This guest post is written by Megan Clark, a successful entrepreneur in Vancouver, Washington. Megan and I clicked when we realized that we were both working on similarly aggressive financial goals for the year, and that we both have many opinions in the discussion of what is means to have the consistency of a 8-to-5 job versus living in the autonomy of running your own freelance business. Megan is the Owner and Designer of Clark & Company, Founder of The Exceptional Creative and Co-Founder and Partner of hi, friend.
Photo: Jordan Philips
Being self-employed was something I always knew I would do; I assumed I would ease into it while working a full-time job elsewhere. Maybe over the course of five or ten years I would ramp up my own studio and finally take the leap, with a large stash of cash in the bank and tons of relevant design experience under my belt. As it turns out, the entire going-out-on-my-own process was majorly abbreviated and happened much sooner than anticipated. From the time there was any hint of something amiss at the ad agency I was working for as Junior Art Director to my last day and termination letter was a mere three weeks. I had only been out of school for two and a half years at that time.
Once I got over my immediate shock, the logistics of being laid off were the most overwhelming component by far. Where would I set up my office? How could I afford a new computer? What about a printer? Fax machine? Business cards? Health insurance? My investment accounts? Should I be collecting unemployment?
Drumming up business wasn’t easy either, but I considered it easier than answering all of the previously stated questions. While working at the ad agency, I worked nights and weekends with other clients; many small start-up companies who couldn’t afford a full-blown studio to do their work came to me. When I suddenly had a full-time schedule to fill I let them know I was available and word spread quickly. Many of them sent me more work and several passed my information along to others who needed my help.
Interestingly enough, it wasn’t until about six months later that I made the leap to commit 100% of my efforts to myself rather than sort of working for myself and sort of trying to find a “real job”, too. At that turning point I chose myself and I knew that the path ahead would be tumultuous, but equally rewarding.
Lesson Learned: Choose yourself.
About six months after that pivotal moment, a copy of The Total Money Makeover by Dave Ramsey landed in my hands. I devoured it like a hungry, hungry hippo (or rhino, perhaps?). My husband and I have been working our way toward financial freedom since. We listed our debts smallest to largest and have paid off five of the six initially shown our our chart.
Our chart isn’t nearly as tidy as Spencer, but it does the trick. This thing’s already more than two years old. We might just frame it once we’re done. The smiley face stickers mean we’ve completed that particular debt. Five down, one to go!
Recently, I had the realization that for many the supposed security of a full-time gig working for someone else is actually a limitation in disguise. Yes, the check may auto-deposit into your account twice a month, but literally one-third of your time is consumed by your commitment. The other third is spent sleeping and that doesn’t leave much room for making money elsewhere.
Lesson Learned: Security = Limitation
By no means have I over-earned what I was making on salary at the agency every month, but over the course of a year I absolutely do. Generally speaking, when you work for yourself, the harder and longer you work the more you make. Not all hours are billable, obviously, but the rate at which one can bill when one is self-employed and an expert in one’s field is typically high enough that it compensates for the time spent on administrative duties, business planning, sales, and so forth. Free agent paychecks may be more sporadic and varying in amount than a regular payroll check, but they pay the bills just as well… and sometimes better.
Over the last three years I have started three different companies. (I’m planning to slow down in 2012, I think…) Each of these companies uses a different method for making money, but all fall into a overall model I’d like to develop. That model is illustrated by a quadrant. The “Revenue Quadrant” comes from The Free Agent Formula, a kit that’s a must-have for any free agent. Here’s what it looks like:
The Revenue Quadrant can be found in Chapter 3 of The Free Agent Formula, available here. Copyright Reach Group LLC.
Lesson Learned: Diversify your income streams.
A secondary tool my husband and I have worked with through our Total Money Makeover is called Whiteboard Accounting. This concept was introduced to me by Frank Chimero, a renowned illustrator and design thinker in Portland, Oregon.
The Whiteboard Accounting process is as follows (from Frank’s blog):
• Buy a whiteboard. Any size you want. I’d say maybe something about 11×14”
• Split it into 12 sections. These are months.
• Figure out how much dough you need to make each month to meet costs. Don’t forget to set aside a bit of cash for retirement, savings, an emergency fund, money for buying the occasional cup of coffee out. If you’re super lazy and don’t feel like exerting effort, take your rent and multiply it by 5.
• Have that number for each month? OK. Let’s say it’s $1,000. (Just for the sake of example.) In the box you’ve drawn for each month, you’d write $100 ten times. (One hundred bucks multiplied by ten is a thousand bucks. Get it? We’re visualizing our income!)
• As you land jobs and as checks come in, you erase $100s from the board. I get an illustration gig. It pays $400. I erase 4 $100 off the board. Repeat ad nauseam.
The thing is, once you erase all the $100 in the month of January, you’re done. Stupid job comes into your inbox, but January is cleared out? Say no! Land a job on January 20th that you really want to take, but you’ve already cleared out the month? Start erasing 100s in February!
Frank described this on his blog (which you can read more of here), but I took it and made it my own. The original idea is to be implemented so you know when you can afford to say “NO” to work. In our case, Whiteboard Accounting is used so we can visualize our income goals and cross off our progress each month. If we over-earn our goals, first we say, “Hallelujah!” and draw a smiley face, then we take whatever is above and beyond and throw it toward the debt we’re on in our debt snowball.
Smiley faces are good. They mean that we over-earned our monthly income goal. Hallelujah!
My job has enabled us to get out of debt at an accelerated rate, but I love it for more reasons than that. I always say I’m ruined because I’ll never be able to work for anyone else… unless it’s an utterly perfect job. As it stands, I have the freedom, flexibility and control to make my job exactly what I’d like it to be. Decision-making is a breeze, relatively speaking. There are no meetings, committees or ballots necessary. Whatever I do, it’s something that I said “yes” to, not what I was volunteered for my someone above me.
It’s not all rainbows and butterflies, but it’s pretty darn good. The days I feel like a lone ranger, need to make a tough decision to delegate work, face budgeting challenges or realize I may never again enjoy a paid vacation or holiday, I remember why I chose myself all those years ago. That thought never fails to put a smile on my face and a spring in my step. I am doing what I love and it’s allowing my husband and I to achieve financial freedom.
Lesson Learned: If you love what you do, it will love you back.
Guest post written by Megan Clark.
Megan is the Owner and Designer of Clark & Company, Founder of The Exceptional Creative and Co-Founder and Partner of hi, friend. You can follow Megan on twitter: @clarkandcompany. Megan and her husband Bryce live in Vancouver, Washington.