In Part I of Lessons from Being My Own Boss, I discussed the transition to becoming an entrepreneur, the issues with project and client handling, and on the long-term value of clients. At which point I realised that I had more things to say, and decided to defer them to Part 2. So, here it is.
On Pricing
Contrary to what I imagined, getting work wasn’t the hardest thing I have had to do. Partly this is because I have adopted a scaled-down work schedule and am happy if I am doing good work, even for 30 hours a week and can spend the rest of the time working on other, personal writing. Partly, because of referrals from existing clients.
Instead, one of the hardest things for me has been to get my pricing right. And I believe I am not alone in this, especially when you are charging for a professional service and not for a product where you can fall back on a cost-plus approach. Whenever I write a proposal, there are always these niggling worries in my head. Am I charging too high? Am I more expensive than what the market is willing to pay? Will this cover my time? Am I under-pricing? Will people not take me seriously if my prices are too low? And of course, what is my time really worth?
I’m still not entirely sure about how to handle pricing, but I’ve found a few ways to work on it. It helps that I’m not an inherently competitive person where money is concerned and don’t compare my earnings with what batchmate X is making. But, some strategies include:
- Clearly writing down the various elements on a job and estimating how much time each will take. Sometimes, the results can be surprising.
- Checking the current average market rate for a person with my experience and using that to arrive at a rough cost per hour. (Remember companies offer benefits such as PF, gratuity and insurance - all this should be factored in to the total package).
- Networking with others in the field and finding out what they charge
Beyond all this rational stuff, one of the most important things is to be aware of the value you bring and to be unapologetic about it. Initially, this was difficult for me, but I am gradually coming around to realise that a good communication plan is critical to most marketing efforts - and - it is not something everyone can do well. So, even if you are not a rocket scientist, there is no need for you to devalue your own services.
However, it is ok to sometimes take on a project at a lower cost than you normally would - with a big IF. I’ve told myself that I will take on a project at a lower cost only if I can specify the reason (and benefit) to myself. Typically, this would be one of the following:
- It will help me acquire a new skill.
- The client is a prestigious one, and listing them on my profile is likely to impress other clients.
- The project is a long-term one - there is a clear need for further work over a period of time. (Incidentally, clients use this one a lot to get small companies to lower prices - so don’t fall for the generic ‘there’s more to come’ line, unless there is a clear reason to buy it).
On Doubt and Self-Worth
In the initial years after starting a business, there is bound to be a lot of upheaval, financially. Plus, if it isn’t a “happening” career (particularly if you’ve been a corporate go-getter), there may be some amount of doubt and even feelings of low self-esteem. There are times when I ask myself, what am I doing? Is this ever going to amount to something big?
Then, corporate perks once taken for granted, are all best forgotten if you are running a small business - air travel, casually booking cabs - everything gets pruned, at least in the initial years. Of course, seeing the indignities that corporate types are being subjected to in the name of the almighty recession, I don’t particularly miss that life! Still, when you see ex-colleagues and old classmates moving up the ladder, it is only human to feel a twinge.
There is only one way out of this - and that is for you to genuinely want to do what you are doing right now. There has to be a clear vision of ‘why am I in this’? It need not always be a burning desire to create your own multi-million dollar business. If your vision is to be able to able to contribute to society in a meaningful way and find enough time for volunteer work, and your business gives you the time to do that - then, it is still successful for you, even if not by the standards of many other people. Similiarly, if your goal is to do exciting work in your field and earn X amount of money doing that work, then so long as you meet that goal, it is fine - even if this X is 20% lower than what peers are making. There are trade-offs to everything, and your 20% less may mean that you have weekends free to spend with your family. On the other hand, there is nothing wrong either with a desire to create a multi-million dollar business, and the work as well as scale of work will vary accordingly.
For me, I find that what helps is to periodically evaluate myself using a few measures:
- Are my existing clients interested in working with me again?
- Am I getting new clients?
- Am I satisfied with the quality of work I did over the last project?
- Is my client satisfied? Do I have a note of appreciation to show for it?
- Am I making more money than I did last year?
- Do I have enough free time to do the other things I want to do?
If the answer to most of these is positive, I am cool.
On Time-Management
I have very little gyan to give on this subject, since my own time management could do with some improvement. When you have to do everything yourself or with a small team, i.e. bid for projects, market your company, do the work (including grunt work that may be done by ‘flunkies’ in a large company), ensure quality checks, hand-hold clients AND manage payments, billing and taxes - it can get crazy. Things tend to be forgotten, especially the ‘boring’ stuff like payments, collections and taxes, all of which can make a big difference to your life.
I don’t have any magic tips around it, except to say that it does help to get in help where needed. This year, for instance, rather than wading through the mess, I’m dumping all of it on a good CA who can deal with it. Yes, that costs some money, but it will also save a significant amount in tax refunds. Another good idea is to keep a soft board with a clear day-by-day list of project deadlines as well as non-project teams tasks to be done, by team member. Time management is important, because it prevents the business from taking over your entire life, something that is always a danger!
That concludes the Lessons from Being My Own Boss series, and I’d love to hear from others who own businesses/are planning to/just interested in the whole thing.
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