I'm a Business? Maaaan.
How To Make it in America is one of my favorite shows that sadly ended too soon. What I loved most about that show is seeing how they figured it out. I would like to start sharing maybe weekly or monthly how I am figuring it out.
I have been freelancing on and off since 2017 and have had some stints back in full-time roles but none lasting more than a year. This past year, 2020 is when I truly tried to stay freelance and not be tempted by the stability of full-time. Although I may have had less anxious nights if I were to work at a company (if they would have me) I think the net positive thing is that I was able to survive and run a semi-healthy business. I did zero marketing and social media work this year. I made a majority of my income on video production and had a small percentage come in through photography prints.
To be specific I am a freelancer who sometimes runs a full production or is just a day player for Conde Nast or another large company. I am non-union and work with start-ups, tech companies, small brands and sometimes big brands but usually their smaller teams or smaller budgeted projects. I think I’m in the right place for my current abilities and confidence.
Now that it’s the end of the year I’m reflecting on what happened. I need to do a more focused internal review but I wanted to share some of the things I’ve thought about this past week.
First off I am debating on if I need a bookkeeper and accounting system. I currently pay $300 dollars to file my taxes with TurboTax and that gives me the Quickbooks self-employed account for free. I’m a single member LLC so that means I have a disregarded entity. The IRS recognizes my LLC and personal as one.
I’ve talked reps at a few places Bench, Freshbooks, QB which I currently use, and small biz owned shops. I’m considering switching to an S-Corp and paying myself a salary but the cost of this infrastructure would be anywhere from $2000-$4000 annually for bookkeeping, $299 to file paperwork to become an S-Corp, $600 to file my personal taxes, $1000 to file my S-Corp taxes, and $900 a year to run payroll through something like Gusto. I think my projected tax savings should be twice this amount for it to be worth it. Otherwise I should probably do nothing except for hire an accountant to look over my books/structure.
The overall good news is that I’ve reconciled things and looked at my income statement. I ran a fairly healthy business with just under 30% operating expenses. My taxable income is almost the same as what it was when I was employed full-time so things are pretty good. This would be great if I did this on purpose but it happened more so accidentally. My focus was on revenue. I also bought a lot of equipment this year so I imagine this number could be much lower if I set a goal.
Next I have been re-reading some of Naval’s posts and he mentioned setting an insanely high hourly rate. Like $5,000 an hour for yourself and anything below that you should outsource the task. It made me think about all the roles I play in a project but if I were to take it to an extreme I’d be doing nothing except for business development. It’s very possible that my best asset is my network. I know creatives who are far more talented and skilled than me and I also know brands and companies who need creative things made. My flaw is that I want to be the one making the creative. Also if I follow this rule then I would never cook even though it brings me joy because sometimes I spend 1-3 hours cooking when I can get a sandwich for $7 in 10 minutes by walking 2 blocks. Still unsure on the conclusion here.
Two things happened in September and October. I basically asked for work and got a lot of leads. I was not able to convert some of the colder ones and just pursued the leads that were more solid. My main problem? I couldn’t come up with ideas for some of them. These clients were cold but they had money ranging from 5-10k and could have been convinced to shell out more with the right idea. What if I had brought in a strategist or writer? This could’ve led to $15-20k of revenue.
Then in October I continued to get leads and started outlining ideas and building decks. But my timelines started to overlap and I had to drop one and reduce scope another. I was making enough for the month so I thought, do less but do them well. Then unfortunately my dad’s health declined and I had to fly back to CA. I then dropped all my projects and gave them to friends. Before I go deeper I do not care about this money. I am so glad I was able to be with my family and we spend time with my dad before he passed away without worrying about work.
But I do want to explore what my bottlenecks where and think about other possible outcomes. This was basically around $20-25k in revenue I gave up. One friend was able to increase the budget by +$5k on one of those so that number could be increased to $25-30k. But I don’t know if it is worth thinking about like that. One issue I have is I have budgeted things too low because I wanted to win the business even if the client could have gone higher. And the crazy thing is one of my best friends is a producer. She’s working on a Super Bowl spot right now. I guess the real issue is probably I don’t know how to ask for help. Is there a world where I had a team in place and was able to get all of this done?
I invested in some equipment this year, some has paid for itself. The camera has brought me lots of opportunities and it is my main workhorse. But another way to run my line of business is to have lots of ideas and be super organized. There is no overhead for those things. Great, well presented, and thought out ideas can give you a budget and access crew, equipment, etc. This can be a much longer thought on technicians vs artists and we can get very esoteric but let’s not.
I doubt anyone will read this far but if you have you may wonder - what the hell are you doing all this for? Wouldn’t it be easier to work in-house? Why not get a job and keep this as a hobby? You know I have thought about those things. But this is the pain I like. It is hard and sucks sometimes but that’s pretty much any job.
What I want to spend some time on next is an actual business plan for 2021. I’ve mostly ran without one although I’ve kept up with other things like the LLC, biennial statements, etc. I don’t need to raise money or get a loan but after looking at some it does provide clarity especially when clients can ask for so many different things. In the plan I will include two pipelines for my business and how they work.
Inbound Requests - when a brand or person sends an inquiry then I ask for an RFP, I send a proposal, they sign, send a deposit, we make a treatment, etc.
Outbound pitches - There is something I want to exist so I make a plan, budget, and pitch it to a brand or company that seems like a good fit and has $$$. My friend Eric said Tom Sachs did this with Nike for this video. Tom is a famous artist and I am not but I won’t let that stop me.
I have also thought about my goals in life and for this company. I used to think I wanted to make things that large audiences would see and love. Now I want to make things that get cult love. A few indie films, some commercials, and music videos. Overall successful enough me and my friends get to do what we want but still go to Target and no one bothers us.
All this to say, I do feel lucky. I am just another dude with a camera. I am learning to run a business and I am making mistakes but still growing. It is actually impossible to not make mistakes and often there are grey choices where you just need to decide because not deciding is worse. Distinguishing between mistakes where you fall into the grass or mistakes that are fatal is something my old boss taught me. Also if they’re reversible just decide quick. And you know what at this stage of my career I’m still discovering my voice as a filmmaker. I’ve learned from each project this year and applied it to the next. Sometimes I get caught up in the comparison trap so I need to remind myself I’m on my own path and the good things is so far I get to keep doing it. I know next year will probably be harder but I am sure it will also be more fun.
THE END
BLACKOUT
Also thank you to everyone who’s answered my cold e-mails asking questions. That has been super helpful and I am so grateful.