presented by Shel Perkins, author of Talent is Not Enough: Business Secrets for Designers. (original description)
- you need to have adequate startup capital to cover the first two years
- most start with savings and personal loans
- most only last about three years
- essential to work with a CPA
- because you’re self-employed, you need to make quarterly tax pre-payments
- keep track of project costs (direct labor, materials) and indirect costs (overhead, self-promotion)
- use financial projections to avoid surprises
- use weekly projections to know your cash flow
- use the client’s money (instead of your own)
- ask for an upfront deposit before the work begins
- send progress billings at the end of each phase, paid within 15 or 30 days
- send month-end statements
- build-up reserves for three months of normal operating expenses (“rainy day fund”/cushion)
- growth: yes or no? you’ll have to:
- take on new skill sets
- hire a business manager/partner
- delegate/share responsibility
- resources
- when working with multiple freelancers/contract people, someone has to manage the client contact
- insurance means much more than just health coverage to a business owner
- errors & omissions
- assumption is you will never make a claim
- the Hollywood model for an agency (group of independents come together for a project and then disband) is a hard-sell to a corporate client
- Optimal team
- 1 person administrator
- 1 business developer
- 10 person creative team
- tracking software
- comparison in August 2007 Step Magazine
- need general ledger tools
- should track project-level costs
- retirement strategies
- the old model was to build a practice by your name, live off its revenue and close shop when done
- the new model is team-oriented with multiple owners, where partners can sell own share to co-owners or merge with others when want to leave
- growth should be for bigger creative challenges
- form an LLC or incorporate to isolate personal financial risk
- if no credit history, do NOT sign a personal guarantee for a loan