I started freelance web development more than 10 years ago. I built my company on my freelance work. So I can speak with some authority here.
Here's my advice in bite-size nuggets:
- Only bill time and materials. Do not ever agree to do fixed fee work or you will loose your shirt.
- Incorporate. It's actually easy and gives you more protections.
- When tax time comes around have a CPA do your taxes.
- Find a basic, easy to read, even handed/fair contracting agreement that you should always try to use. Have it reviewed by a lawyer. Include these points: mutual indemnification, your *hourly* rate, terms of ownership that gives you ownership over work produced until its paid for in full. Include a clause that allows your clients to cancel at any time without warning but they still have to pay for hours worked. (More on why later.) Any contracts provided by your clients have reviewed by a lawyer.
- You *will* eventually (probably sooner rather than later) be stiffed by a client in part or in whole. Have a lawyer you can call to write them a letter. You'll at least get some payment if you have a lawyer write a letter for you. Be sure to know how far you want to push this. The point of a lawyer is not to sue, but to get partial payment.
- You can set your hourly rate more or less randomly. Look to see what other independent contractors are charging (as best you can) and set your rate proportional to your experiance and confidence. Raise your rates annually.
- There are numerous ways to handle proposals. Here's what I do and what I recommend: First, spend time talking with your leads to learn what it is that they need. Write this down in a proposal format that includes the following: 1) A short summary (1 to 2 pages at most) of what the client needs. 2) How you propose to solve their problems. This pretty much says that you'll provide what's listed in section #1. 3) A list of technologies and techniques you're likely to use including languages, platforms, frameworks, database, techniques such as Test Driven Development and Continuous Integration, Source Code Control systems, etc. Provide a short blurb about each item listed and why it's good. And 4) provide a guesstimate of how long you think it will take. More on this in the next bullet point.
- To estimate projects follow this process: 1) break the project down into major steps you'll need to follow to complete the project. This would normally be something like building infrastructure, security, each major section of the application, etc, etc, etc. This is an art and is learned through experiance. Add 33% more for meetings and project management. Add 33% more for trouble shooting and debugging. Add 33% more for post deployment support. Make it very clear to your client that this is *just a guess* based on experiance. As a part of your project management strategy hold at least weekly meetings with your client to show them what you've accomplished, tell them what you're working on, and update them on anything that has taken longer or changed in scope on the project and how that impacts your estimate. Your contact should allow them to cancel at any time. The combination of your initial guess and your weekly updates, combined with the knowledge they can pull the plug at any time gives your client confidence in your project and comfort to pay hourly.
- Invoice bi-weekly and give a discount for payment in the first week. We give 3% discount for early payment in our standard contract. We get good cash flow and our clients save money.
- To find leads for projects I recommend that you network. There are many professional networking organizations out there as well as your local chambers of commerce. Also, attend conferences in your technical expertise. Submit topics to those conferences and try to talk at them. Write for technical journals. Most of these are very easy to get into. In terms of sales, don't try to sell. Instead listen to the problems your leads have and tell them what you think they should do, even if it means steering them away from you. This builds trust and will lead to referrals and eventually more work. Just be 100% honest in all cases and always try to give your clients the best possible advice.
Well, I'm pretty much tapped out in feedback. My company is Alagad and our website is www.alagad.com. If you have questions or want a little mentorship feel free to drop me a line through the website contact us form. I won't help you unending, but I don't mind answering some questions that may arise.
Good luck. You're on your way to a much better income and financial freedom.
