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Your Attitude on Money4:03 with Paul Boag
Figuring 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 0:00 and creating a lifestyle business is to tackle the issue of money 0:03 and your attitude towards it. 0:08 This is an important part of what we do. 0:10 We don't talk openly enough about money. 0:12 Now one of the biggest questions that all freelancers and web designers 0:15 had to work for themselves ask me is how much should I charge? 0:19 And to be honest, I can't answer that question for you. 0:24 There's too many variables such as your location or your skills set, 0:27 all the type of clients you work with. 0:30 It's not something I can help you with but what I can tell you is that chances are 0:32 you're probably charging too little. 0:38 There are loads of things that we forget to consider 0:40 when we set our charge out right . 0:44 We have this notion in our heads that we'll be able to work everyday 0:46 and charge out all of our time but it doesn't work like that. 0:52 We're going to have loads of overheads that will also increase our costs. 0:56 We've got sales and marketing time. 1:00 Today is a big chunk of your time that's not going to be chargeable. 1:02 Then of course there's admin and project management and things like that. 1:06 Occasionally , you might even want to take a holiday perish the thought, 1:09 and you're not going to get paid when you do that. 1:12 What if you get sick? You've got to cover those cost as well. 1:14 And then, of course there are taxes 1:18 that we will have to pay whether we like it or not. 1:20 You also need to consider what you're going to take out of the business. 1:23 Your rates dictate how much goes into the business but what about your salary. 1:28 A lot of freelancers and other web designers don't set themselves 1:33 a specific salary but instead take money out of the business 1:40 as they feel that the business can support it 1:44 but I will encourage you give yourself a set salary. 1:47 It will make budgeting and planning a lot easier 1:50 but more than that, I think It sets a stronger separation 1:53 between company finances and personal finances. 1:57 You can get yourselves into all kinds of trouble 2:00 if you just dip into the business whenever you feel like it. 2:02 So have a set salary and then stick to that. 2:06 Now, be fair about that salary and give yourself something reasonable 2:09 otherwise what's the point of being a free lancer 2:13 but try and be realistic as well. 2:16 You need to be fair not just to yourself but also to your staff. 2:19 And when it comes to staff, I would encourage you to reward early adopters. 2:24 The first people that come and join you because that's quite a big risk 2:28 for a lot of people to join a small company. 2:32 So what we do is we tend to give them a good salary and we may also 2:35 give them share options or things like that for the early joiners. 2:39 But, you equally need to reward yourself because you're taking the risk 2:45 as well as setting up your own business to make sure you give yourself 2:49 a good salary as well as those first one or two employees. 2:53 The other thing I encourage you to consider is bonuses. 2:57 Although having a set salary is a great idea, 3:00 if your business is doing particularly well, 3:03 there's nothing wrong with rewarding yourself for that success 3:05 and having good bonuses is a way of doing that. 3:09 Not only should you be giving yourself good bonuses 3:12 but you should also be considering this for any members or staff you take home. 3:15 Reward them when things go well, make sure they benefit 3:19 as much as you do from the success of your business. 3:23 Also, even when things aren't going so well, if someone has gone 3:26 above and beyond and worked really, really hard, 3:31 then reward them in some way even if it's a quite low level. 3:34 Finally and most importantly when it comes to money, 3:38 don't starve your business of working capital. 3:41 Yes, you want to pay yourself for good salary, yes, you want to give bonuses 3:44 but make sure you always got a buffer behind you for those tough times. 3:48 I would say if you can 3:53 have as much as 6 months of salary behind you in the bank. 3:55 That's not always feasible but it's something to work towards. 3:59
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