plunge and say goodbye to their unfulfilling wage slavery. You can take control of your destiny. You just need a little help along the way, and that’s what this kit will provide.
We’ve questioned the definition of success, and found that it means something very different to different people. What the notion of success means to you — and the way you run your business and to what end — is entirely up to you.
We’ve looked at the differences between freelancing by yourself and setting up your own business to employ other people. We’ve seen that ability and talent is only part of the story. You need to put other skills into action, not least sense, forethought, planning, and the ability to sell.
In running your own business, a sensible approach and the right mindset is key, no matter how excited you are to be your own boss. Gathering a team of assorted professionals about you is vital for gleaning the necessary advice from their differing experiences. Finally, you need to define your business strategy by beginning at the ending: planning your exit.
Now that we’ve covered the basics of why you’d want to freelance and what freelancing is all about, the following chapter covers the information, advice, tips, and hints you’ll need to test the freelancing or small business waters. So, are you ready to jump in and start working towards your greatest life goal? Fantastic! Let’s make a start and get you where you want to be.
First, you’ll need to download this chapter — along with three others — for offline reference, and if you’re interested to see what else the kit offers, take a look at the Table of Contents. But ultimately, to get the most out of your small business, you’ll need your own copy of The Web Design Business Kit 2.0.