turning a profit

Becoming A Frugal Freelancer

by Paul Strikwerda in Articles, Gear, Money Matters 2 Comments

If you’ve stumbled upon this blog post without reading part one Would You Survive The Shark Tank? please stop. Click on the title above; read the story, and come back when you’re done.

By the way, as always, blue text on this blog indicates a hyperlink. 

Here’s one nugget from last week’s post you’ll remember:

“The way you manage your money is one of the most important indicators of success. You may have the most enchanting voice in the world, but if you don’t price for profit, and you spend more than you make without even knowing it, you may end up driving for Uber, instead of doing your dream job.”

A week ago we talked about investing in your business. You’ve got to spend money to make money, but you have to do it wisely. I call it “strategic splurging.”

BUSINESS 101

Today I’m going to talk about saving some cash, but before I get to that, let’s go over a few basics.

As a solopreneur, you have to ask yourself:

“What is the purpose of my business?”

Financially speaking, there can only be one answer:

It’s not to make money, but to turn a profit.

If I were a bank, and you’d come to me for a loan, I wouldn’t care about how well-respected you are in your community, or how much you love your job. I would not look at how many people read your blog, or how many friends you have on Facebook. I would look at your bottom line.

Your profit is the number one indicator of the health and success of your business. Here’s a simple formula:

Total Sales – Total Expenses = Profit

AMATEUR OR PRO

We often talk about the difference between doing voice-overs as a hobby, or as a business. What’s the difference between an amateur and a professional? In the end it doesn’t matter what you think, or what your coach tells you. You’ve got to convince the tax man!

Here’s what the IRS has to say about the difference between a hobby and a business: 

In order to make this determination, taxpayers should consider the following factors:

  • Does the time and effort put into the activity indicate an intention to make a profit?
  • Does the taxpayer depend on income from the activity?
  • If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
  • Has the taxpayer changed methods of operation to improve profitability?
  • Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
  • Has the taxpayer made a profit in similar activities in the past?
  • Does the activity make a profit in some years?
  • Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?

 

The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year.

SAVING MONEY

Healthy companies focus on two main things:

1. Increasing revenue
2. Decreasing expenses

Here’s what you should know: Curbing costs starts between your ears.

In Are Those Black Friday Deals Really Worth It?” I gave the following spending advice:

1Distinguish between a WANT and a NEED

Every time you’re tempted to make a major purchase, ask yourself: 

“Do I really need it right now, or is it just something I want?” “Is it a necessity, or a luxury?”

So, if you really, really want to buy a nice, new, shiny piece of equipment, ask yourself:

– Will it make me more professional, productive, and profitable?

– Will my clients experience an undeniable difference as a result of this purchase?

– Will this investment pay for itself within a reasonable period of time?

If you can answer these three questions with an emphatic YES, move on to the next level:

2. Find the product that best meets your needs and your budget

This applies to business expenses, but also to other purchases. You have to be a smart shopper across the board, to allow your business to grow. 

If you must make an investment, do your homework before you make an impulse buy. Determine how much you can afford to spend, and begin your research. Ask people you trust for suggestions. Look at what the pros are using.

Skip commercial copy, but pay close attention to independent reviews from reliable sources. For gadgets and certain pieces of gear, I will often turn to The Wirecutter website for extensive comparisons, reviews, and recommendations.

Here’s my rule of thumb: Always choose high quality over low price. You may pay a bit more today, but you will save money in the long run.

When you operate your own business, it’s so easy to get bogged down in the day-to-day running of your shop. However, if you want to have staying power, you must think long-term, and plan accordingly. And speaking of time, here’s your next decision:

3. Determine the best moment to buy something 

Saving money has a lot to do with timing. For instance, the best time to buy a new television is right before the Super Bowl, and before new models hit the showroom. It can save you hundreds of dollars. 

One of my favorite sites is lifehacker. Lifehacker has a handy graphic, illustrating The Best Time to Buy Anything During the Year. You’ll see that February is great for buying cellphones and home theaters. August is best for office supplies.

Once you’ve found what you are looking for, and you know when to get it, you must make the following commitment:

4. Never pay full price

No one pays sticker price on a new car, right? That would be foolish. So, I want you to bring that same mindset to your next purchase. And just as you’d go from dealership to dealership to get the best price, I want you to use the same method online.

The first thing you need to find out is how much retailers are generally charging for what you want to buy. Otherwise you don’t know if you’re overpaying, or you’re getting a steal.

A simple way to do that, is to start a Google search for your product. Click on the shopping tab, and sort by price from low to high. Before you begin this process, always clean your disk space by clearing your cookies, cache, history, and footprints. Otherwise, your search history might reveal to online retailers that you’re interested in buying a certain product, and they’ll quote you a higher price.

If you’re an Amazon fan, I recommend installing the free camelcamelcamel price tracker. It monitors millions of products, and it gives you insightful price history charts. On top of that, this tracker can send you alerts via email and Twitter, notifying you of price drops.

The website Slickdeals also has a price tracker, tracking prices from 52 stores. You can install a bookmarklet, and add it to your browser’s bookmarks bar to check the price history of any item at a supported store as you browse the web.

Once you have a clear price point, the next decision you’ll have to make is whether to buy…

5. Refurbished or used

My biggest savings have come from purchasing previously loved equipment. Not everyone is comfortable with buying second-hand, but once you’ve had a few positive experiences, I think you’ll warm up to the idea.

The safest way to buy used gear, is to get it from someone you know. The Facebook group VO Gear Exchange has over 1,500 members, and right now there are 123 items for sale. Online retailer Sweetwater has a Trading Post where you can buy and sell gear. You can also buy and sell used pro audio equipment from Guitar Center by clicking this link. 

As a buyer and seller, I’ve had mostly positive experiences with eBay. The trick is to do your homework before you start bidding. Know how much something is worth, and use the website Checkaflip to find out how much a certain product is usually selling for. 

Buyer beware! Only buy from sellers with overwhelmingly positive feedback, and look for auctions that end on hours very few people will be bidding (mornings and early afternoons). The fewer people bid on something, the better your deal will be. eBay has a money back guarantee if your item hasn’t arrived, or isn’t as described.

Amazon shoppers can also buy used or reconditioned products. Just click on the Used & New link below the description of the item you’re looking for. You might be surprised how much money you can save. 

Speaking of reconditioned or refurbished, that’s another great option for frugal freelancers. I recently bought an iPad Air 2 with 128 GB, Wireless & Cellular. You can find it at the Apple store for $629. I bought a factory refurbished model from BLINQ for $396.79 with free shipping (using a 20% off coupon for signing up for email alerts). Apple sells the same iPad refurbished for $529. Retailer Best Buy is selling the iPad Air 2 with similar specs as an Open Box item for $464.99.

My tablet didn’t arrive in Apple’s signature fancy packaging, but otherwise it looked and felt brand new, without any dents or scratches. Right now I’m using it as a second monitor, with the help of an app called Duet. The app is available for Mac and PC.

If you’re still not comfortable with getting a used or reconditioned product, you have to consider what to do when you’re… 

6. Buying new

Of course you’d start by using a shopbot like Pricegrabber, to find the best price. You can also look for deals on Retailmenot or a site like Overstock.

Rick Broida from website CNET, writes the Cheapskate Blog that’s written for bargain shoppers like me. Once I had ordered my iPad, I wanted to set up cellular service. The Cheapskate Blog told me about a free T-Mobile data plan for my tablet. All I had to do was buy a ten-dollar Sim card, install it, and BAM: I now have a 200MB monthly plan at no cost.

Rick also wrote about the Brenthaven Elliot Slim Brief with lifetime guarantee which normally retails for $79.95. I got it for $24.95, and it protects my iPad perfectly during my travels. This deal is no longer available. 

Apart from Rick’s blog, CNET has another deals & promotions page you might want to check regularly. You’ll find deals on anything from electronics, cruises, office equipment, to clothing.

There are at least four other deal aggregators I visit regularly: kinja Deals, BradsdealsWoot, and Tanga. Please do some window shopping to find out what they have to offer. You can thank me later!

Another money-saving concept is that of the Buyer’s Club. This is where a number of buyers commit to purchasing something to get a group discount. Groupon is probably one of the best examples. One of my favorites is MassDrop, which has a special Audiophile section. 

Whenever I’m shopping online, I make sure to activate my eBates account to earn cash back on my purchases. The Cash Back Button I’ve installed tells me how much cash back is being offered, and it reminds me to activate the discount. About 2,000 stores give cash back through eBates. The way I see it, it’s free money!

“But what about coupons?” you may ask. Well, I use a browser extension called Honey. Honey automatically finds and applies coupon codes at checkout on thousands of sites. Honey also finds better prices on Amazon, and offers cash bonuses on many stores. 

Once you have Honey installed, whenever you’re on a shopping site that Honey supports, you will see the Honey icon in the top right corner of your browser turn the color orange. This means that Honey supports that store.

Now, here’s my last money-saving tip for you: 

7. Get a good accountant who specializes in small businesses

Let’s face it: you didn’t become a freelancer so you could bury yourself in boring and time-consuming paperwork. Spare yourself the headaches, save yourself some time, and hire an expert. Your forms will be filled out correctly, and filed on time. A good accountant helps you maximize your deductions, lower your tax bills, and can be your financial sounding board.

When you’re ready to make your next purchase, remember this: it’s easy and lazy to pay full price. It’s also bad for business. 

It may take you some time to track down the best bargains, but you’ll learn a lot, and finding a bargain can be quite gratifying. 

The way you shop for your business will help you cut down your household expenses as well.

Small savings add up quickly. At the end of the day, you’ll have more money in the bank; money that’s going to be your security blanket.

Of course there are more ways to save, and if you have specific tips, I hope you’ll share them in the comment section.

Happy frugal shopping!

Paul Strikwerda ©nethervoice

PS Be sweet. Please retweet!

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Would You Survive The Shark Tank?

by Paul Strikwerda in Articles, Career, Freelancing, Gear, Money Matters 13 Comments

Three years ago, two aspiring voice-overs took the plunge, and opened up shop.

One was incredibly talented, undisciplined, and thought he always knew best. The other one wasn’t as good, but she was business-savvy, and listened to feedback.

36 months later, number one is now an Uber-driver, entertaining his clients with celebrity impressions. Number two is starting to make a living… as a voice talent.

What went wrong, and what went right? Was it a matter of luck, attitude, or preparation?

Simply put, it takes more than talent to make it as a freelancer, no matter what field you pick. Way more. Let’s explore.

INVESTING IN YOU

Here’s a question for you.

If I were an investor on Shark Tank or Dragons’ Den, and you came to me with a pitch to back your business, what would I be looking for?

Number one: I’d look for your ability to make me money. By the way: that happens to be the same reason why agents sign you, and clients hire you. 

Think about that for a minute.

You may believe that you’re doing what you’re doing to make money for yourself. If that’s the case, I have news for you.

Your clients don’t care whether or not you turn a profit. Your clients don’t want to know how much you spent on that new microphone or revamped website. All they are interested in, is this:

“Will your voice help me spread my message so I can make more money?”

Even if you happen to work with a non-profit, it’s always a matter of benefits and costs. The benefits of hiring you should outweigh how much your clients pay. If that’s the case, those clients will perceive you as an asset, and not as an expense.

MAKING YOUR PITCH

There’s a lot of psychology in selling, but it starts with this: in a competitive market you have to offer a competitive product. Something that’s different, or better than what’s already on the shelves. 

If you’re providing a service like voice-over narration, you better bring it from day one. Don’t jump into the ocean if you barely know how to swim. Amateurs learn on the job, and they get eaten alive. Professionals know what they’re doing, and they’re able to survive.

In the Shark Tank as well as in real life, you’d need to bring something to the table that’s rather unique; a brilliant solution to a common problem, sold at the right price. Yes, you heard me. As one of the investors, I would expect you to know what you’re worth and charge accordingly.

Mark my words: Those who sell themselves short, aren’t taken seriously.

You’d also have to demonstrate what sets you apart from the competition. You have to come up with a solid marketing plan, and convince me why I should trust you.

It’s also important that you present your plans compellingly and logically, particularly under pressure. The reason is simple. If you cannot sell yourself, how will you ever sell your service, especially if you are the embodiment of that service?

LOOKING AT THE NUMBERS

Lastly, you’d have to show me your books.

Some freelancers think this is the boring stuff, but to me, this is where things get interesting.

No matter what business you’re in, the way you manage your money is one of the most important predictors of success. You may have the most enchanting voice in the world, but if you don’t price for profit, and you spend more than you make without even knowing it, you may end up driving for Uber.

Your balance sheet needs to reflect a few other things as well:

  • a keen sense of organization,
  • an aptitude for making intelligent investments, and
  • an ability to control costs.

 

If it’s okay with you, I want to talk about the last two things I just mentioned: investing in your business, and controlling how much you spend. Today I’ll talk a bit about spending. Next week I’ll show you a few of my favorite ways to save. 

WHERE TO PUT YOUR MONEY

No matter what some people want you to believe, you cannot run a profitable voice-over business on a shoestring budget. It starts with getting the proper training. Clients pay you because they trust that you know what you’re doing. They don’t expect you to figure it out on the fly and on their dime.

Just as a carpenter needs quality tools to deliver quality work, you need to have equipment that says you’re taking this voice-over thing seriously. Otherwise, you’re nothing more than a hopeful hobbyist talking into a stupid snowball microphone. 

Now, if you’re just getting started, here’s something you probably don’t want to hear: without a dedicated, isolated, and acoustically treated recording space, you’re not going to make enough money to stay afloat.

When a client calls, or there’s an audition, you need to be able to jump into your booth and press “record.” Otherwise the client will go somewhere else, and you’ll be last in line for that audition. You really can’t afford to wait until your neighbor stops using his snow blower, or until that barking bulldog finally falls asleep.

An expensive microphone in a bad recording space won’t sound half as good as a cheaper microphone in a treated environment. I think you get the point. Looking back at my career, building a home studio was one of the best investments I’ve ever made. It has paid for itself many times over, and frankly, I wish I’d done it earlier.

THE INVISIBLE EQUALIZER

Another investment you should make, is an investment in something invaluable that cannot be bought or rented. You can’t taste it, or touch it. Yet, everyone is using it every day (some to greater effect than others).

I’m talking about Time.

The success or failure of your business greatly depends on how you spend your time. First of all, give yourself time to become good at what you want to do. Cultivate your craft. Don’t rush it. There’s a lot more to doing voice-overs than most people think. And just because it sounds easy, doesn’t mean it is. 

Time is all about goals and priorities. We usually get things done that are important to us. People tend to get their “musts,” but not their “shoulds.” 

In a past profession, I interviewed many people who were considered to be a success. Politicians, captains of industry, and entertainers. Most of them were incredibly busy, but they were really good at planning, or had someone else do the planning for them. That way, they made the most out of every day.

These people were just like you and me, but they didn’t spend hours checking Facebook, or watching soap operas. What struck me most was their tremendous power to prioritize, delegate, and focus. Whatever they were doing at a particular moment, had their full attention.

So, if you wish to learn from those who are where you want to be, don’t ask them about the moment they knew they wanted to be a voice-over.

Don’t ask them about the silliest thing that ever happened to them in a studio.

Ask them how they spend their time, and learn from it.

This will help you get ready for the Shark Tank that is your professional life.

Three years from now, it might make the difference between working a dream job, or driving a cab.

Paul Strikwerda ©nethervoice

PS Be sweet. Please retweet!

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