In this issue of Ask FreelanceSwitch, we look at getting back into working and overhead. Ask FreelanceSwitch is a regular column here that allows us to help beginners get a grip on freelancing. If you have a question about freelancing that you want answered, send an email to askfreelanceswitch@gmail.com.
Question 1
I’ve stayed home for the last 10 years raising my boys. Picked up a few projects and have done volunteer work. How should I charge for my work? Where I left off? My portfolio is not very strong, but my work ethic is. I’m trying to catch back up.
With a ten year break in your freelancing career, it can be tough to get back into the swing of things. You’ll feel like you need to catch up with freelancers who were working throughout that whole period and the fact of the matter is that you can’t. Your freelancing career will look very different than other peoples’ and that’s perfectly fine.
Without an in-depth portfolio, you’re somewhat starting from scratch here. That means that you’ve got an opportunity that most freelancers who have been working for awhile don’t: you can take a look at different opportunities to focus your work and build the best portfolio you can from the ground up. If, for instance, you want to write copy for restaurant websites, you can target your portfolio specifically to that niche.
You will have to sink some time into building a great portfolio and building up your client list. But since you do have more experience than a freelancer starting from the absolute beginning, you likely will be able to raise your rates fairly quickly.
Question 2
I really enjoy your posts and information for us fellow freelancers. I have a rather interesting question on overhead that I think may be worth exploring.
I am beginning to get super busy with regular ongoing clients (an ad agency commission) and am looking to expand with a new employee, equipment, and an executive suite up the road. What is the best way to determining if I can afford it and will it be alright with my income per month. Also, is there a known figure for a safety net for overhead (i.e. 20% of revenue) for creative professionals? I don’t want to spread myself thin because I think I can afford it but in result I am not allowing for enough profit each month. What are your thoughts?
One technique that could make it easier to decide on whether you can afford each part of your expansion is to set aside the money now: by saving up the amount that you would need to pay an employee for a month, you can immediately tell how difficult that proposition will be.
If it’s tough but feasible when you aren’t getting the benefit of that employee’s work, you’re on the right track. But if it is impossible to get anywhere near paying for that new employee without going out and landing work for that employee to do, you may not be ready yet. After all, there’s always a chance a gig will fall through, or you’ll have a slow month, and you need to be sure that you can pay an employee even then.
In my experience, there isn’t a set number that makes sense as a safety net for every freelancer. The simple truth is that not only do we have different needs in terms of money, but we also are willing to accept different levels of risk. For example, a college student freelancing on the side and still getting the occasional check from his parents can run a much narrower margin than a mom freelancing to pay her own bills and those of her children. Choosing how much to set aside is a matter of preference.
That said, I don’t actually maintain a percentage-based safety net. My approach is to keep enough money in a savings account to cover the next month’s business bills, no matter what I’ve got coming up in the next thirty days. This is above and beyond saving for new hardware or my personal savings. This is just a cushion for my business.
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