The importance of attracting and retaining customers is often overlooked by creatives across various industries.
If you want to grow your freelance business or start your own larger business, doing the actual work is just part of the job. The actual “business” end of things is what struggling freelancers from those who are successful or have built their own larger companies.
Quick aside – Who are you / why are you qualified to speak about this?
I hate when people put out information about a topic and haven’t done anything themselves. So, I wanted to briefly answer this question. I started freelancing (business strategy, UX and software development) about five years ago. A little over four years ago I turned that freelancing into a company called Jakt. The business has done seven figures in revenue for three years straight. I’m not trying to brag – instead I’m letting you know I’m not full of it.
Anyways, back to the article.
For the purposes of illustration, let’s use the hair industry. It’s one that fascinates me because I think there’s so much potential for improvement on the business side of things.
Originally written in October 2015 on the Jakt blog.
Starting a business is hard. Then you realize that getting started was easy, compared to step two: scaling.
My company, Jakt, is a service business. This makes scaling even harder; scaling a service business is much different than a company that sells physical products. Rather than revenue being tied directly to product sales, a service business has it’s revenue tied to the services you provide. These services are then connected to the people on your team providing the service. It seems like a simple equation: the more people you have = the more revenue your company can generate. Unfortunately, that simplicity is also where the challenge arises. This creates a cyclical chicken before the egg situation.
More People = More Overhead
More Overhead = More Work Needed
More Work = More $
At this stage, if there is a slower month with less work, we have potentially large losses. It’s a high risk, high reward type business. Service businesses do not typically have the high reward that a product company can have with an IPO (unless you are Shake Shack,
For the first 2 years of my business I had a partner. At the end of 2014, he left and I had a very difficult decision to make: should I keep the business or move on to something else? I was so used to running the business with someone else that I honestly wasn’t sure if I could do it on my own.
For those of you that know me, you know that I can pretty much power through anything with hard work and grit. I’m absolutely convinced that if you don’t stop, you can’t fail. However, this was the first time in my life when my confidence in that belief was really questioned. I wasn’t sure if I could do it on my own. And I was scared that if I tried and failed, that meant I wasn’t good enough and I couldn’t lead and run a business. It was a very trying and emotional time for me.
Among all the uncertainty, I just kept running the business. And while I was “still deciding” whether to keep it or not, 4 months ended up going by. And then I was like,
I was basically drunk, even though I hadn’t had any alcohol. I couldn’t think straight and felt delirious. And then I crashed for 12 hours. I had hit a wall.
I slept less than five hours a night for the past month. And I’ve probably averaged five hours a night for the past few years while starting my company.
You think it won’t catch up to you; you’re different. But no, eventually it does. You may have held off longer than others, but sooner or later the crash comes.
For those that know me well, they know I can push myself to the limits and outwork most people. Burnout is very real. I used to think it was bullshit and only people who weren’t mentally tough experienced it. I was wrong. Sooner or later the body and mind just gives and you have to take a day (or a week) off.
I’ve recently become obsessed with preventing burnout. I want to get the most out of each and every minute while not pushing myself over the edge to burnout. It’s a very fine line. Quite frankly, it’s a challenge. But like most entrepreneurs,
Startup founders come to me all the time and say something like, “We have this. How much will it cost and how long will it take to build the solution?”
They might also say, “I’ve received a range of quotes going from $50,000 to $500,000. I don’t understand why this is the case.” But they still insist they need an estimate from me.
The honest answer to this? I have no clue. And neither does anyone else. That’s why you received estimates ranging from $50,000 to $500,000.
There’s no way to give exact time and cost up front. You aren’t buying a product with a set value. Instead you’re buying something that’s entirely custom-tailored to the unique situation, the problem you are trying to solve, and the customers you want to help.
It’s also pretty undefined at this beginning stage. Typically, it’s a rough idea of what you think should be built. And even if you’ve written your own specs and wireframes, this doesn’t mean that we can just give an estimate and start building. If it was that simple, you wouldn’t be getting estimates from $50,000 to $500,000. Furthermore, along the way,