If you work for yourself, you will be well aware of the freelancer feast and famine cycle.
You take on a project and get a payment. You then do your thing, for your clients, and there is no further payment or new projects until you complete that piece of work.
We get the feast a deposit payment and final payment then there is the famine phase where we get no more cash until the work is done.
Here’s What It Looks like
This is very much simplified and does not take into account reserves (but I’m all about the dramatic charts 🙂 )
- A project is approved and a deposit payment is taken.
- You work on the project
- At the same time as you are working, you are accruing expenses and your payment is being eroded.
- At the end of the project you get the final payment and hopefully your expenses have not exceeded your deposit payment.
- In the ideal world you have a new project in the pipeline and your final payment and a new deposit payment makes it bumper feast but that is not always the case.
Here’s the basic chart, $100 deposit, $10 expenses per day and a final payment of $100 after 10 days.
This is a pretty precarious model. If you over-run, before the project is complete you go negative.
If you client is slow in paying the final payment, again you go negative.
Here’s the same data but with a 5 day overrun or late payment.
Smoothing The Freelancer Feast And Famine Cycle
My idea of a µAgency helps to smooth the feast famine cycle by having lots of small µRetainers from my clients paying for a small service.
What I suggest is you add a new recurring retainer to your existing client work and charge a large number of your clients, a small fee for a service they need on a recurring basis.
In my case I provide an ongoing maintenance plan for my clients where they get backups, updates and fix on fail if things break on their site.
I have a lot of clients on that plan paying me a small fee each month, add that to my project work income, and my income chart looks different to the ones above.
I cannot do a lot of this work as I’m booked out on projects so I have a team member delivering this service.
If I add in $10 of retainers each day, the graph looks much different.
You can see the retainers have flattened the curve significantly and the final payment on the project puts us into profit,
My thinking is that you should have enough small of µRetainers to cover your “nut” or your basic monthly income costs, then all project work you do on top of that is just a bonus.
If Only There Was A Course About µAgency!
Well slap my thighs and call me Rodger, if I haven’t already built a course to do that.
The stars must be aligning, the teacher appears when the student is ready!
I’m building two courses on the µAgency:
Understanding the µAgency – this is a free course to help you understand the what of a µAgency.
Build Your Own µAgency – this is the how to, so you can create your own small firm. This will costs £99 and is under construction and will be released in the next few weeks.
Both courses are available at my new site https://MicroAgencySchool.com
The transformation these courses are designed to give you, is one from solo freelancer to agency owner in a control and managed fashion. I’ll lead you past the pit falls that befell me when trying to build an agency.
Wrap Up – Freelancer Feast And Famine
I’m going to bang on about the µAgency for a few more posts, apologies if this is not your thing. Normal programming will return shortly.
I’ve looked long and hard for training on how to take the first step from online solopreneur to agency owner and believe me, they are few and far between, and NONE take you through the first initial steps like I am. That’s why I’m doing this.
Check out my free training over at https://MicroAgencySchool.com.
Photo Credit: devinlynnx Flickr via Compfight cc