Freelance Does Not Equal Employee

As a freelancer, you’re often a price taker rather than maker. But that doesn’t mean you need to sell your soul to the lowest bid.

 

Earlier this week the trade union I’m a member of, the Media, Entertainment and Arts Alliance, released it’s recommended rates for freelancers. These aren’t law in the same way as minimum wages laws or award rates are in some jurisdictions. They’re indicative of the rates a freelance journalist ought to charge in order to make a decent living.

For writers, they suggest the following rates.

  • $911.00 per day
  • $607.00 per half day (based on charging 2/3 of the day rate)
  • $227.00 per hour
  • $925.00 for 1000 words or less (and then 93c per word)

The rates are similar for editors, proof-readers and photographers.

The assumption that these rates are based on “what a freelancer would need to charge to earn the same income as a mid-level journalist working on a metropolitan daily newspaper”. The mid-level journalist they have in mind gets paid about $70,000AUD per year. That includes super-annuation but I’ll work on the assumption that freelancers are contributing to their own super-annuation fund.

Let’s break that $70,000 down.

  • There are 365 days in year.
  • Weekends – 104 days
  • Public holidays – 10 days
  • Sick leave – 10 days
  • Annual leave – 20 days

That leaves 221 working days in the year making the mid-level journalist’s day rate $316.74

It’s not looking like the MEAA’s suggested rate of $911 per day is at all reasonable.

The MEAA also includes in their suggested rate “reasonable out-of-pocket expenses” such as travel costs, telephone, car mileage, fax costs (really – people still fax?). Even if I allow $800 per month for those things (that’s based on looking at my own expenses so I’ve added insurance and a few other bits and pieces) that’s only about $40 per working day.

I’ve written before about setting a pay rate. Advice like the MEAA’s rate card is useful but it needs to be tempered with reality. Even allowing that the real cost of a full-time employed is 1.5 times their salary (allowing for on costs such as a computer, etc), the MEAA’s rate suggests an annual salary of just over $200,000.

With all that said, I’m a self-employed contractor because I like being able to work flexible hours, dress in whatever I fee like much of the time, sneak out in the middle of the day for a tennis lesson, lunch or whatever I want. However, I expect those things to come at a price.

The MEAA’s rates aren’t realistic. You’re better off setting your own goals, working hard and enjoying life. If you can’t make it work as an independent freelancer (and it’s not for everyone) then perhaps the safe $70,000 per year job is what you want.

Five Time Management Basics

Development of time management skills is a key to freelance success.

20110508-223655.jpgI’ve been freelancing full-time for almost a year. Prior to that, I was working in an office job and fitting freelancing in around that work. By necessity, my time was tightly managed. However, when I went 100% freelance, my diary was far more flexible. That meant I had to develop a new level of discipline with time management.

Here are the five things I do to manage my time.

1. Workflow management

I’ve been using a self-developed workflow system using a program called Bento on my Mac. The neat thing is the system can be synchronized to my iPad and iPhone easily so I can record ideas, pitches, commissioned work, work in progress and submitted work.

Without this system, I’d lose track of my work as in a typical week I’d have several deadlines on the go at any one time.

2. My whiteboard

I have a small whiteboard (900 x 450mm) on my wall that lists the week’s deadlines, to do items (such as bills and invoices) and other stuff I need to keep track of. It’s a low-tech solution but it works to keep my focussed each day.

3. Set daily goals

Each work day I set targets. The nature of the targets varies depending on where I am in my work cycle. Sometimes it’s to conduct a certain number of interviews or write a number of words or submit a number of stories.

Daily goals are important. By setting small, achievable targets that are linked to deadlines and budgets it makes the somewhat daunting tasks of hitting monthly or annual earning goals mo achievable.

4. Mix it up

I know my personality pretty well and know that I need to vary my work otherwise I lose focus. So, I try not to fill consecutive days with the same work. If I have a full day of writing, I make sure my next day involves something different.

If it’s not practical because of pending deadlines then I try to introduce some diversity by planning work for different clients. If I have a day of writing about consumer tech, I make the next day about enterprise or management. That gets my brain working in different ways.

5. Schedule some fun

In order to get the most out of my work time I always slow for some social time during the work day. If I was in a 9 to 5 office I’d occasionally grab a coffee with a friend or chat in the lunch room. There’s no reason that has to stop just because I’m self-employed.

Each week, I plan to catch up with a couple of friends on the phone and go out for lunch with my wife. While those activities can cut into work time, they actually help me be more productive by keeping my brain fresh.

So, what do you do to get the most from your time?

Business plans, setting goals and getting things done

Setting a business plan sounds smart. Perhaps it’s not.

When you’re planning to make the change to being your own boss it’s tempting to spend a lot of time working out how to make the shift without actually making the shift. There’s a name for that – paralysis by analysis. I thought long and hard about making the change last year. I was coming off a 10 year stint at the same company and really needed to find something new to do. After close to 20 years working for other people I figured that I could either try going solo or die wondering.

A post at Freelance Folder talks about how freelancers don’t need Business Plans. I’ve never seen a business plan that bore any resemblance to reality. It’s typically a mix between guesswork and telling someone (usually a bank manager) what they want to hear. I prefer a different approach.

1. Set some financial goals

I suggest that you need to set three different types of goals; a break even goal (what you need to survive), a comfort goal (what you need to have some fun) and the BHAG – a big hairy audacious goal. This is the one that lets you take an overseas holiday with the family or buy a nice car or indulge in some other luxury item.

Set the goals and write them somewhere you can see them. I have them on my whiteboard.

2. Work out how much you need to earn per day to hit the financial goal

If you need to earn $104,000 per year to reach a goal you might think that’s $2000 per week or $400 per day. You’d be wrong. In Australia, full time employees are entitled to 10 paid sick days per year and four weeks of annual leave. So, instead of having 52 weeks to make your money, you have 46.

That means you need $2260 per week or $450 per day.

3. Try not to start out with no money or clients

This is the tough one. If you’ve been working full-time, there’s not much chance that you’ll have  full client roster that can pay all your bills on day one. That means you’ll either need a partner who can cover the bills or some money in the bank. While you might not be able to plan what will happen to your business in the first few months, you should at least plan to be able to eat.

4. Don’t blindly accept every job that comes your way

This is one of the tough ones. It might be tempting to accept every job that comes your way no matter how much it pays. Remember your daily earning goals and work to them. If a $200 job comes in and it’s going to take three days – you’ll want to consider whether it really worth accepting. By accepting low value jobs you’ll establish yourself as a low value product. However, if the $200 job comes in and you can do it in a couple of hours then that might be a good option.

Remember – while your clients will measure your value in words or images, you need to charge yourself out by your time.

How do you plan? Let me know in your comments.

5 tips for getting paid

The thrill of the job is great, but getting paid is what it’s all about

Manage your dollars

The thrill of the first job as a freelancer wears off pretty quickly if you’re not paid. In fact, all of the benefits of self-employment diminish when cashflow is slow or non-existent. Here are 5 tips for getting paid.

1. Don’t work for nothing – no matter what

Giving freebies isn’t a path to financial independence. When you work for free (volunteer, charitable work is the obvious exception), you’re telling the world what the value of your work is. Set a rate, agree woth the client and invoice promptly.

2. Value your work

When you work for a low rate, like the $25 per story things you see on many job boards these days, your resigning yourself to a life of hard labour, frustration and poverty. When you take a job for low pay you’re telling the client that’s what your work is worth.

3. Make sure the client knows you’re getting paid

Even if the client is a friend, make sure that they know you’re not working for free. It’s better to be frank and open about the pay rate and timing than to get into a nasty argument later.

4. Make your invoice crystal clear

How do you expect to be paid if the client can’t work out where to send the money? Make sure that your invoice clearly

  • shows your company name
  • the services you’ve provided and the price
  • all of the legal tax stuff you need to include. In Australian this means having the words “Tax Invoice” printed on the invoice as well as your ABN
  • payment details including bank account details, Paypal address (if you use it), due date and contact details in case there’s a problem

5. Ask and ye shall receive

Surely you don’t expect the money to magically appear in your account on the due date every time. It might not be easy but get used to asking to be paid when the due date passes. That means keeping good records, setting reminders and learning how to be firm but polite.

A bonus tip

If you still find you have a client that refuses to pay either through neglect or because they hope you’ll forget then have an escalation process in mind. Mine is to use my union. They have a debt collection service that I can use for no extra charge or commission.
What are your tips for getting paid in full and on time? Do you use a discounting system or some sort of incentive? Is there some trick you’ve found works for you?

Contracts – defining the scope of work

It’s amazing but so often I hear of freelancers who end up in dispute with clients over what seems to be obvious – neither party understood what the other understood the work to be. In today’s instalment on freelance contracts I’m going to be short and sweet.

As a freelancer – before you agree to a job make sure you understand what the client expects.

That may sound like a statement of the bleeding obvious. In project management speak it’s called defining the scope. But it also involves creating an agreed process for managing scope changes. It’s often the case that as you show a client progress on a job that they’ll get ideas for different or improved features. That’s OK but you need to firmly, but politely, let the client know when those extras will

a. affect your ability to deliver the agreed work on time; and

b. cause you to incur unplanned costs.

Define the work

I’ll use the example of a writing project I did recently for a corporate client. The job was to write a case study about one of my client’s clients and their business partner. Here’s how I defined the scope

1. How many people was I expected to interview?

2. How many words did I have to write?

3. Did I have to fit into a particular corporate template?

4. Did I need to source supporting images?

5. How long did I think the task would take (and therefore what would I bill my client)?

6. What were the deliverables? Were drafts expected along the way?

Now, that’s a fairly simple example but it covers what services I was offering, what the client was getting and a timeline for milestones and final delivery. If you can get these things right then you’ve gone a long way to also creating a payment schedule.

It also means that if the client, after reading a first draft realises that I need to interview another subject then I can estimate how much extra time that will take and, if required, adjust my quote. We can then discuss it and  I’m not left feeling like the client is screwing me and the client doesn’t suffer from bill shock.

Defining the scope of a complex piece of work can sometimes take as long as the actual work. However, without a good plan you’ll never really know if you’ve reached the right destination.