I was being interviewed by Reshma from Zoho this morning about my use of Zoho products, in particular their new iOS invoice app. She and I were talking about small businesses and how they can use Zoho. Also about freelancing and being a small home based business and I was asked if I had any advice for entrepreneurs that are just starting off. I surprised myself because I didn’t have an answer right at the tip of my tongue. I had to think about it for a minute.
Here’s my answer… Bill at a higher rate or at least try to. When you first start out a lot of people (me included) don’t think we’re worth more. I might know that someone else is billing at $75 and hour but I may only bill at $65 because I don’t think I’m on that other persons level. Now if you are good (not a fly by the seat of your pants hack) you should bill higher. My advice is bill equally or even higher than other seasoned professionals in your field. This is for many reasons but to start with, you’re worth it. You shouldn’t be doing whatever you’re doing if you aren’t good at it. Yes you’ll be better over time but then you should start billing as if you’re already there.
The next reason is, life is expensive. Maybe you started when you were single and Top Ramen was a reasonable meal, when you get a boy/girl friend life gets more expensive. Maybe you get married and have kids, let me tell you diapers are expensive and so is tuition at preschool and kindergarten. Then consider inflation and you have to start billing at a higher rate so you can afford all these “things” that may be down the road. And if you stay single then trust me you’re going to want to take more elaborate vacations and travel farther or have a nicer house/car.
Life is expensive and being a freelancer doesn’t mean you have to struggle all the time. There’s a minimalist bootstrap your company mentality in the tech community I spend my time in. I don’t fully agree with it. You should run your company lean to some extent, use Phone.com (PBX systems are pricey) and maybe use a cloud storage system for your documents and data or Google Apps for your email instead of a server in your office. That’s running your business lean but smart and always make sure you can keep your lights on at home. Don’t sacrifice your home for your business, a million dollar company in 3 years isn’t worth letting your kids shiver in their own home tonight. But I do remember many years ago when it was just me struggling, sitting at my cheap desk with 2 sweat shirts on and a blanket around my shoulders. I never minded being cold.
Being a freelancer or SMB doesn’t mean you have to struggle all the time, but most likely some of the time, in the beginning.