Lessons Learned after Two Years in the Self-employment Trenches
Thea Teich
Background
More than 20 years in scientific, technical, and marketing communications
Downsized after 11 years with manufacturing company
Handled all aspects of marketing communications there, particularly publications, technical literature, direct mail, some advertising, and trade shows
Many years of direct involvement and volunteerism with professional organizations, especially STC and CEA, plus active in alumni club
Assumptions
You've already decided what type of business you want to go into
You've already researched the market and determined there's a need for what you want to do
You already know how much this will cost up front, realistically, if not without some degree of pessimism
You're doing this because you want to, not just because you're mad at your boss
You've helped other people in your profession or worked with them on committees, etc.
Advantages of staying in the same profession as when you we employed in a standard way:
Networking advantages
You already know the job; no need for immediate additional training
You probably have a good idea about procedures, costs, processes
Advantages of changing professions
Fresh start
Opportunity to try something you have developed an interest in over the years
In starting your own business, you should pay the most attention to:
Keeping in touch with people you know
Servicing the clients you have as well as finding new ones
Keeping in touch with potential clients and clients for whom you've done just a little work (they may need you again later)
Deciding what services you will provide to clients (you don't have to do everything)
Determining whether you like people. People do business with people, not companies.
Taxes
E.g., Social Security Tax: you're paying 14% of your
profit
Deductibles: Keep track of mileage, all purchases, postage stamps!!!
Training -- it's deductible!!
Don't worry so much about
Accounting, just find a good accountant and keep good records
Simple is better; 3x5 card/client, enter amount of invoice, write date alongside when paid
Advertising
Unless it's highly targeted and you have specialized experience in a particular industry
Extensive software and hardware systems
Buy it as you need it and ask yourself how often you are going to need it, especially in dealing with photocopiers, scanners, zip drive
What other people are doing
Problem Area Everyone Talks About
Setting rates
Find out what others -- who have similar levels of experience -- are doing. They are usually willing to tell you because they don't want you undercutting them and usually when we first start out, we undervalue ourselves.
Set a "corporate" rate and a "nonprofit" rate
Set a "friends and family" rate -- for the jobs that come from members of your alumni club
But remember, you see only about 50% of what you bring in; the rest goes to taxes
(28% Federal Income tax + 8% Ohio tax + 14% Social Security tax on profit)
Be willing to lower your rate if a client gives you regular work, because this means you have to spend less time marketing -- which is not billable.
BUT charge your highest rate if your client is slow to pay, because you can't carry him or her at the lower rate.
If a client balks at your rate, remind him or her that they are paying for an experienced vendor, one that will take less time to do the project. Sure, there are people out there who will work for $15/hour, but they'll take three times as long to get the project done.
Plus, remember, if they were using an advertising agency, they would be paying $125-200/hour
Here's common rates in SW Ohio:
Research, writing, editing: $35-60/hour
Substantive copyediting: $35-50/hour; $3.50-5.50/page
Desktop publishing (as opposed to graphic design): $45-85/hour; $8-10/page, depending upon the number of charts, graphs, tables, etc.
Proofreading (no substantive changes): $20-30/hour
(Source: small, informal group of self-employed Cincinnati-area writers and editors)
Finding Clients
First, make a list of everyone you know who might be interested in your "change of life."
Announce what you are doing in a letter and what services you can provide
Follow up and ask if you can come in and discuss possibilities, although you know they probably don't have a project for you right now
Different letter to colleagues -- that's where referrals come from
Follow up, that's the hard part
Advertising: only highly targeted, e.g., plastics engineers newsletter; sociology journals if you are editing scholarly papers
Keep talking to everyone; you never know where business will come from, especially if you've volunteered with various groups. People are looking for ways to pay you back for help you've given them in the past.
Ongoing direct mail
Keep a growing mailing list of key contacts; use a RIFLE, NOT a SHOTGUN approach
Keep it small and simple: everyone turns over a postcard and reads it, but a letter might get dumped
Two of my biggest clients were the result of referrals from other writers, as was my first project.
Getting Paid
Contracts -- usually, if the client is a company, they produce the contract
Letters of Agreement -- I use if I don't know the client
Invoices go out separately from the project usually, sometimes because they go to different places. Several clients have policies that state they can withhold payment up to 90 days. Be prepared! You charge these people your full corporate rate, even if they are giving you ongoing work.
Follow up. E-mail is great for this purpose. Usually, your contact wants to make sure you get paid in a timely manner. When a significant amount of time has passed, e.g. six weeks, I send an e-mail to my contact. They usually run right up to their company's accounts payable department to find out what's going on, particularly IF YOU'VE MET THEIR DEADLINES!
Dealing with Money
Separate business checking account. I have one with my brokerage and they charge an annual fee. But they are also paying me interest on the account, so that covers the fee. Many banks' business accounts do carry significant fees and most do not pay interest on these type accounts. However, a separate checking account for the business is important in dealing with tax issues.
Managing Time
Set a routine, but remember the day has 24 hours. There may be times when you get to the computer at 7:15 am, break for lunch and dinner, and work until 11 pm. If you want to go to the gym at 9 am every day, do it. Just manage to get the work done, too.
Preventing Isolation
Join organizations like STC and CEA and attend meetings, including the LANS
Get together with people you know who are working the way you do for lunch. I belong to one group that meets for coffee once per month with a pre-determined subject to discuss -- so we don't devolve into the '90s version of the "back fence." Additionally, a group of self-employed writers who all do work for one particular client all get together for lunch once per month. This is even more informal, except we check to find out who has gotten paid.
Keep active in other ways, too. Join groups who are interested in the same things you are.
When your spouse comes home from his or her "regular job," stop and share some unwind time.
Other Concerns to Examine Before Making This Decision
Your personality
Can you handle the juggling, the switching back and forth between projects and clients?
Can you handle the unknown, like "when is that @#$%^&& check going to come?"
Can you handle the fact that there will be days when you can't leave the office at 5 pm, or 6 pm, or 7 pm, etc.?
Can you discipline yourself?
Can you focus, particularly when it's a lovely day and the garden needs planting or you would rather play golf or go swimming? You can do all these things, but you still have to meet the client's deadline.
Tax Considerations - I keep the proverbial file folder full of receipts! I pay any business expense from the business checking account
Mileage involving your business is deductible at $0.30/mile. Keep a log!!
Improvements to your office
Equipment, supplies
Costs of attending professional meetings, conventions
Training costs
Extra telephone service
Internet Provider charges
50% of all business entertainment, including lunch with other writers
Postage involved with your business
Costs of inventory, record keeping, fees to accountants, anything that is a cost of doing business
Would I Go Back to Working for Corporate America?
I never say never, but . . .
It's very difficult to have to be somewhere every day at a given time
I really like the variety of projects
I really like working for a number of different people
I really like the flexibility and freedom
I really like not dealing with office politics, difficult, insecure bosses, and touchy coworkers. I step daintily in dealing with my clients, but I can leave their offices after an hour-long meeting and not see them for a week or more.
I really like being stimulated; I am not bored most of the time.
I really like the fact that whatever I do, I am doing something for my own business -- and unless I make a complete botch of it, no one can take it away from me.
What I miss
Benefits
Camaraderie -- but I never experienced much of this on most of my jobs. There was always this pyramidal structure that I never fit into exactly.