Annual report 2020

Title
Annual report 2020
Published
Apr 1, 2020

I’m a freelance digital designer. On occasion, I work with other freelancers on a project-by-project basis. I’m fully remote, working from the North East of England. However, the majority of my past and current clients are based in London.

Top stats

5

No. of clients

15

No. of projects

£20,000

Biggest fee

£250

Smallest fee

£106,604

Total billed

£65,304

Profit

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image

Thoughts

Missing data

Had I properly tracked my time during all projects then I would be able to calculate two important metrics:

  1. Utilisation rate: How many of my billable hours are spent doing billable work.
  2. My hourly/daily rate

Right now I could divide my income over a standard year but I also know that I had many weeks off, spent lots of time on personal projects, and spent lots of time doing business admin work and looking for new business. In hindsight, that data would be great to look at now. If only to gauge how effectively I am using my time. As I move from a company of one to a company of two with my new co-founder it will be even more necessary to have an accurate view of the value of my time.

Pricing

This year I tried a number of pricing methods.

  • Initially, I was working as a day-rate contractor;
  • I did several fixed-fee/fixed-time projects whereby the outcome was flexible;
  • I attempted to win a value-based pricing proposal, but alas, that didn’t work out.

What I’ve found is that before any time is spent figuring out how much a project will cost, all clients have a number in mind. That number is usually the most they are willing to spend. I ask for this number upfront. I rarely get it at this point. As such, I enter into the guessing game.

When I get the client’s budget, I roughly calculate how many weeks of work the clients budget will allow for and we agree to work on a fixed-fee/fixed-time basis with variable deliverables.

My fixed-fee often includes many of the project costs baked-in. So within that number I account for train tickets, hotel costs etc. When I build a team it includes other freelancers fees too, which accounted for £4,000 in total this year. Some things are not included, such as research recruitment.

I don’t know why I include my expenses in this way. I guess I feel like it’s easier to manage rather than having multiple conversations about expenses with clients. I don’t want them to feel like they’ve got to go through a procedure just to agree for me to hop on a train to London for a meeting.

Recommendations and repeat work

100%

of clients gave repeat business

100%

of projects came from recommendation or an existing relationship

This is probably true of so many other agencies and freelancers. Winning work from cold, such as competitive pitching, is hard. It’s hard to control the pipeline of new work, since you aren’t able to control who’s recommending you and when. The result is the typical feast-to-famine cycle. One month you can’t move for new projects, the next it’s a ghost town. I do believe there is a way out of this and it is possible to control the forces at play. I’ve written about this already. I’m going to attempt to work at this in the year ahead and hopefully next year I’ll be able to claim that I’ve made new client relationships in ways beyond just recommendations.

Diversity of work and income (or lack thereof)

For any agency having a significant portion of your income from one client can be dangerous. In my case Client A accounted for 50% of my year’s income.

Client A will also likely account for 50% of this forthcoming year.

Whilst the services I was able to offer throughout the year were relatively broad, the way I was able to make money was entirely by services reliant on my time.

In 2020 I’d like to get more clients. Meaning, that the value of my client based is shared between more clients rather than fewer clients.

I also need to diversify the ways that I am able to generate income. Ways of doing this are typically, products, courses, books... feels like the typical list of consultant/thought-leader offerings. I’m wary that every book tells you to do these things in order to create ‘passive income’. I’m keen to do things like this but things that interest me rather than trying to flog my thoughts and become some guru. To give one example; I’m working with my brother to start a new range of male grooming products. Zero connection to my agency work, if successful it could provide another form of income that isn’t directly tied to my time where much of the work is able to be outsourced. Let’s see.

How do I feel about all this?

When I initially went self employed two years ago, I started contracting. For me, this is very different to trying to operate with an agency model/mindset. Other people simply call it freelancing. At the start of this year I formalised my thinking around operating as an agency and began to pursue new work in this way. However, I still hunted for contracting gigs when things got quiet. I now feel relatively confident in being able to not pursue work through recruiters and contracting jobs boards. Nothing wrong with these per se but I have little success winning the type of work I want to do via these routes and they aren’t flexible to my agency model. E.g. Try to get a recruiter to do a fixed fee project, I did and the conversation died very quickly.

Money wise, I feel pretty good. I was able to pay for everything we needed and despite moving out of London the fees I’m able to charge have largely stayed the same. Cash flow is a whole other problem which I am no expert in. Cash flow has been hard this year for a number of personal reasons (I bought a house). This year I need to be more strict about sticking to a fixed monthly payment and hopefully with any luck cash flow will improve but it’s something that will always require planning and management.

It’s not all rosy though. At times it is very stressful, waiting for leads to get back to you, feeling like you’re never gonna win new work. Seeing your account balance go down and down. Waiting for invoices to be paid. Typical stuff. At times I do wonder if it’s all worth the stress. Whilst I’m not exactly making mega money (relatively speaking), freelancing does afford me some ‘freedoms’. Namely, the ability to work from home, to decide to work four days weeks, and in down-time to do side projects and painting. For that I’m grateful and sometimes I need to remind myself that these are the real ‘benefits’ of freelancing. Benefits I’d take over free lunches and yoga classes any day.

That’s all folks.

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