Lessons learnt from my second year in business
My business has been two years on the go this month. How cool is that, right? It’s exciting to see my “baby” growing up year after year, and it’s also great to see my own growth as a professional and sole-entrepreneur.
Constantly learning is one of the best things about running your own business. Quite often, you have no one to teach you how things have to be done; the only way to know is by trying. Sometimes you succeed, sometimes you fail, but there is something you always do, and that’s learn.
Last year I wrote this other post on the lessons I learned after surviving my first year as a freelancer. In today’s post, I’m sharing three more valuable lessons that this second year has taught me.
Lesson 1 | The value of time
I didn’t learn this lesson until my second year in business, probably because my first year wasn’t as busy. But half way through my second year I started a waiting list, with clients requiring to book their projects 3-4 months in advance.
Looking back at my days in the corporate world, time wasn’t so precious. I had to be in the office from 9 to 5. Time wasted on the phone, emails or unnecessary meetings wasn’t a big deal.
Now, as a freelance designer, every minute counts. Time spent on anything that doesn’t generate revenue is costing you money.
Companies have different teams to look after many different areas of the business: IT, accounting, marketing, operations… But freelancers are all in one. We have to look after clients, IT issues, website updates, bookkeeping, etc, and these tasks don’t generate any revenue.
In my typical week, there are usually 3 types of tasks:
- the ones that generate direct revenue, i.e. client work
- the ones that hopefully will generate revenue indirectly, i.e. marketing, advertising, networking, etc
- the ones that don’t generate revenue but are necessary for the business: accounting, invoicing, office maintenance
Reducing the amount of time spent in the third group of tasks – the ones that don’t bring revenue - means that I can dedicate more time to work with clients and build profit.
For me, managing my time effectively means to find the right balance between billable and non-billable work every week. For example, spending 1 hr a week on invoicing can be necessary, but spending 3 hr could be time that my business cannot afford.
An activity book – or time sheet - helps me plan in advance the right amount of time I can afford to spend on each group of tasks along the week and track hours to ensure I stick to the plan. My typical week is split like this:
50% Client work
30% Marketing and blogging
10% Business development and client care
5% Self development
3% Accounting and invoicing
2% Business management and planning
You can download my activity book template below (in Microsoft Excel)
Time and money spent in marketing and promotional tasks are a gamble. If these activities don’t generate new leads, opportunities or sales, they are also a waste. Here is when conversion rates become critical.
Takeaway: Plan your time ahead each week and make sure you minimise the number of hours spent on non-billable tasks by automatizing processes with the help of templates, software and other online tools.
In this other post, you can find a list of tools that I use in my business to save time and work more efficiently.
Lesson 2 | The importance of having a process
In my first year, I didn’t have a standardised process to work with clients. I used to set-up a process after meeting the client and understanding their specific needs. But that tailored approach had more disadvantages than benefits.
Now I have streamlined my process to work with clients.
For my website design projects, I’ve defined a single work process with 8 stages. Each stage is broken down into small steps to be completed by either the client, a third party or myself. A deadline is also assigned to every step to ensure that the project is completed on time and doesn’t cause delays in other projects.
As described in this other post on How To Streamline Your Process To Impress Your Clients I’ve also set up a communications process for every project to deliver a great client experience.
Having a pre-defined process to work with clients has many advantages:
Project management efficiency - After having gone through the same process many times I know it by heart. Every new project is easier to manage, I can complete tasks quicker and minimise errors. Deadlines are also easier to meet.
Clarity and trust - My process is easy to explain and simple to understand by clients. They know what to expect from working with me since day 1. They trust my expertise.
Accuracy - By knowing the amount of time that I need to complete every task and possible issues that I could find along the way, I can calculate how many hours every project requires and quote accordingly, avoiding nasty surprises in the final invoice.
Consistency - Every client receives the same service, the same value for money and the same dedication and attention, creating a consistent experience for anyone who works with me.
Having a streamlined process, plus the help of a project management tool which is Freedcamp, allows me to take 5 or 6 projects on a time (I used to take 1 or 2 in my first year) increasing my monthly revenue and managing projects more efficiently.
Takeaway: a clear and well-defined process can set you apart from your competition in the over-saturated design industry and make your clients fall in love with your work.
Lesson 3 | The freelance income roller coaster
Did I say how much I miss my steady paycheck from my old job? I think I’ve said this a few times already, but I’ll say it again: I miss the days when I used to know how much money I’d have in my bank account at the end of the month. Now, my monthly income is quite unpredictable.
The freelance work usually comes inconsistently. You can go from being overcapacity to have several months with no new projects or leads. These months can become quite stressful and put a lot of pressure on the family finances.
Bringing revenue as often and consistently as possible is one of the biggest challenges that any small business owner has to face. In this other post, I’m sharing some tips to build a more consistent income when you are a freelancer.
To not only depend on client’s work, I’ve diversified my offer by selling digital products. But here is another common problem of making money online: digital products have a very short life.
Starting a new business has never been easier. Amazon, Etsy, Kickstarter, etc make it possible to start selling online with no inventory, no investment and no overhead costs. Selling online is a great source of passive income for many small businesses.
But everyone knows that. If you’re making a quick profit selling something online, chances are that many others will soon replicate your idea taking a piece of your pie.
Sources of income come and go quickly. Seeing some of my ideas growing up and slowing down as fast as the speed of sound has developed a need to be constantly rethinking my business, measuring results and implementing new ways to make a profit and grow within my niche.
Takeaway: Any self-employed designer goes through times where work slows. Managing finances during the ups and downs is vital for your business to survive.
Are you considering taking the leap into the freelance life? There are so many things I can share with you! Join my 6 weeks creative business ecourse and let me tell you the secrets to becoming a successful sole-entrepreneur.
