Recalculating Productivity in a Freelance Entrepreneur Context

Recalculating Productivity in a Freelance Entrepreneur Context

April Snow Day The streets are covered with a heavy blanket of premium throwing snow. Alas, there is no one to throw it at.

Because I had to move my car early this morning for the plows, I shot off to the coffee shop and did some planning. Yes, MORE PLANNING. I felt a prick of unease as I worked through my plans, and finally figured out what was causing it:

Was I spending too much time planning and not enough working?

The followup question was:

Well, what is working anyway?

It popped into my mind that perhaps I had unrealistic expectations of what a productive day would look like for someone in my position. When I started freelancing, I had the idea that finally, I can spend more time focusing on what I want to do. This is true to some extent, but what are the expected numbers behind this? Since I have a tendency (as do many people) to start with what I already am experienced with, that meant a solid 40 hours a week doing project work + project management, and then extra time on top of that doing whatever I needed to grow the business. Sounded reasonable at the time. The only time I achieved that level of productivity, though, has been when I’ve been full-time on a single project.

Now that I am moving away from pure “skills and services” and toward “products and process”, my expectations should change as well. As a freelancer focused on offering design skills, productivity is measured by billable hours. As a freelancer / entrepreneur focused on products, productivity is measured by products made and shipped. My new revenue equation should ideally favor products created and sold, not just billable project work.

So my final question was this…

What does a productive day look like?

I had no idea, so I decided to apply the “If I knew the answer, what would it be” trick; here’s what I came up with at the coffee shop:

  • Took a guess at how a typical week breaks down: 2 days were production / billable, 1 day seemed to get caught up in administrative work, and 2 days were spent on blog and business planning (the time includes these blog posts). I winced as I compared the 2 days of billables to 3 days of non-billables.

  • Summed up the hours in a typical idealized day: 8 hours of sleep leaves me with 16 usable hours. Subtract an hour for “health”, an hour for breaks, an hour for lunch, an hour for dinner, 2 hours for TV/relaxing, and 1 hour for lunch chores, and I’m left with about 9 hours.

  • Using the basis of the weekly breakdown as a base ratio, I figured that my DAILY work time for production billables were roughly (2/5) * 9 = 3.5 hours of billable work, (1/5) * 9 = 1.75 hours of administrative work, and (2/5) * 9 = 3.5 hours of blog-related work. Since I like working on the blog and related business, I’m going to further shift the hour breakdown toward 3/2/4: that’s 3 hours of billables, 2 hours of admin/email/biz-dev, and 4 hours working on my own stuff.

  • Using US$40,000/year as a baseline livable wage, and assuming 52 weeks in a year, the amount of revenue I need to bring in per week is around $770/week. For fun, I calculated $60K as $1150/week, $80K as $1530/week, and $100K as $1920/week. This is all pre-tax, so I’m counting on about 1/3rd of it going away.

  • If I have 3 hours of billable work a day, that works out to 15 hours over which I need to make a minimum of $770 to meet my $40K/year baseline. If I can do that, then I am doing OK. Though I could easily calculate an hourly wage from this, they have the connotation of commodity pricing, which is not how I like to compete in the marketplace. If you’re getting started, however, this is exactly how you would calculate your minimum hourly rate, adding 20-30% for profit, and more if you are in demand. There’s a great writeup by Brian Fling on pricing that lays it all out very clearly if you are looking for more detail; it’s the best writeup I’ve seen on the subject.

  • If I assume that there are about 15 hours of work a week available, then I can use this to realistically schedule outside project work. I must admit that 15 hours a week seems painfully small and slackerish a number, when you hear stories of people putting 100+ hours into launching their companies. However, that’s 15 hours of pure work; the rest of the time I’m spending during the weekend quite probably is spent thinking about the problems and doing other company-building activities. Frankly, I’m thinking about it all the time already.

  • There is room for flexibility in the actual number of hours I spend during the week, but I think that this is probably a sustainable working baseline schedule to maintain my current progress. That’s my answer, if I knew the answer. Of course I don’t know for sure, but one way to find out is to live with this for a while and find out.

Remembering the Mission

Though I’ve spent quite some time above calculating base revenue and associated metrics, I don’t want forget the real mission, which is to support myself while I build the next round of products and media. My real goal is to build an engine that can drive passive sustained income. In other words, those 15 hours per week of billable work are supporting 20 hours of product building every week. That work breaks down as follows:

  • Website Improvements: to help people find the stuff they’re interested in, and to create a place where they are likely to visit more often. How do you do that? By providing things that people want, in a way that’s easy to find and use. The website is also what establishes “my identity on the web”, and the more authentically it does that, the more likely it is to attract the kind of people I’d like to work with.

  • Books & Products: Writing of some kind, for sale in electronic or printed form. As I wrote in yesterday’s Groundhog Day Report, I’d like to see more income from actually making and selling things that I think are cool. There’s a kind of framework that is coming together that I think could be awesome. But…I have to make them first. This is part of the plan.

  • Collaborative Projects: There are a few things I’m working on that I’d like to bring other people in on: the Online ETT, for example. One of my expectations from collaboration is to meet cool people and acquire new skills and technologies from experienced practitioners, in exchange for whatever design experience I can provide. But I also may be surprised at what happens.

  • Community Networking: Creating a positive energy field around all these entrepreneurial activities is one of the keys to my strategy of fun. One reason I’m writing about what I’m doing, though it may seem to some like “tipping my hand”, is that I’m hoping like-minded individuals will feel hop on the vibe and contribute to this mutual co-prosperity sphere of self-empowerment. And, if I’m screwing up in my assumptions, I’m hopefully someone will tell me and save me some time :-)

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p>The ultimate goal is to bring in significant revenue from the making and selling of products, not make a lot of money working 15 hours a week on excellent client projects. If I could do both, that would be a dream come true.

The Sundries

What about those remaining 10 hours of administrative time? That’s replying to emails, looking stuff up for people, tracking down projects, doing taxes, and so forth. I need to spend the time on this otherwise I’ll be in the hole again staring a huge pile of chores in the face (that’s where I am now, actually).

Then there’s those 40 hours of sleep and 35 hours of eating, relaxing, and living, not to mention the unscheduled weekends representing an addition 32 hours of whatever. Could be work, could be play.

Takeaways

Now that I have a sense of what the week could look like, I now have a baseline metric for evaluating my progress on the daily and weekly level. I did not really have one before, other than the list of “good things” from the Concrete Goals Tracker.

Now, I can book my time in the future with greater confidence that it will fit into my work-life balance.

10 Comments

  1. Joe 13 years ago

    You subtracted lunch twice in step two.  Is that 10 hours then?

  2. Dave Seah 13 years ago

    Joe: You’re right! I looked at my notes again, and the last one is actually “chores” (like vacuuming or doing the dishes). I’ve made the change…that’s what I get for not proofreading carefully :-)

  3. Ivan Brezak Brkan 13 years ago

    Great article Dave… You can’t imagine how much this is helping me make my own work world domination plan. :) Being a student means I lose a lot of time while in class. Seems I’ll have to have to hack my way around this, but you are making it a lot easier for me so thanks! Seriously!

  4. Dave Seah 13 years ago

    Ivan: Good luck, man! You’ll definitely have to hack it yourself and make it work for yourself. Awesome that you’re taking care of it while you’re a student now!

  5. Gary V. Vaughan 13 years ago

    This is very much along the lines of Julie Morgenstern’s time chart idea… kinda like a school timetable for your whole life.  I’ve been using one for a couple of weeks now, and it makes seeing whether your spending too much time on personal stuff (I wish) or work (that’s me!).  I have a blog article in the pipeline, but I want to spend another week working with my time chart before publishing the post.

  6. Dave Seah 13 years ago

    Gary: Thanks for the link to Julie Morgenstern! I wasn’t aware of her enterprise (the name sounds familiar though). It’s particularly interesting because she does a more professionally-oriented version of what I’m doing, so I have one more model to follow. Mua ha ha ha! :-)

  7. byrnegreen 13 years ago

    Thanks for the reflections Dave.

    I did this sort of planning for my consulting work when I first started.  The one amendment I would make to your billable formula is that you should account for vacation time.  I figure with holidays, a couple of weeks vacay and some personal days, 48 (working) weeks in a year, divided by a goal annual income makes more sense.  This makes $60K $1250/week, e.g.

    And I agree, this is just for minimum rates when starting out, the real measure is what the market will support AND your ability to ask for what you are worth (a psychological consideration worthy of another post.)

  8. Sarah Heal 13 years ago

    Hi Dave,

    Thanks for the insights into your planning of work vs other activities.  I’m impressed by how you’ve actually quantified it.

    I think the awareness of what is required in terms of billable hours to sustain a standard of living is useful.  Charles Handy talks about something similar in terms of portfolio workers.  The real value of this is that it stops the inclination to just go out and work, work, work once one first gives up a real job.

    I wonder though about the small time breakdowns.  This is useful…May I ask though – what would happen if you gave yourself one concentrated week to focus on the products that you wanted to create, the projects that you want to do?

    I tend to mostly work in a 6-8 week on; one week off pattern – that is when I’m working for clients I’m living, eating, breathing their stuff.  The other week – well that’s mine!

    Just a different perspective.

    Cheers

    Sarah

  9. Dave Seah 13 years ago

    byrnegreen: I had some half-baked idea that I would implement some kind of “windowed average” of the weekly minimum, but didn’t get around to explaining it. It’s probably easier to just deduct those holidays and vacation weeks out of the equation…thanks for the catch!

    Sarah: I used to work in concentrated bursts just like that. With the daily blogging, however, it has becomes necessary to work on it every day or so; since it’s one of the mainstays of my professional presence, I think it is worth while.

    This pattern may not hold forever, but at least until I get some stuff launched in terms of process, website, and product, it’s what I’ll be trying. The most important part to me now is that I can schedule some new work.

  10. JL 13 years ago

    I also did a breakdown like this before and I was shocked by how little time I ended up spending on pure work—even though it felt like I was always working.

    The problem for me is that I’m usually always “thinking” of work but not always “doing it.” For example, I may watch TV and at the same time browse the net looking for ideas. So in my mind, it feels like I’m working, but it’s not always the most productive work.

    It’s that whole multitasking thing again. So over the past few years I’ve learned to cut down on that. If I’m going to relax, I’ll purely relax. And when I work, I work.

    It’s easier said than done, but at least now I don’t get too many false impressions of how long I worked.

    I think in the end, the key is to find a way to generate money without working. Your site, your book, your products will work for you even when you’re taking a break :)