I am not taking credit for any of this, after watching this video I thought I should summarize or rather transcribe and paraphrase what I learned on this blog post:
For those who don't know, Chris Do among many things is the founder of The Futur—an online education platform with the mission of teaching 1 billion people how to make a living doing what they love is. He is pretty much a design and business guru and has given plenty of talks worldwide about design and the business of design.
I had a chance to watch his 2-hours video explaining how to go from being a freelancer or just an employee (working for other people) to forming a business and becoming an entrepreneur.
The short answer is... You need to have an entrepreneurial mindset.
How do you do that, how do you delegate work...This short blog post is kind of a summary of his talk - Scaling Up: How To Run A Successful Studio & Go From Freelance to Entrepreneur
Chris began by saying that there is a D-School for business people ...that is there is a Design School for teaching Business people Design Thinking or Design Concepts...But why there is no B-School for creative people? Why there is no Business school to teach designers business?
As designers, we have learned how to speak the language of creativity but we have yet to learn how to speak the language of business. So Chris Do is teaching us business principles...so that we can become bilingual...speak both the language of creativity and the language of business
What's was on the agenda (objectives /learning outcomes). Here Chris says:
- How much are you worth? - This isn't just a conceptual question how much is your time really worth...we gonna figure that out so that you can make better decisions on how better to spend your time
- Entrepreneur's mindset - We wanna maximize our time...so that if we can hire someone to do the work that I don't have to do the none essential stuff - I can actually grow
- Real cost of working in your business Vs on your business - How much is working in your business costing you (How much is costing you to keep your hand in the pie)
- Hand off Tax (HoT) - Hot burning concept - coined by Chris Do
- What/How to delegate - Part of becoming an entrepreneur is learning what and how to delegate work to others while still getting a good night rest. that's critical because a lot of you are reluctant to hire people because you're worried they are not going to get the job done - that they are going to mess up and somehow ruin your reputation - there is a way to do this...by forming a freelance matrix - you are going to learn how to hire and how to build a repository of creatives people that you can lean on and rely on
- How to hire freelancers
- Artist matrix
The first question Chris wants us to think about is:
What's the cost of doing work yourself?
DO NOT SELL YOUR TIME
What's your Project rate..?
How much time did you spend making this..?
If you take your project rate and divide it by the hours that you work you are going to find out your hourly rate. Through this little exercise, you're going to find out how much your time is really worth
Chris took an example of Rick who is a videographer who takes promotional videos for hair saloons. As a videographer Rick creates these videos to help the saloons grow their business.
Rick charges $1800 for one promotional video. The actual working time for this project is 36 hours. Rick took 36 hours to make one promotional video and he made $1800.
So to figure our hourly rate we take the $1800 and divide it by 36. Rick's hourly rate comes down to $50/hr which is the project rate divided by time.
So Rick's hourly rate is $50/hr ... pretty good.
Chris then asked Rick...how many different roles does he take when he is making these promotional videos. As it turned out...Rick's assumes the work of:
- DP (Director of Photography / cinematographer - a critical role
- An Editor + Color Correction - pretty hard work
- Record Voice Over
- Producer (If Rick's wants to completely remove himself from the project he might want to hire a Producer which is the fourth's role Rick conducts for his video clients)
So take the whatever job you did last time and break it down into different roles...to find out who do you have to hire to replace you.
Now Chris says here...This is truly what Entrepreneurship is about - is that you can fulfill the job (this is called cost of goods sold i.e every dollar you are spending) in order to complete the job... And what money you have left over.
Don't forget to account for profit, which is the common mistake - Remove your labor as part of the profit. Don't include your labor as part of the profit. If you could go on a vacation and just give this work to somebody or a bunch of people... What would it take?
Rick was then asked how much would he have to pay if he hired people for those roles above.
Rick would have paid the DP - $20/hr
An Editor - $15/hr
Voice Over - $10/hr
Producer - $10/hr (Let's say a producer would also get this rate)
To do this whole promotional video Rick spent 5 hours to shoot, that's a role of him being a cinematographer (DP). He was an editor for two days and spent about 16 hours. Being a voice over person for 1 hour. And let's say as a producer he spent 10 hours doing all the juggling and phone calls here and there.
Now take a look at the following table:
|DP / Cinematoghrapher||$20/hr||5hrs||$100|
|Editor / CC||$15/hr||16hrs||$240|
|Record Voice Over||$10/hr||1hr||$10|
Please Note: To make the math agree I have added one row of the role of a Personal Assistant - this might include all the admin work, emails, etc.
Remember how much was the project rate in the beginning: $1800
So, $1800 - $490 = $1310
So the $1310 is the profit. Gross profit to be exact because we didn't include other expenses like equipment, etc.
So Chris urges us that every time we get a project like this we should look to delegate the work to someone else so that they can do the work.
What's the lesson?
If you're going to delegate the work you going to clear $1310 in profit. Before saying things like "I like to do the work myself" you should become aware of how much your time is worth.
In the original scenario where you did the work, your time was worth $50/hr. So anything that you do that is less than $50...is what you are costing the company the money. And we saw how those rates for different roles...they were all way below $50/hr. If you can could effectively hire someone else to do that work - that's what is costing you. So if you choose to do the work of the producer rather than hiring a producer...you're costing your own company ($50-$10) $40. You're costing yourself $40...because you can hire someone else.
So the table might look like this...if you decide to do the work yourself
|Role||Rate||Time||Costing You (Rate-$50)||Sub total|
|DP / Cinematoghrapher||$20/hr||5hrs||$-30||$-150|
|Editor / CC||$15/hr||16hrs||$-35||$-560|
|Record Voice Over||$10/hr||1hr||$-40||$-40|
This is how much you're costing your company by not delegating, $1310
As much as you wanna keep your hands on the work that's what is effectively costing you. And the more your hourly rate is...the more you're costing the company for doing something that was supposed to be done by an intern.
So you always wanna delegate the work as much as you can, as often as you can and as fast as you can.
What aren't you doing when your hands are in the work?
Chris says this is a really important question for us to understand because there is something called an opportunity cost - when you're doing something, you're not able to do something else so we have to calculate that. Every time you say Yes to something, you are also saying No to everything else...because the only constant we all have that is non-renewable and is perishable is TIME
Let's talk about the concept of Working IN your business Versus Working ON your business. These are very different concepts.
When you are doing the work (i.e the 36 hours for $1800) ... You are working in your business.
You have Hours Available and Hours Used. Hours Available minus Hours used is going to tell you the amount of time you can work ON your business.
Let's assume you're working a normal workweek which is 40 hours a week, 8 hours day for five days (Monday to Friday).
So on 40 hours that are available in a week, Rick spent 36 hours producing that one promotional video. That will give him 4 hours of time (40 - 36) to work ON his business. Every week that goes by he has 4 whole hours.
So Ricky has 4 hours left to do the most critical work - Working ON his business. And let's talk about what that critical work might be: The critical work are those essential tasks that only you the founder or the owner of the business can do: These might include:
- The Vision of the company (Vision Planning)
- Sales (Talking to clients) - So when Rick is shooting and editing and doing voice-over, what is he not doing? – You guessed it, he is not talking to clients - and what happens to a business that has no sales? - No money whatsoever
- To generate Sales you need Marketing
- Networking (You're tired after work you can't do any networking)
- Lead Generation (Making multiple campaigns on social media etc.
- Etc. (i.e Self Development, System Design, Optimization, etc. etc.)
Here Chris pauses and asks there so many things you could have been doing to grow your business but you only have 4 hours...there are just not enough. So what do you end up doing? YOU STEAL TIME.
You only have the 40 hours a week...now you need more hours to work on your business....you're going to steal those hours from somewhere else. If you need more time you're going to steal TIME from your weekend (personal time), nights (sleep), personal development, etc. When you steal time from the weekend you're essentially stealing time from relationships...you may be married or in a committed relationships or just your ability to meet new people. You're stealing time from very critical things.
That is what most people do. They work a whole amount of time and they fail to work on the essential stuff for their business and they end up stealing time from their own personal time which is just as crucial. - It's a vicious cycle.
A vicious cycle is when you need to do marketing but you can't do marketing because you busy doing the work...and because you're doing the work you can't do marketing, you get less leads and then you need to do more work even with less pay because you need the work.
At some point, we have to change that from the Vicious Cycle to Virtuous Cycle. We need to make that important decision to go the other way.
Of the the essential things we mentioned above the following are the most important ones:
- Marketing (We need new leads)
- Sales ( A business can't survive without sales)
- Vision / Planning (During Covid you could see which business had vision or planning for the future)
So those are the top critical things we need to be working on.
So when you choose to do the freelance work...you're forgoing those three critical things which you can not hire out...you can not hire a freelance CEO...You couldn't afford this person if they were any good. So these are stuff you trade for. Nobody can sell like you...Nobody can talk with the knowledge, enthusiasm and passion like the owner of the business.
For me those 30 minutes of the video were eye-opening...but the rest of the video is just the same if not more. This blog post is already 2k words...Just go and watch the full video!
Again, full 2-hours videos can be found here:
PS: There was a question asked: What if you don't have the money to hire? ...I challenge you to watch the whole video when you get a chance to find out the answer.
Transaction only happens if both sides see greater value in what they're getting versus what they're giving - Chris Do