I grew up in Pontypool in the 1980′s. This was a tough time. The miners’ strike was big news. Hell, the (long gone) railway bridge near where I lived had “Trinders are scabs” emblazoned across it by some passionate activist; strike breaking was not to be encouraged.

This upbringing has left the shadow of working class guilt; the thought that making money must be bad. That it must intrinsically mean that someone, somewhere is being exploited; that somehow we have done something that is corrupt & rotten. Well, let me paint you a different picture; greed is good.

That’s a pretty incendiary thing for me to type; for all the reasons I’ve hinted at above. And certainly because of the Gordon Gekko connotations.. And, in fairness, I don’t really mean greed; I’m actually talking about profit here.

Profit: The Besmirching Party Pooper?

Sometimes we, as an industry, seem ashamed to turn a profit. To treat profit as if it is some sort of besmirching party pooper which gate crashes our festival of creativity. The thing is though, we can’t be ashamed of talking about money. And we can’t be ashamed of making money.

We do what we do because (hopefully) we genuinely love web technology and how it can help people. It’s a fast changing industry and that suits us down to the ground. But, as hinted at elsewhere in this blog, those skills and that passion alone are not enough to run a successful business. And, at its heart, a successful business needs to make decent money.

The Working Week Fallacy

Perhaps you are in a situation where you bill hourly (which helps divorce you from the expensive threat of ‘scope creep’ on fixed cost projects); if so, make sure that your hourly rate really covers all your costs. A big mistake I made when shifting from contracting (a bum on a seat at an agency) to freelance was doing my calculations and working out that I needed to charge (say) £25 per hour to make a decent living. The mistake I made was not realising that, in reality, you don’t bill all your hours and you are only productive for (say) 60% of the week. How you bill needs to reflect this or you won’t be in business long.

You need to be charging enough to pay for your new MBP, to allow you to go to conferences (hint!), to pay for training, to allow you to spend a day in a gallery or exhibition recharging your creative batteries. Yes the client needs to foot the bill for this (I’m not saying as directly in a line item on an invoice!) because it is all of this which allows you to be good at what you do. And that is what the client wants; you to be good at your job as that is of benefit to them.

The Employment Dilema

If you employ people or freelancers then the business needs to make money on them per project. Otherwise you are simply a clearing house for work which is actually losing you money; and that will ultimately result in only one outcome.

You need to look at projects with an eye to how your business can make money on this; sure be giddy with excitement with what you can do for the potential client but if they can’t afford your services or can’t afford the full service; then you need to react accordingly. By all means choose when you want to work for below cost or for free (e.g. for a charity*) but let that be your active choice rather than something you simply drift in to.

(*Note: I’ve been sat across from marketing managers who plead poverty but who are earning more than you are. Again, choose carefully when you give your time for free/below cost).

The Bottom Line

I earned the best money when I was contracting on an eCommerce site for a large supermarket; but I hated the job – so money isn’t everything. I’ve never been happier working for myself but the toughest days all revolved around not having enough money (caused by a multitude of mistakes). The stress that causes flows over into family life and effects everything you do. The flip side, is that when you start getting some of the basics of money right, it has the same ramifications outside of work; everything is happier/easier. You can take time off, go on holiday etc without stressing about money etc. And, guess what, that allows you to be better at your job.

Our business’ need to make money.

Joel

p.s. The Business of Web Design conference is coming to Cardiff in July 2014 – there is a call for speakers here.