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Behind the scenes of a teeny, tiny freelance business - Revenues, profits, and advice
These facts and figures are for 2019, prior to COVID. I’ll post 2020 figures next year, but I’m currently projecting our income and profits for 2020 will be about 20% - 25% lower as a result of COVID (hence why an emergency budget is so important).
First, a little history. My wife and I have been running a freelance business for the last 14 years. Until 2016, we focused purely on proofreading and copy editing. In 2016, I decided to add freelance writing to what we offered, mainly to diversify revenue streams. Between 2016 and 2019, we managed to up our revenue each year, both due to taking on more work and raising rates. We work exclusively from home.
Here's an overview of how we did in 2019, starting with the financials. All figures are approximate, rounded, and shown in US dollars.
Total revenue: $146K
- Revenue from proofreading / editing: $25K
- Revenue from freelance writing: $120K
- Revenue per day from writing: $500
- Revenue per day from editing: $100
* Total revenue per day: $600
Total business expenses (excl taxes): $24K
- Health insurance premiums: $11K
- Accounting fees: $3K (I had some complex tax matters that I resolved in 2019, fees are for that and EOY filings)
- Computer software and subscriptions etc: $2K (SaaS subscriptions, web hosting, etc)
- Bank and credit card charges: $2K
- Office costs: $2K
- Business donations to charity: $1K
- Internet and phone: $1K
* Other expenses: $2K
Total profits (pre-tax): $122K
Taxes (payroll / self employment, federal, state): c. $33K
Take Home Pay after Taxes: $89K, $7.5K a month
Living Expenses: $4.5K a month, $55K a year
- We have paid off our mortgage and don’t carry debt.
- We don't have kids, which significantly reduces our expenses.
* We do have “emergency” savings to cover six months of expenses.
Disposable Income: $3.3K a month, 39K a year
- We spend 20% - 30% of this on charitable donations, larger projects, and fun stuff.
* 70% - 80% of this disposable income is invested over the medium to long term, mainly in retirement accounts. Only 15 years away from retirement and need to build those funds up!
2019 Revenue by Major Clients
- Currency exchange business: $30K
- Marketing agency for business formation: $26K
- Fiverr Pro freelance platform: $19K
- Marketing agency for cybersecurity and other clients: $14K
- Marketing agency for SaaS: $12K
- Supply chain business: $10K
* Ecommerce marketplace: $8K
- Diversification - Diversify among niches and clients as much as is reasonably possible. Don’t rely on one particular client for the majority of your income. Needless to say, the currency exchange business that was my biggest client in 2019 has not used me at all since March 2020, due to COVID. I definitely recommend multiple revenue streams for any freelancer, so you can protect your income.
- Independence - The only freelance platform that we use is Fiverr Pro which we were invited to join. Fiverr Pro is for professionally priced freelance services, so we can charge as much on there as we do for off-platform work. We haven’t used other freelance platforms like Upwork or Freelancer.
- Specialization - A narrow focus on specific niches and topics was key to success. On the proofreading / copy editing side, that means non-fiction, medical, and training. On the writing side, that means tech, business, and finance. Specializing means you can often charge more, and helps you get work in the first place.
- Confidence - If you’re good at what you do, have the confidence to ask for higher rates. My B2B clients are happy to pay my rates for the level of service they get. The ideal position to be in as a freelancer is that you set the rates, not the clients.
- Pricing - We always price by the project or per word - That works much better for our clients than hourly pricing. Additionally, if you can work fast and maintain quality, that often results in higher per hour fees. For example, if you can write a 1,500 word blog post for $200 in 90 minutes, that's an hourly fee of $125. Additionally, I started writing at 10c a word and slowly increased the rate every year, until the c. 35c a word I am on now. That feels like a sweet spot for my current level of expertise, and works for clients.
- Automation and efficiency - Automation is really important. Less time spent on admin means more time that's chargeable to clients. Key efficiencies for us include IFTTT for scanning job boards and emailing leads, Zapier for transferring information between online services, FreeAgent for accounting, invoicing, expenses, payroll etc, TickTIck for project and task management, and Google Docs for working with clients.
- Finances - It's really, really important to stay on top of finances, so you can see where you're making money, your key expenses, your financial outlook etc. We also have around six months of household expenses as an "emergency budget" which definitely helps our peace-of-mind!
- Professionalism - This is vital. Presenting yourself as a professional businessperson, with confidence and poise is vital. In other words, it's not just about the work itself, it's about everything around that. Good communications, suggestions to the client, getting contracts in place, always meeting deadlines, following up - It all makes a difference.
- Clients - Do everything you can to find regular clients. One of the biggest time sucks for a freelancer is seeking out new leads and applying to them. If you can get clients who use you on a regular basis, that's good for your bank balance, and for reducing time you spend looking for new gigs. For me, the revelation was marketing agencies, who find clients for you!
- Finding leads: Find a lead generation tool that works for you. Much of my lead generation came to applying for very specialist jobs through job boards that I was highly qualified for. In 2020, I completely rebuilt my website and portfolio to concentrate solely on inbound leads, and get between 3 and 5 serious inquiries a month.
- Work and life balance - Through all of this, it's important to keep a good work and life balance, especially in times of COVID!
- Puppies - Pets are a wonder for freelancers. Perfect for the breaks you take, the love you share, and the need to get out and take them for walks (at least for dogs and wombats.) They're great for mental and physical health.
Tips on Transitioning for Active Duty to the Civilian Sector
“Well if I could do it, so can you!”
Let’s pause for a moment and table the fact that this is one of the biggest decisions many Veterans have to make.
This is not a one size fits all approach to transitioning from Active Duty to the Civilian world. I preface all of this to say that every Veterans journey will be different, and the miles will vary. But, one constant is that x-amount of years ago you signed an obligation to y-amount of time to the U.S. Government with (insert Service here), and now you’re set to receive your DD-214.
What follows are simply steps that you have at your disposal, and this list is most definitely not exhaustive. The whole jist to say I’m just here to jog your mind into creating a path that will help you along your way during your transition. As a person I once served with said, “If you’re comfortable during a transition then something is wrong.”; suffice it to say most of us who have transitioned from Active Duty to greener pastures were uncomfortable during what can be at times a tumultuous ride, no matter how well you plan.
So, you’re planning on pursuing your Associates/Bachelors/Masters etc. Well one of the most important questions outside of the admissions process is, “how am I going to pay for this thing called an education?” One option that most of you will have is your GI Bill. I would always tell my Soldiers that their GI Bill is worth its weight in gold, because it is. It can be a confusing process figuring out whether you signed up for the Montgomery or Post-9/11 (also known as Chapter 33), and now there’s a Forever GI Bill? Which one do I have? Which one do I choose?
Well that all depends on a whole host of differing situations, but distilled down for the Post-9/11 is this:
Post 9/11 (Chapter 33) GI Bill:
You may qualify if:
“You may be eligible for education benefits if you meet at least one of the requirements listed below.
At least one of these must be true. You:
- Served at least 90 days on active duty (either all at once or with breaks in service) on or after September 11, 2001, or
- Received a Purple Heart on or after September 11, 2001, and were honorably discharged after any amount of service, or
- Served for at least 30 continuous days (all at once, without a break in service) on or after September 11, 2001, and were honorably discharged with a service-connected disability, or
- Are a dependent child using benefits transferred by a qualifying Veteran or service member
Benefits of the Post 9/11 (Chapter 33) G. I. Bill:
“You can receive up to 36 months of benefits, including:
- Tuition and fees. If you qualify for the maximum benefit, we’ll cover the full cost of public, in-state tuition and fees. We cap the rates for private and foreign schools, and update those rates each year.
- View current rates
- Money for housing (if you’re in school more than half time). We’ll base your monthly housing allowance on the cost of living where your school is located.
- Money for books and supplies. You can receive up to $1,000 per school year.
- Money to help you move from a rural area to go to school. You may qualify for this one-time payment of $500 if you live in a county with 6 or fewer people per square mile and you’re either moving at least 500 miles to go to school or have no other option but to fly by plane to get to your school.” (VA.Gov)
The basic steps of using your GI Bill are:
- Select which GI Bill you wish to use and submit your application through: https://www.va.gov/education/how-to-apply/
- Download your Letter of Eligibility through: https://www.va.gov/education/gi-bill/post-9-11/ch-33-benefit/
- Submit your Letter of Eligibility to your Schools Veterans Affairs Department (Most schools will have a Veterans Department page with contact information in case you need assistance)
- School dependent, but many will have you submit the number of credits you are taking through their Veterans Department to the Department of Veterans Affairs
- Note: All schools have a different payout time for tuition, money for books/supplies, and your BHA
For commonsensical reasons employment is important. So, skipping the long diatribe of why it’s important to have a job here’s some resources that helped me to build a better resume, prep for interviews, and above all search for what I wanted to do rather than just what I needed to do.
The following are a list of popular websites that can either link directly to a job or put you in the ball park of different jobs within that area.
- LinkedIn is a fantastic resource to connect with other professionals, and to find jobs:
- Indeed is one of the biggest job search websites for a reason:
- Federal jobs:
- State/County/City Jobs:
- Consult the State/County/City government jobs page IE.
- State of Oregon Jobs
- Multnomah County Jobs
- City of Portland Jobs
- Also search a company’s actual website postings.
So, you’ve found the job(s), and now comes the applying.
Straight from the Society for Human Resource Management (SHRM) is a fantastic article that addresses some solid points on how to create a professional resume:
This first list of questions are ones that you should be contemplating when shaping your resume, “Why are people going to remember you? Why will people want to hire you? What is your unique value to a new employer?” (Enelow and Kursmark)
This is a short set of guidelines on crafting a solid resume:
- Use a Well-Branded Headline
- Share Details About the Organizations Where You’ve Worked
- Emphasize Achievements
- Highlight HR Keywords
- Prepare Your Resume for Applicant Tracking Systems
- Share What Makes You Special
- Write Tight, Lean and Clean
Cover letters might be the antithesis to some, but a strong cover letter can convey to the organization you’re applying to more than just submitting a resume that you want this job.
A fantastic article from Amy Gallo in the aptly titled How to Write a Cover Letter goes through a list of guidelines in writing a solid cover letter.
- Do your research first
- Open Strong
- Emphasize your personal value
- Convey enthusiasm
- Keep it short
The transition from Active Duty to Civilian life as I prefaced earlier can and will be challenging. For myself it was less of an overnight, “Oh I’m done,” and more of a gradual process that I am still going through. Like many of you I’m still trying to figure out what I want to be when I grow up. But these are resources that have helped me along my process. Good luck!
ReferencesGallo, Amy. “How to Write a Cover Letter.” 04 02 2014. Harvard Business Review. https://hbr.org/2014/02/how-to-write-a-cover-letter.
Kursmark, Wendy Enelow and Louise. “How to Write Powerful and Memorable HR Resumes.” 2020. SHRM. https://www.shrm.org/resourcesandtools/hr-topics/organizational-and-employee-development/pages/how-to-create-an-hr-resume.aspx.
GI Bill Overview
GI Bill How to Apply
Letter of Eligibility Download
Post-9/11 GI Bill (Chapter 33)
Montgomery GI Bill Active Duty (MGIB-AD)
Forever GI Bill
GI Bill Calculator
GI Bill Yellow Ribbon Program
U.S. Department off Labor Tips for Writing a Federal Resume