When you're self-employed, every dollar you spend in your business has to count.
But where do we tend to overspend as freelancers—especially when we're starting out? Are there some common mistakes? And how can we cut back without jeopardizing our business?
In this training episode, Carol Tice reveals where new and seasoned freelancers tend to spend more than they need to. She also provides tips and ideas for keeping ongoing costs low and negotiating the best deals with service providers.
Carol is a longtime business writer and author of The Pocket Small Business Owner’s Guide to Starting Your Business on a Shoestring. She’s been a business journalist for over 20 years and a freelance writer since 2006. As a business coach, Carol is passionate about helping writers earn more money as freelancers and has helped many of her clients successfully launch their own businesses.
What follows is a condensed transcript of my conversation with Carol. If you prefer to listen to the full audio (27 minutes), you can listen to it (or download it) here:
Ed Gandia: Carol, welcome back to the show.
Carol Tice: Thanks for having me on. It’s great to be here.
Ed Gandia: Today, we’re covering a topic we don’t address often enough: how to spend money wisely in our freelance businesses. Where are freelancers wasting money?
Carol Tice: I have to start with website design. This isn’t true of all freelancers. Some freelancers need to spend more on their website design! But when I review client websites, I find many have highly designed sites that cost thousands of dollars to build. And often, the site hasn’t been done right, and it needs to be done over.
Some designers are in love with design. They make sites that are very busy and flashy, with rotating headers and things. But they may not know a lot about conversion. And I have to tell my clients, “You’re going to have to do this over. This isn’t going to get you any customers. I can’t even tell what action you want people to take.”
Overpaying for overdesign is a problem. Writers really only need a bare bone site with a few subpages and clear contact information on the front page. Your contact information shouldn’t be hidden under a tab or limited to a form people need to fill out.
All you need is a simple site that explains what kind of writing you do and shows how to contact you. If you make your email link clickable and a few other basic things, then that is more effective in getting clients than some splashy, big-money website.
Ed Gandia: So what price range should writers consider? What’s too much?
Carol Tice: You can get this done for a few hundred dollars, at most. I just threw up a website for my new book about saving money in your business: The Pocket Small Business Owner’s Guide to Starting Your Business on a Shoestring. I paid about $150 to my webmaster to set it up. It’s totally fine. There are cheap solutions out there.
You can create your own website using platforms such as Writer’s Residence. Sean Platt’s outstandingSETUP is affordable if you know a little WordPress. I’ve seen sites they’ve done that are nice and simple.
When I started my freelance business in 2005, I hired a friend of one of my team members. They were in the same digital design class in high school. He put up my website for $18 an hour. It was incredibly cheap, and he was great.
Community colleges with computer design classes are great places to find people. Ask the teachers for a referral. Often you can find someone who needs a portfolio credit, and you pay next to nothing.
The other solution is to barter. I’ve bartered with designers for graphics in exchange for writing part of their website.
My philosophy is to look at every cost in your business and ask yourself if there’s a way to get rid of it. After five years of reporting and covering cash-strapped hardware stores and lumberyards, I’ve learned that every cost counts.
We have a tendency to just accept costs in our businesses. “Well, I have to have that.” But maybe you don’t. If you change your attitude and look for ways to avoid spending, you might come up with other solutions.
Ed Gandia: Bartering is how I created the current iteration of my freelance writer website. I bartered with a web design firm, and it worked out great. We’re both happy. So I know this can be done. You just have to be a little creative.
Today, in 2013, there are cost-effective ways to get this done. And not just get it done, but get it done right. In WordPress especially, there are themes that make it look like you spent $5,000, when you only spent a couple hundred. It’s pretty remarkable. We didn’t have these options back in 2005.
Carol Tice: Overspending relates to our insecurities sometimes. You think, “Well, if my website looks fabulous, I’ll impress people and feel legitimate.” That’s not what it’s about.
Great writer websites are really, really simple. Great freelancer sites are straightforward with only a small amount of copy. Let me read your clips and see your portfolio. Tell me how to hire you. Give me some of your personality. That’s it.
Ed Gandia: So if you can get it right and use some of these tools to get an amazing-looking site for just a couple hundred dollars, then all the better. You don’t have to spend lots of money to get there.
Carol Tice: That’s right. And while we’re talking about Internet tools, take a look how much you spend on software. There’s probably a free version or trial of the kind of softwares you use. For example, LibreOffice and Apache OpenOffice are free. You can use them instead of Microsoft Office Suite.
Look at every tool you use. MailChimp is free to the first 2,000 subscribers. FreshBooks is free for the first three clients. You can get started without paying and still have a really pro tool. If you have that mentality, you approach it from the perspective of “Who’s got a free offer for me?”
And if you’re really creative, you can bounce from free offer to free offer. There’s a lot of competition in software.
Ed Gandia: You mentioned MailChimp. So if you’re going to have a newsletter, it’s free for the first 2,000 subscribers?
Carol Tice: Yes. It’s great for building a client list.
Ed Gandia: And FreshBooks is an invoicing and bookkeeping software. The first three clients are free? I didn’t know that.
Carol Tice: Yes. There’s also a free project management software called Project Zoho. There are so many free tools out there. Use them.
Another area where freelancers are overspending is in-person networking. There are a lot of pricey chambers of commerce out there and pricey business networking groups, like BNI, where you can end up spending $500 just to join. I never did that. You can be a guest at a lot of these places. Most chambers run at least one or two free open house events a year. You don’t have to be a member.
Figure out where you can network for free. LinkedIn city groups, like my Seattle group, have free meet-ups. Meetup.com has free meet-ups. You can network without having to shell out money.
My chamber of commerce happens to be really affordable, but I gather some are really expensive. If you’re in a metro area, look around at all the chambers in your area and see which is the best value.
Also, marketing partnerships are a great way to get free publicity and referrals. Most freelancers don’t do enough of these. Get together with complementary businesses, like a designer, webmaster, writer and photographer, and put an ad on each other’s website. It’s free and can be a terrific source of business.
Ed Gandia: You’re using the power of the network to get a compounded effect. If you get three people, it’s like the effort of nine versus the effort of one.
Carol Tice: I find a lot of people doing Facebook ads and such, and they don’t have to. When was the last time you went on LinkedIn and told your connections you’d appreciate referrals? That you’re looking for more clients? That’s free. And it gets great results.
Ed Gandia: When it comes to spending time and resources, prospecting and marketing is a big one for many freelancers. Do you have any ideas that could help? Especially when people are starting out and bootstrapping?
Carol Tice: Sending letters of introduction via email is free. You can send out hundreds of them.
Ed Gandia: I’m a big fan of warm email.
Carol Tice: Exactly. Sometimes people buy a list, which is a total waste of money. You want to develop your own prospects. I know you agree with me on that.
Ed Gandia: Yes.
Carol Tice: I do recommend that people use The Book of Lists if they’re in a major American metropolitan market. The American City Business Journals publishes it. But you know what? I’ll bet your library has a copy. So you don’t even have to spend $98 to buy one.
Ed Gandia: A lot of freelancers worry about not living near a big metropolitan area. This is the age of online freelancing. You don’t need to stick to your local market. It’s a global business.
Carol Tice: Just pick the nearest city and use their list.
Ed Gandia: Absolutely.
Carol Tice: And while you’re at the library, ask what business databases they have. They may have LexisNexis, Hoover’s, Dun & Bradstreet—all kinds of things. These subscriptions didn’t use to cost that much, but now they cost an arm and a leg.
Ed Gandia: There are several layers to this prospecting effort. You mentioned the first one: creating a master list. But then take it to the next level and get a name and contact information. LinkedIn is great for this. And you don’t really need to upgrade in order to get some of the most powerful features. I know you’re a fan.
Carol Tice: Absolutely. I used to troll LinkedIn for jobs and see who’s viewed my profile. It’s a great way to prospect. I also like to troll their full-time jobs and then pitch them my freelance services.
Ed Gandia: Tell me more about that.
Carol Tice: Behind every full-time writer or photographer, designer-type job listing is chaos. Somebody has been fired or they’ve left, and they don’t have a replacement. Now it’s a mess and everyone is overloaded.
So they need to find someone, but it’s going to take six months to a year. It takes forever to make a permanent hire because it’s a big decision. It’s a big commitment.
Ed Gandia: To clarify, these are job listings for a full-time position?
Carol Tice: Right. So when you see that ad, you apply. And then when you write your cover letter, you say, “I’m not looking for a full-time job. I’m a happy freelancer. But I was wondering if you need help with design, writing, whatever, while you’re hiring?”
Often, the answer is yes. The salary of the unfilled position gets moved to the freelance line of the budget. They have to get the work done while they’re giving applicants writing tests, personality tests or whatever weird things they have to do to make a permanent hire. It’s an elaborate process. I was a staff writer for 12 years, and I don’t believe either place I worked was ever fully staffed while I was there.
Ed Gandia: So you’re not pitching them on going freelance instead of hiring a full-time employee. You’re saying, “I can fill that gap while you finalize your hire.” That’s a brilliant move.
Carol Tice: Of course, the reality is once they use and love you, it often turns into an ongoing thing. They’re happy to keep giving you assignments. And one day they might say, “Well, it’s been six months. You’re doing great, and we still haven’t hired anyone. Why don’t we just keep it like this?”
I pitch it as, “Hey, can I help out while you’re in trouble? I’m plug and play.” I always target industries where I have experience. “Oh, I use InDesign. I can come in and put out your publication.”
Ed Gandia: Where do you find these openings? You said LinkedIn is a good place?
Carol Tice: I like the full-time jobs on LinkedIn, because companies have to pay to list their job openings. So immediately, clients are qualified. It’s not Craigslist junk. It’s Microsoft and Costco. Big companies.
Ed Gandia: Tell me a little bit about office equipment and resources such as phone and Internet service. These things don’t seem like a big deal, but they add up quickly.
Carol Tice: We tend to forget about monthly service-type expenses. We sign up and then forget about them. But really, you should re-bid on those services every six months to a year. New providers emerge, deals happen, the marketplace changes.
Another thing you can do is play your current service against a new offer. “Your competitor is offering me this. What have you got for me?”
See what they’ll give you. Constantly think about how you can get the cost lower. Often when you sign up for a service, they’ll give you a deal that expires in six months. They don’t say anything when it expires, and your bill starts creeping up. Next thing you know, it’s twice the price of what it was.
I just went through this with Comcast. We had Comcast digital everything. We weren’t getting a bundle discount, even though we had everything: Internet, cable and phone. And they were charging us for TV channels we never watched.
Get in the habit of scrutinizing bills and questioning them. Re-bid all those monthly services. I’ve cut my telecom costs in half just by doing that.
Ed Gandia: So it requires a little discipline. Maybe set yourself a reminder every six months. And you may need to carve out a couple hours to make some phone calls and do a bit of research. But what you’re suggesting is that it can pay off in a big way. If you can cut your total telecom cost by half, and not just in your business but at home too, that’s huge.
Carol Tice: Yes. My husband is a pro at comparing offers. I’ll save flyers I get in the mail and then every few months I’ll be like, “Hey, honey, can you look through these?”
Think of every recurring monthly, quarterly or annual service you use. For example, how do you back up your hard drive? Are you using a cloud-based service for that? If so, how much does it cost?
Ed Gandia: What I’ve found is that for these companies, it’s cheaper for them to give you a better deal and to keep you as a customer than lose you. The lifetime value of a customer can be huge. That’s why their customer service people have leeway to give you a deal. There’s so much profit margin built in, it pays for them to be flexible.
Carol Tice: When you call and say, “I want to stop my service,” then it’s battle stations. They’re like, “What can we do to keep you?” “We have this deal. Are you on that yet?” But you have to poke them.
If you’re financing your business with credit card debt, the same strategies apply. Call your creditors. Compare cards. Find the one with the lowest interest rate and put all your debt on that one. And then call them and see if they’ll knock it down more. Or call one of their competitors, “I’m getting this percent here. Can you give me a lower rate?”
There’s a lot of competition out there. People are hungry for your business.
Ed Gandia: I recently saw a post from Derek Halpern from Social Triggers. He said the next time you see a charge on your bill that you don’t agree with, call the company and say, “I need you to take this charge off my bill because I don’t want to pay it.” Use that exact script.
He said nine times out of ten, they’ll take it off. You might have to talk to a supervisor, and they may be confused at first. But he says there are a lot of junk fees in our statements. Companies just throw them in there figuring nobody’s going to ask.
There are some things, like taxes and so forth, where there’s no flexibility. But Derek has had tremendous success with this approach. It might be worth trying.
Carol Tice: Absolutely. Be the squeaky wheel.
Ed Gandia: These are great ideas, Carol. When you’re starting out, you have to be resourceful. That’s the key word. It’s not about having everything perfect. People spend a lot of money trying to get everything perfect, but then they don’t execute.
I’d rather our listeners be resourceful and spend extra time and money executing than wait until everything’s perfect and beautiful. Otherwise, years will go by and you won’t execute.
Carol Tice: No kidding. I agree with that.
Ed Gandia: Tell us about your book. It’s available in bookstores now?
Carol Tice: It’s available on Amazon and Barnes & Noble and all that. It’s titled The Pocket Small Business Owner’s Guide to Starting Your Business on a Shoestring. It’s full of hundreds and hundreds of ways to save money in your business. It has ideas for every aspect of every type of business. Service, e-commerce, retail, merchandising, wholesale, you name it.
Ed Gandia: How applicable is it to freelance writers?
Carol Tice: There are some chapters that definitely apply. All the tips I’ve talked about today are in the book.
Ed Gandia: So even somebody with a very simple service-, home-based business can benefit from it.
Carol Tice: Yes. There are some great ideas for online and service businesses. Ideas on how to get started and create a business without spending a lot. The website for the book is www.shoestringstartupguide.com. There’s a free workbook that goes with it too. It complies all the tips into a checklist, and you can use it as a brainstorming tool.
Ed Gandia: That’s a great idea. I love that.
Carol Tice: There’s a link at the end of the book that you use to get the workbook.
Ed Gandia: And listeners have got to visit your site to see what you got for $150.
Carol Tice: Yeah. Check it out.
Ed Gandia: Carol thanks again for coming on. It’s an important topic. These little things add up in a big way. Over the course of a year, it can mean the difference between making a go of it or not.
Carol Tice: It all adds up. Thanks for having me.