Thursday August 4, 2005
Author: Garrett Dimon
It seems like everybody is or wants to be a freelance web
developer. Of course, this makes sense because it enables such a
glorious and carefree lifestyle. Rather, that’s what
everybody envisions.
Unfortunately, it’s not as easy as creating a web
site and cashing checks. There’s a lot more to running a
business that isn’t sexy or fun. Parts of owning your own
business are downright boring, tedious, and expensive.
I thought it might help if I pulled together the less
glamorous aspects of “going solo” as I’ve
come to call it to help others have realistic expectations. Hopefully
being aware of these often overlooked matters, and some mistakes I made
personally, can help you create a more successful plan before you take
the plunge.
Money, Accounting, and Taxes
Your costs will be cheaper than running a large business, but
office space, taxes, computers, internet access, health insurance,
office equipment, and legal fees can be costly surprises to your bottom
line if you don’t plan ahead.
Pricing
This is one of the most challenging aspects of running your
own freelance web development business. You can’t calculate
your salary alone. You have to factor in all of the above expenses as
well in order to determine how much you need to charge.
Hidden Time
Accounting, collection, taxes, sales, contracts, and
networking are all very necessary for successfully running a business.
And, not surprisingly, they take away from your development time. You
can easily spend 25% of any given day, if not every day, taking care of
these aspects.
Business Development
This is an extension of hidden time that deserves its own
section. This includes updating your skills, making an entry on your
company blog, attending a conference, and updating your web site, or
learning a new skill. They are all necessary, and require additional
time.
Sales
When you’re working for a large company,
it’s easy to be idealistic about sales. On your own though,
chasing down leads, writing proposals, contracts, and statements of
work can be extremely time consuming. Don’t take sales for
granted. It’s one of the hardest parts about running a
business.
Health Insurance
It’s easy to overlook the cost of insurance. What
many people aren’t aware of is that for every dollar you pay
towards insurance, your company could be paying another 5 to 10 times
that amount for you. When you go solo, that means you can expect your
insurance costs to go up dramatically. If you have a family, this can
be even more of a concern. Of course, you could always gamble and go
without insurance, but if you’re the type that likes the
security, you could be in for a shocking dollar amount when
you’re footing the whole bill.
Your Health
When you’re the only employee, there’s
more to be lost when you’re out for a day. Nobody else can
cover for you, and anything could go wrong. Staying healthy becomes
much more important than if you’re working for the man.
Legal
As much as I hate this kind of stuff, good legal documents are
necessary. They may never come into play, but having a good signed
contract is part of running a professional business. Again, they
aren’t cheap, and planning is what matters here.
Personal Time
This was my biggest weakness during my 2 years on my own. When
running your own business, it succeeds or fails based on your efforts
alone. From my point of view, that meant that any moment not spent
working, was money lost. I learned the hard way just how wrong I was.
Make sure to take time for yourself, this makes you much more
productive in the long run.
Focus
With all of these other aspects of the business needing your
attention, it’s very easy to run out of time for billable
work. As such, staying focused becomes incredibly important. So balance
that personal time with focus on your goals.
Organization & Time Management
In addition to focus, all of these tasks can quickly overwhelm
you if you’re not organized. Figuring out a system that works
for you, putting it in place, and sticking to it is of the utomost
importance. I was so focused on billable work during my time, that I
had a mess of bookkeeping by the end of the first year.
That’s one mistake I’ll never make again.
Resources
Running a business requires effort. Lots of it. While these
resources may not make it painless, they can help make things a little
easier.
- Basecamp
– Probably not news to you, but an invaluable resource.
- Blinksale
– This shouldn’t be news either, but I definitely
wish I had it a couple of years ago.
- Budget
Design by Sinelogic – A great PDF on how to
successfully execute on low budget projects.
- Inc.com
– Great articles on running a one-person business.
- SitePoint
– An incredible amount of advice regarding the business side
of web development.
Summary
This is just a little bit from my experience. It’s
not meant to deter anyone from going out on their own. However, with
more and more big names going out to start a business, I thought it
might be beneficial for others to be aware and temper action with
wisdom. Feel free to take advantage of my lessons to start your
business a little more prepared than I was.
Source: http://www.garrettdimon.com/archives/about-going-solo
