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Your Attitude on Money
4:03Figuring out what to charge for your work is challenging, but Paul offers a list of business-related expenses that can help clarify your quote.
Another important aspect of running your own business
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and creating a lifestyle business is to tackle the issue of money
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and your attitude towards it.
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This is an important part of what we do.
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We don't talk openly enough about money.
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Now one of the biggest questions that all freelancers and web designers
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had to work for themselves ask me is how much should I charge?
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And to be honest, I can't answer that question for you.
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There's too many variables such as your location or your skills set,
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all the type of clients you work with.
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It's not something I can help you with but what I can tell you is that chances are
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you're probably charging too little.
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There are loads of things that we forget to consider
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when we set our charge out right .
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We have this notion in our heads that we'll be able to work everyday
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and charge out all of our time but it doesn't work like that.
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We're going to have loads of overheads that will also increase our costs.
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We've got sales and marketing time.
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Today is a big chunk of your time that's not going to be chargeable.
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Then of course there's admin and project management and things like that.
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Occasionally , you might even want to take a holiday perish the thought,
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and you're not going to get paid when you do that.
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What if you get sick? You've got to cover those cost as well.
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And then, of course there are taxes
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that we will have to pay whether we like it or not.
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You also need to consider what you're going to take out of the business.
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Your rates dictate how much goes into the business but what about your salary.
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A lot of freelancers and other web designers don't set themselves
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a specific salary but instead take money out of the business
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as they feel that the business can support it
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but I will encourage you give yourself a set salary.
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It will make budgeting and planning a lot easier
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but more than that, I think It sets a stronger separation
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between company finances and personal finances.
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You can get yourselves into all kinds of trouble
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if you just dip into the business whenever you feel like it.
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So have a set salary and then stick to that.
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Now, be fair about that salary and give yourself something reasonable
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otherwise what's the point of being a free lancer
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but try and be realistic as well.
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You need to be fair not just to yourself but also to your staff.
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And when it comes to staff, I would encourage you to reward early adopters.
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The first people that come and join you because that's quite a big risk
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for a lot of people to join a small company.
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So what we do is we tend to give them a good salary and we may also
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give them share options or things like that for the early joiners.
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But, you equally need to reward yourself because you're taking the risk
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as well as setting up your own business to make sure you give yourself
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a good salary as well as those first one or two employees.
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The other thing I encourage you to consider is bonuses.
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Although having a set salary is a great idea,
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if your business is doing particularly well,
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there's nothing wrong with rewarding yourself for that success
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and having good bonuses is a way of doing that.
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Not only should you be giving yourself good bonuses
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but you should also be considering this for any members or staff you take home.
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Reward them when things go well, make sure they benefit
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as much as you do from the success of your business.
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Also, even when things aren't going so well, if someone has gone
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above and beyond and worked really, really hard,
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then reward them in some way even if it's a quite low level.
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Finally and most importantly when it comes to money,
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don't starve your business of working capital.
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Yes, you want to pay yourself for good salary, yes, you want to give bonuses
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but make sure you always got a buffer behind you for those tough times.
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I would say if you can
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have as much as 6 months of salary behind you in the bank.
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That's not always feasible but it's something to work towards.
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