1 00:00:00,000 --> 00:00:03,860 Another important aspect of running your own business 2 00:00:03,860 --> 00:00:08,000 and creating a lifestyle business is to tackle the issue of money 3 00:00:08,000 --> 00:00:10,190 and your attitude towards it. 4 00:00:10,190 --> 00:00:12,440 This is an important part of what we do. 5 00:00:12,440 --> 00:00:15,090 We don't talk openly enough about money. 6 00:00:15,090 --> 00:00:19,720 Now one of the biggest questions that all freelancers and web designers 7 00:00:19,720 --> 00:00:24,070 had to work for themselves ask me is how much should I charge? 8 00:00:24,070 --> 00:00:27,110 And to be honest, I can't answer that question for you. 9 00:00:27,110 --> 00:00:30,730 There's too many variables such as your location or your skills set, 10 00:00:30,730 --> 00:00:32,619 all the type of clients you work with. 11 00:00:32,619 --> 00:00:38,340 It's not something I can help you with but what I can tell you is that chances are 12 00:00:38,340 --> 00:00:40,380 you're probably charging too little. 13 00:00:40,380 --> 00:00:44,370 There are loads of things that we forget to consider 14 00:00:44,370 --> 00:00:46,510 when we set our charge out right . 15 00:00:46,510 --> 00:00:52,900 We have this notion in our heads that we'll be able to work everyday 16 00:00:52,900 --> 00:00:56,580 and charge out all of our time but it doesn't work like that. 17 00:00:56,580 --> 00:01:00,840 We're going to have loads of overheads that will also increase our costs. 18 00:01:00,840 --> 00:01:02,810 We've got sales and marketing time. 19 00:01:02,810 --> 00:01:05,920 Today is a big chunk of your time that's not going to be chargeable. 20 00:01:06,030 --> 00:01:09,330 Then of course there's admin and project management and things like that. 21 00:01:09,330 --> 00:01:12,480 Occasionally , you might even want to take a holiday perish the thought, 22 00:01:12,480 --> 00:01:14,610 and you're not going to get paid when you do that. 23 00:01:14,610 --> 00:01:18,580 What if you get sick? You've got to cover those cost as well. 24 00:01:18,590 --> 00:01:20,890 And then, of course there are taxes 25 00:01:20,890 --> 00:01:23,740 that we will have to pay whether we like it or not. 26 00:01:23,910 --> 00:01:28,990 You also need to consider what you're going to take out of the business. 27 00:01:28,990 --> 00:01:33,950 Your rates dictate how much goes into the business but what about your salary. 28 00:01:33,950 --> 00:01:40,200 A lot of freelancers and other web designers don't set themselves 29 00:01:40,200 --> 00:01:44,450 a specific salary but instead take money out of the business 30 00:01:44,450 --> 00:01:47,350 as they feel that the business can support it 31 00:01:47,350 --> 00:01:50,430 but I will encourage you give yourself a set salary. 32 00:01:50,760 --> 00:01:53,000 It will make budgeting and planning a lot easier 33 00:01:53,000 --> 00:01:57,070 but more than that, I think It sets a stronger separation 34 00:01:57,070 --> 00:02:00,360 between company finances and personal finances. 35 00:02:00,360 --> 00:02:02,940 You can get yourselves into all kinds of trouble 36 00:02:02,940 --> 00:02:06,310 if you just dip into the business whenever you feel like it. 37 00:02:06,380 --> 00:02:09,430 So have a set salary and then stick to that. 38 00:02:09,430 --> 00:02:13,040 Now, be fair about that salary and give yourself something reasonable 39 00:02:13,040 --> 00:02:16,240 otherwise what's the point of being a free lancer 40 00:02:16,240 --> 00:02:19,440 but try and be realistic as well. 41 00:02:19,440 --> 00:02:23,580 You need to be fair not just to yourself but also to your staff. 42 00:02:24,640 --> 00:02:28,720 And when it comes to staff, I would encourage you to reward early adopters. 43 00:02:28,720 --> 00:02:32,420 The first people that come and join you because that's quite a big risk 44 00:02:32,420 --> 00:02:35,350 for a lot of people to join a small company. 45 00:02:35,350 --> 00:02:39,750 So what we do is we tend to give them a good salary and we may also 46 00:02:39,750 --> 00:02:44,710 give them share options or things like that for the early joiners. 47 00:02:45,710 --> 00:02:49,220 But, you equally need to reward yourself because you're taking the risk 48 00:02:49,220 --> 00:02:53,020 as well as setting up your own business to make sure you give yourself 49 00:02:53,020 --> 00:02:56,510 a good salary as well as those first one or two employees. 50 00:02:57,510 --> 00:03:00,120 The other thing I encourage you to consider is bonuses. 51 00:03:00,540 --> 00:03:03,730 Although having a set salary is a great idea, 52 00:03:03,730 --> 00:03:05,700 if your business is doing particularly well, 53 00:03:05,700 --> 00:03:09,200 there's nothing wrong with rewarding yourself for that success 54 00:03:09,280 --> 00:03:12,480 and having good bonuses is a way of doing that. 55 00:03:12,480 --> 00:03:15,610 Not only should you be giving yourself good bonuses 56 00:03:15,610 --> 00:03:19,180 but you should also be considering this for any members or staff you take home. 57 00:03:19,180 --> 00:03:23,470 Reward them when things go well, make sure they benefit 58 00:03:23,470 --> 00:03:26,630 as much as you do from the success of your business. 59 00:03:26,630 --> 00:03:31,380 Also, even when things aren't going so well, if someone has gone 60 00:03:31,380 --> 00:03:34,100 above and beyond and worked really, really hard, 61 00:03:34,100 --> 00:03:38,250 then reward them in some way even if it's a quite low level. 62 00:03:38,250 --> 00:03:41,360 Finally and most importantly when it comes to money, 63 00:03:41,360 --> 00:03:44,710 don't starve your business of working capital. 64 00:03:44,710 --> 00:03:48,640 Yes, you want to pay yourself for good salary, yes, you want to give bonuses 65 00:03:48,640 --> 00:03:53,080 but make sure you always got a buffer behind you for those tough times. 66 00:03:53,980 --> 00:03:55,220 I would say if you can 67 00:03:55,220 --> 00:03:59,120 have as much as 6 months of salary behind you in the bank. 68 00:03:59,300 --> 00:04:02,980 That's not always feasible but it's something to work towards.