Copyright 2004 Integrity IncorporatedCopyright 2010 Integrity Incorporated So, you want to be an...

Copyright 2004 Integrity IncorporatedCopyright 2010 Integrity Incorporated

So, you want to be an editor... who makes money

Carolyn L Burke, MA, CISSP, CISM

CEO, Integrity Incorporated

Executive Director, EAC


Did I really say money?


Each of us needs to earn a living in order to pay our bills and

save a little for the future.


But how much?


How much are your services worth?


Or, how profitable are you willing to be?

Copyright 2010 Integrity Incorporated

What do business people know?

They know to leverage their knowledge and skills to work for them, but that was last year’s talk.

• You work in order to earn a living.• Stay focused.


Warning

This presentation may or may not contain numbers, charts, spreadsheets, financial planning and target practice.


Focus = Having a Target


Aiming at the target


LAST YEARBASIC BUSINESS DECISIONSAre you a freelancer, an employee or a business person?How much are your services or products worth?Are you providing a service or a product?Are you profitable?

• ADVANCED BUSINESS SKILLS

Expanding your business's offerings

Finding more work and new clients

Setting and achieving goals

CONCLUSION

Your mission, vision and values

Running a profitable business with integrity


Our agenda this year

A freelancerHow much do you charge?What are you charging for?What are your costs?When will you be profitable?

• Who makes money Signing the contract Collecting your fees Bookkeeping The bottom line

RegularlyHow can you be profitable?Making those changes


Freelancers and Money





How much do you charge?

• 24 hours in one day• 365 days in one year

8760 hours

• 8 hours in one work day • 220 work days in one year

1760 working hours



RatesWork week Hours $25 $35 $55 $100

8/5 1,760 $44,000 $61,600 $96,800 $176,00010/5 2,200 $55,000 $77,000 $121,000 $220,00012/5 2,640 $66,000 $92,400 $145,200 $264,000


How much do you charge?Fill in here

A Hours per day:

B Hours per year: (A x 220)

C What do you charge per hour: $

D What could you earn per year: (B x C ) $

E How much did you earn in 2009: $

F What is the difference: (D - E) $

A

C

D

E

F

B


How much do you charge?Projecting your fees (Income Statement)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TOTALSRecurring work

BaNQ 250 250 250 250 250 250 250 250 250 250 250 250 3000Institute 150 150 150 150 150 150 150 150 150 150 150 150 1800CICA 900 900 900 900 900 900 900 900 900 900 900 900 10800Joe's Website 300 300 300 300 300 300 1800Ministry of Education1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 14400

Project workGreat book 750 1500 750 3000Another book 1500 2500 1000 5000ABC Annual Report 2750 2750Joe's Brochures 400 400Real Estate Agent 350 375 195 350 375 195 350 375 195 2760City of Alberta 200 750 1200 750 1200 3500 1200 200 9000

New clients 1000 1000 1000 1000 1000 1000 60003050 6300 4375 2995 3600 5150 7325 6195 5150 7300 5375 3895 60710

Actual Fees Earned Projected Fees

3050 9350 13725 16720 20320 25470 32795 38990 44140 51440 56815 60710 Accumulated total

E


Fill in here

A Hours per day: 8

B Hours per year: (A x 220) 1760

C What do you charge per hour: $55

D What could you earn per year: (B x C ) $96,800

E How much did you earn in 2009: $60,710

F What is the difference: (D - E) $36,090


A

C

D

E

F

B


What happened to F ?


What happened to F?

• You didn’t charge for all the hours you worked

• You didn’t charge for work that wasn’t editing per se

Let’s change this


What are you charging for?

• Charge for all the hours you work• Charge for work that isn’t editing, such

as sales time, project management, administration and billing, managing the client or sub-contractors.


Let’s find out how you spend your day



Logging your time • Carry a notebook and pen with you.• Use one page per day. • Record each activity as you go, not

after the fact.



Hrs Code Time Activity1.0 H 9am-10am Staff meeting

0.5 S 10am -10:30am Called three clients about new projects 0.5 B 10:30am-11am Client call. Spoke to staff for 10 minutes. 2.0 B 11am-1pm Edited brochure


What are you charging for?COD

EType of work

B Billable timeN Non-billableA Admin tasksH HRF FinancialM Marketing, networkingS SalesL Long termX Time spent on special projectsT Travel time P Personal time during ‘official’ work hours



Tracking your time• Once a week, count all the hours spent

on each type of activity.• Log into your time log.



May10 B

SUN 1

MON 3

TUE 1

WED 3

THU 3

FRI 3

SAT 4

totals 18

Your time log



May10 B N A H F M S L X T P tot

SUN 1 0 0 0 0 0 0 0 0 0 0 1

MON 3 1 .5 .5 0 0 .5 1 1 0 1 8.5

TUE 1 1 .5 .5 0 3 0 2 1 0 1 10

WED 3 1 .5 0 1 0 .5 1 1 0 1 9

THU 3 1 .5 .5 0 0 1 1 0 0 1 8

FRI 3 1 .5 .5 0 0 .5 1 1 0 1 8.5

SAT 4 0 0 0 0 .5 0 0 0 0 0 4.5

totals 18 5 2.5 2 1 3.5 2.5 6 4 0 5 49.5

Your time log


What are you charging for?Daily: Complete your log book page for the

day, accounting for every minute

Weekly: Update your time log

Monthly: Compare what you’ve billed against the N and B hours, and against the total hours. Is time allocated wisely?

Annually:

Compare what you’ve earned against the N and B hours, and against the total hours.



• Are you working efficiently? (lower P)• Are you spending enough time on billable

work? (raise B, lower N)• Should you bill for the non-billed work? For

sales, admin time, travel? Justify N time: Write a mini essay about why you chose to work for free.



• On your invoice, add N, A, T, (and M, S) times. Is the total still reasonable?

• Next, send that invoice to a client. • Check in. Are they comfortable paying you for

all your time? If not, perhaps your rates are too low!

I guarantee: you are not billing for all the time you spend on a project.


Charge for everything you do

• Log all your time• Analyse the log

regularly• Break into

categories: marketing, hr, billable time, administration, sales, bookkeeping, planning.

0

5

10

15

20

25

billable time

unbilled time

marketing

hr project manag.

sales

planning

financial

M T W R F Totals


INVOICE

Billable hours 22 hoursUnbilled hours 9 hoursProject management 4 hours

Total 35 hours

INVOICE

Billable hours 22 hours

Total 22 hours

Charge for everything you do

• Invoice your time• Your invoice

should look like this:

• Not like this:

Billable hours


What are your costs?EXPENSES (Income statement)Staffing Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TOTALS

Subcontractors 500 500 500 500 500 500 500 500 500 500 500 500 6000Office 0

Computer and related 1000 300 1300Internet 55 55 55 55 55 55 55 55 55 55 55 55 660Phone 25 25 25 25 25 25 25 25 25 25 25 25 300Printer / paper / ink 35 35 35 35 35 35 35 600 55 35 35 35 1005Couriers 55 112 33 12 19 44 275Offi ce equipment 300 250 550Lease 500 500 500 500 500 500 500 500 500 500 500 500 6000

Marketing 0Web Designer 300 300 600Web hosting 10 10 10 10 10 10 10 10 10 10 10 10 120Domain name 20 20Ads 300 300 600Cards / letterhead 150 150

Skill maintenance 0EAC conference 330 330Travel 150 50 200EAC certification 650 650Books 250 250Dictionary subscription 95 95

1575 1180 1540 2605 1537 1375 1708 2340 1457 1475 1144 1169 19105

G


What are your costs?

Flow-through costs• Lease• Subcontractors

Rate-increasing• Skill maintenance• Marketing• Office

All tax deductions.



• Which costs can you reduce?• Which can you delay?• Which can you eliminate?



Subcontractors 500 500Office 0

Computer and related 0Internet 55 55Phone 25 25Printer / paper / ink 35 35Couriers 0Offi ce equipment 300 300Lease 500 500

Marketing 0Web Designer 0Web hosting 10 10Domain name 0Ads 0Cards / letterhead 150 150

Skill maintenance 0EAC conference 0Travel 0EAC certification 0Books 0Dictionary subscription 0

1575 0 0 0 0 0 0 0 0 0 0 0 1575







1575 1180 1540 2605 1537 1375 1708 2340 1457 1475 1144 1169 19105

G







1555 1120 1720 2385 1517 1355 1367 2140 1137 1455 1124 1149 18024

G



Canada Revenue Agency (CRA):

“you can deduct any reasonable expense you incur to earn business income”

Tax deductible expenses lower the amount you will owe tax on, thereby raising your overall income.



• Which other personal or household costs could become tax deductions?• Entertainment sales meetings• Internet and phone business expenses• Insurance convert plan to include CGL• Car travel• Clothes / makeup deduct if you present

to an audience



• When you plan a tax deductible major purchase, consider which tax year the purchase will fall into.

• Pick the year with the higher business revenue.


Profit

• Profit =

Revenues

- Expenses

J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec

($)

Revenues Expenses Profits


Lower expenses

• Reduce all unnecessary expenses

J an Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

($)



Raise revenues

• Raise your rates• Add admin fees

J an Feb Mar Apr May J un J ul Aug Sep Oct Nov Dec

($)



Income Statement

REVENUES Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TOTALSRecurring work 2500 2800 2800 2800 2500 2500 2500 2500 2800 2800 2800 2500 31800Project work 550 3500 1575 195 1100 2650 4825 3695 2350 4500 2575 1395 28910

3050 6300 4375 2995 3600 5150 7325 6195 5150 7300 5375 3895 60710

EXPENSES Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TOTALSStaffing 500 500 500 500 500 500 500 500 500 500 500 500 6000Office 895 610 595 1395 707 845 607 980 627 595 614 639 9109Marketing 160 10 530 10 310 10 10 10 10 310 10 10 1390Skill maintenance 0 0 95 480 0 0 250 650 0 50 0 0 1525

1555 1120 1720 2385 1517 1355 1367 2140 1137 1455 1124 1149 18024GROSS PROFITS

1495 5180 2655 610 2083 3795 5958 4055 4013 5845 4251 2746 42686


Gross Profits

G

E

H


Reduce taxes

Finally, look at other expenses you could deduct.

This will lower your profitability, but will put more after-tax money in your pocket.


Signing the contract

A look at the EAC

Standard Freelance Editorial Agreement



A contract:• clarifies assumptions• includes a statement of work• provides recourse • includes a schedule for delivery and for payment• is a legal relationship



1. Task

2. Delivery

3. Payment

4. Termination

5. Special clauses

6. Indemnity

7. Applicable laws

8. Schedule A – definition of terms



3. PAYMENT

The agreed-upon editorial fee of _____________, based on a flat fee or an hourly rate ($_____ per hour), is to be paid by the Client to the Editor in the following manner: __________.

Payment is to be made within _____ days of invoice. Any payment after the due date is subject to _____% interest per month (_____% per annum).

The Client will reimburse the Editor for direct expenses incurred in fulfilling this agreement, including: photocopying, printouts, inputting, long-distance calls, parking, travel, couriers and postage, ___________.

http://www.editors.ca/hire/sfea/index.html



4. TERMINATION

This agreement may be terminated by either party in the event of material change of circumstance, with _____ days’ notice sent in writing to the other party at the address shown below.

If the Editor terminates the agreement, the Editor will be paid by the Client for work done up to the date of termination.

If the Client terminates the agreement, the Editor will be paid by the Client for the work done until termination or _____, whichever amount is greater.




This contract may be changed only by written agreement between the Editor and the Client.

Signed by the parties to this agreement on _____________ (date).

Signature: _____________________

Editor’s printed name: ____________

Address: ______________________

Signature: _____________________

Client’s printed name: ____________

Address: ______________________



Collecting your fees

1. Include scheduled payment terms.

2. Include a retainer or start-up fee.

3. Include a charge for late payments.

4. Invoice on schedule.

5. After 30 days, phone them.



• Terms• “payable upon receipt” doesn’t work• “payable on 30 days” is standard



Scheduling your payments

1. Regular intervals • Weekly, bi-weekly, monthly• Set up your monthly work plan to include

time to issue invoices

2. Milestone payments • 1 chapter, 20 pages, on completion• Submit your invoice with the work



What if you miss your work deadlines?

• Issue the invoice anyway. Let the client decide to delay payment–they may not.



Collection calls• Don’t feel bad—it’s just business.• You’ve done the work and are owed

compensation.

Mediation• If you need help, email EAC’s mediator

for help: [email protected].


Remember these?


RevenuesProjecting your fees (Income Statement)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TOTALSRecurring work

BaNQ 250 250 250 250 250 250 250 250 250 250 250 250 3000Institute 150 150 150 150 150 150 150 150 150 150 150 150 1800CICA 900 900 900 900 900 900 900 900 900 900 900 900 10800Joe's Website 300 300 300 300 300 300 1800Ministry of Education1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200 14400

Project workGreat book 750 1500 750 3000Another book 1500 2500 1000 5000ABC Annual Report 2750 2750Joe's Brochures 400 400Real Estate Agent 350 375 195 350 375 195 350 375 195 2760City of Alberta 200 750 1200 750 1200 3500 1200 200 9000

New clients 1000 1000 1000 1000 1000 1000 60003050 6300 4375 2995 3600 5150 7325 6195 5150 7300 5375 3895 60710



ExpensesEXPENSES (Income statement)Staffing Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TOTALS





1555 1120 1720 2385 1517 1355 1367 2140 1137 1455 1124 1149 18024


Bookkeeping

• Issue invoices using your accounting software

• Enter all receipts for expenses• The software will generate the multi-

period income statement• Add your own projections for the rest of

the year (on a spreadsheet)


Income Statement

REVENUES Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TOTALSRecurring work 2500 2800 2800 2800 2500 2500 2500 2500 2800 2800 2800 2500 31800Project work 550 3500 1575 195 1100 2650 4825 3695 2350 4500 2575 1395 28910

3050 6300 4375 2995 3600 5150 7325 6195 5150 7300 5375 3895 60710

EXPENSES Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TOTALSStaffing 500 500 500 500 500 500 500 500 500 500 500 500 6000Office 895 610 595 1395 707 845 607 980 627 595 614 639 9109Marketing 160 10 530 10 310 10 10 10 10 310 10 10 1390Skill maintenance 0 0 95 480 0 0 250 650 0 50 0 0 1525

1555 1120 1720 2385 1517 1355 1367 2140 1137 1455 1124 1149 18024GROSS PROFITS

1495 5180 2655 610 2083 3795 5958 4055 4013 5845 4251 2746 42686


Gross Profits


Bookkeeping

The software will:• Calculate taxes owed (GST, PST, HST)

• Prepare your year-end statement for your tax return

• Help you manage your profitability by producing reports and charts

• Help you stay on top of the paperwork


The bottom line

You should earn enough to• Cover monthly and annual expenses• Take a few weeks off• Save 10-20% for long term investments


How can you be profitable?

From today• Charge a reasonable rate• Charge for every hour worked• Lower your expenses• Deduct everything you can


How can you be profitable?

Other ideas (from other sessions)• Market your services• Specialize (and raise your rates)• Find new niches to work in• Fire your expensive clients (20% / year)• Leverage your time by subcontracting• Go through further professional development

(and raise your rates)


Your scheduled weekMON TUE WED THU FRI SAT SUN

7 F8 A9 S

10 S A11 P12 X1 S S S S S2 H3 T4 B5 T67

M B

B

B

M

B

B

B

B B

P

B

F

B


Bull’s Eye


So, you want to be an editor... who makes money

Carolyn L Burke, MA, CISSP, CISM

CEO, Integrity Incorporated

Executive Director, EAC

Copyright 2004 Integrity IncorporatedCopyright 2010 Integrity Incorporated So, you want to be an...

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