AIW Going Freelance Seminar Session 1: The Fundamentals of Freelance Business

Kristen King

(www.inkthinkerblog.com) — The Business of Freelancing, presented by Al Portner (freelance writer and author), Ken Norkin (copywriter), and John Mason (attorney).

<<< AL PORTNER >>>

About 50% of the room is new freelancers.

Most people start otu believing that they will write mainly for publication but quickly learn that this is not the case, and most of income will be derived from work for hire (WFH).

WFH has some advantages, namely quick turnaround and quick payment. AP had a couple of publications where the lag time was as much as a year. 7-8 months is fairly common.

WFH can be many things for many kinds of organizations:

Advocacy groups
Advertising and PR agencies
Associations
General business
Campaign consultants
Charities
Colleges and universities
Individuals
Internal organizations
Lobbyists
Media of all kinds
Newsletters (opp for continuing revenue — note to self!!!)
Internet
TV
Think tanks
Trade pubs
Many, many more

Generally commercial work pays the best and is the most dependable income.

Marketing materials
RFP responses
Grant applications
Speeches (one of the highest-paying areas)
Photography
Annual reports
Talent work — voice overs, etc.
Newsletters
Editing

There is a lot of editing out there, but you need to be familiar with the various stylebooks. The main ones are AP, Chicago, GPO, APA. (NB: See the Inkthinker article Q&A Time: Acquiring familiarity with various style guides)

The seminar program contains an expansive spreadsheet listing the main kinds of work for each type of client.

There are only 3 jobs in the whole world:

People who make things
People who sell things
People who account for the people who make and sell things.

Freelancers do all three jobs at once.

Questions to ask yourself:

Why do you want to go into business?
What kind of work do you want to do?
What qualifies you? — As a follow-up, how will you create your platform and establish yourself as an expert who can do these things? How will you establish credibility and authority?
Who do you expect to be your clients?
Do you have a business plan? (NO! Another note to self!) — You have to separate your personal life from your business life; if you allow the two to become confused, you will never know how you are doing in your business. You may have a hobby, but you won’t have a business.
How will you market your business?
Do you have a natural constituency?
Have you set benchmarks to signal success?
How much will you charge?
What do you expect to earn?

Getting started — the program contains a list of must-haves for getting started, including a website (NB: See Inkthinker article Q&A Time: Professional website?), a defined workspace, furniture and equipment (eg, desk, computer, printer, etc), marketing materials (NB: See Inkthinker article No-Frills Freelance Marketing), internet connection, etc. (NB: I’m going to try to get copies of all of these materials to post on the site, so check back next week for that.)

Al recommends having an LLC treated as an S-Corp. He pays himself a salary out of his company. (NB: See the book You, Inc.) Something else to consider is liability and errors and omissions insurance.

Determine whether you’re going to us a cash accounting system or an accrual accounting system. (NB: I will discuss these in detail in a future Inkthinker article).

Make sure you comply with all local regulations.

Al’s PowerPoint Presentation:

AIW Going Freelance Seminar: Al Portner Presentation on the Business of Freelancing – Get more Business Plans

<<< KEN NORKIN >>>

Ken does primarily commercial work (which will be discussed in the next panel). He’s going to talk about pricing (Hallelujah!). Did an informal survey during the registration period to identify your target or desired income, how much you currently (or plan to) charge per article/per word.

Average target income was $75,000
Average hourly rate was $100/hour (low was $20/hour but that person was targeting $35K/year; high was $150/hour)

$100-$150/hour is very reasonable and commendable.

Ken has provided a handout called How to Charge that breaks out exactly how to calculate fees. (He uses this in a lot of presentations, FYI, so it’s not something I’ll be publishing.)

“What you charge is not just mystical numbers floating out there. They have connections to things.” There’s a direct correlation between the work you do and what you earn; if you’re not charging enough for those individual things (ie, words, hours), you very well may not be able to make your target income goal.

If you want to pay yourself a salary of $75,000/year, then billing $75,000/year will not cover it. Health insurance, savings, retirement, overhead expenses, etc. cut into your takeaway. You may need to earn more like $75,000 + 40% (the actual percentage depends on how much you contribute to savings, investments in your business, etc.)

Figure out how many hours of billable work you have to do for yourself. You want to go into the planning as if you are a normal business with normal business hours; start with 2080 hours in a year and subtract out those things you want to give yourself

Holidays
Sick days
Time spent marketing your business
Invoicing and administrative tasks
Professional development and training

When you subtract it out, you end up with about 1,000 hours per year (not counting the late nights and weekends you’re going to put in to make up the difference) that you’re billing. So figure out your total amount you need to bring in (salary plus expenses) and divide by 1,000 to get your rate.

Subscribe to the Creative Business Newsletter and get a free rate guide. (It’s really good, btw. And the November/December issue will contain “A survey report on business conditions in the U. S. creative services industry. Read what your peers are experiencing.”) They point out that it’s hard to make a go of it in a major metro area at less than $90/hour.

For those who want to write articles, there’s the same kind of relationship between how much work you have to produce to make the income. How many people are targeting $1/word (most raise their hands). Writers have been targeting those rates since the 1960s. it’s like electronics: the quality keeps going up but the price doesn’t.

112,000 words divided by 1500 words/article means 75 articles/year. Can you write 75 articles/year? Do you have the energy for it? Can you even find that many assignments? $1/word just isn’t going to cut it. You need to target the higher-paying assignments. You need to ratchet up your per-word rate or hourly rate so you’re targeting those clients who can afford to pay that.

I really think you have to get to the point of charging by the project and charging more per project. The formulate starts with how many hours you think a piece of work is going to take and then your hourly rate shows you the minimum you need to make, and then you need to develop project fees that compensate you at a higher rate because that’s what starts to raise your income. By charging project fees, you get paid by the value of the work you do not how long it takes you to do it.

<<< JOHN MASON >>>

Art and entertainment attorney, which sounds a lot more fun than IP lawyer. Works with freelancers, novelists, newspaper companies, online content publishers and distributors, and also is an agent.

Besides the quality of the writing that you do, copyright is really the foundation of everything you’re going to do in your commercial transactions and it’s going to govern how you exploit what you produce. Copyright is ownership. “The original expression in a tangible, fixed form of original authorship.” Copyright is important enough that it’s actually included in the body of the Constitution.

It attaches inherently when you create something. What you need to do to attach copyright to a work is merely to create it. You can’t own an idea — but when you fix it in tangible form, you own the copyright. The fixation itself is such an important thing. Copyright is the actual copying of the fixed thing.

Think about copyright as a pizza. You write something and that’s your work. The copyright is an intangible intellectual property right that attaches to a work. One slice of the pizza is the right to copy it. Another slice is the right to commercially exploit it (license it, enter into a contract to distribute it, etc.). Publicly displaying, making derivative works.

Transformative is transforming from medium of expression to medium of expression, like nonfiction true crime novel to Broadway musical comedy (which may not actually be cool, but maybe not). There is no set percentage of how much you can change a work where copyright isn’t an issue anymore. The default under the law of 0% — if you take someone else’s work and modify it or revise it or incorporate it into your own work, that is copyright infringement. There’s fair use and there’s licensing, but the default is infringement. (NB: Read the Inkthinker article Plagiarism vs. Copyright Infringement: Do You Know the Difference?)

Joint authorship, collaboration gets into who owns what. Default law is 50/50 and that each joint author can exploit it separately without the permission of the other person. If you don’t have an agreement as to who can do what and who has what power, it’s split equally. The default is also that you have to share the profits equally, but if you don’t know what the other guy is doing, it’s hard to stay on top of that.

Editors making language changes is not automatically collaborative. It will depend on the agreement you sign. “I understand that you’re going to make changes to the work as part of your publishing services, and you have the right to distribute the modified work but I OWN the modified work.” Whatever you get in writing is what decides: contract, agreement, whatever. Get it in writing. (Although oral agreements are binding and enforceable, but not advised because they can be confusing.)

It’s important for people who create original content to have things in writing.

You can’t transfer ownership of your copyright unless it’s in a writing signed by you the author. — You can sell a product, but they don’t get the copyright unless you sign off on it.
Work for hire is the default for business. Everything you write is owned by your employer, like if you’re a reporter for the Washington Post. But as a freelancer, it’s a gray area as to who owns the copyright so you have to put it in writing.
You may state in your agreement that you give the client all right, title, interest, etc., but also that you retain a perpetual, nonexclusive right to use the work for promotional purposes. Also, all authorization of transfer of copyright hereunder are subject to full payment — so if they don’t pay, you still have the copyright.
If you don’t have that in the original contract, you can request after the fact a nonexclusive license to use the work to promote your own services. A nonexclusive license can be transferred via e-mail, in writing, and even over the phone.

Recommend keeping a job jacket or some kind of list of when you create a work (or when it’s finished) or when and who you send it do (which is publication under the copyright law.)

Copyright notice isn’t NECESSARY to have copyright, but it notifies a reader/viewer that you are claiming copyright. The notice tells the world that you are the copyright owner which is important because if someone uses your work without authorization, then it’s the difference between copyright infringement and willful copyright infringement.