How to stay in business!

Cost analysis

 Office expenses

Cost

amortization/depreciation

Per year cost

Per month cost

3000

600

50

Computer Technology

6000

3 year (five for taxes)

2000

166

Software

4500

3 year (five for taxes)

1500

125

Rent office

1200

14000

1200

Consumables

100

1200

100

Telephone

200

2400

200

Insurance

100

100

Accountants

100

100

Attorneys

100

100

$25696

$2141.00

General information about billing projects

OK the above indicates that your costs per month before you pay yourself will be $2100.00. This means that these costs are what goes out before anything you make can be take as salary. If you need to make $4000.00 per month to live, then you need clear $6100.00 per month. If you are trying to clear this amount in every four weeks you need to make $1600.00 per week,

So billing you time out for 40 hours to get $1600, you need to bill $40.00 per hour. This is the minimum you can charge per hour to keep you doors open for one person. If the business needs to make profit for expansion and growth then $40.00 will not be enough, so it will be better if you can mark this amount up by at least one third.

Reading this quick list I see several things that need to be considered. First, there are some charges that I am sure I have forgotten. I see that I failed to add the 33% you will pay in taxes on you income! I am sure there are many other things!

Also, it is fairly certain that you WILL NOT work a full 40 hours per week. You will have some time that you are down and not doing work that is billable, work such as doing you taxes, self promotional materials, selling, taking care of things that just need to be done.

If you are lucky you will be able to bill 30 hours a week. So you need to adjust your billing got compensate for all the stuff that you do just to take care of the business.

• If you can bill at $75.00 per hour, you may be able to make ends meet.

Another issue will be how you bid a job. Most likely you will not be able to bill per hour. In most cases, you will have to bid the job on a flat fee. I have only done one or two projects in my entire career where I was able to bill by the hour.

This means that you must be able to estimate the amount of work and how much time it will take to complete the work.

Bidding projects in a reasonable manner that you can make some money and not run the client off or have the client refuse to return is a very tough and tricky issue. It requires an astute judge of character and understanding of human psychology. You need to be able to assess you client and determine what their ability to pay is and also what they are willing to pay. Then try to work the project size and scope to fit their budget or what they may be willing to spend.

Also it is imperative that you know exactly how big the project is, how many pages, how many images, rollovers, special scripted elements, tables, how much text to be edited, how much time to come up with a cool design that works, are there flash or other work that you may have to job out to someone else, and many other things. The goal is to be able to determine before you begin, before you sign a contract that commits you to doing the project for set amount of money.

In addition, it is quite possible that on some projects you may lose money and other make much more than your hourly rate. If these and be more towards the money making side over the long run then you may be able to stay in business. In many cases you will do some work for a client that you know will lose money because you have opportunity to make more money on other projects.

My advice is to NEVER do spec work for client from whom you have not already received a substantial amount of income and have a sense that you will continue to make money. If you are doing the first project for client and they ask you to do the project on spec you should refuse. Spec means Speculation. Speculation is when you speculate on whether you can make money on something on the risk of failure! Nine out of ten spec projects will fail in my opinion.