Today’s post is part 2 of a previous post that I recommend reading first: “Do you need to grow a team to earn 6 figures?“
Background info from that last post…
In case you don’t want to read the previous post, here’s the TLDR…
It’s all-too-common for under-earning freelancers to think that the solution to their “tiny take-home income” woes is scale.
The logic goes something like…
“I want to earn $100k, and I work with 20 clients a year right now to earn $25k.
So if I want to get to $100k, I need to work with 80 clients a year.
But I don’t have enough time to do that much work…
So in order to get there, I’ll need to hire some people so that I can focus on getting the clients and my staff can focus on fulfilling the projects.”
If you’re the type of person who likes the idea of spending all day on management and phone calls, this is fine, but if you’re a freelancer who enjoys your craft, it’s probable that you’ll enjoy your work life far less when running a small agency than if you go solo.
How to earn six figures without hiring anyone
Earning six figures as a soloist is totally doable without anything super crazy needing to happen. After all, grossing $100k a year just means working 1,000 hours at $100/hr.
1,000 hours a year = 83 hours a month = roughly 20 hours tracked per week.
(We recommend value-based anchoring or value pricing over hourly-billing, but the above breakdown helps illustrate the achievability of $100k/yr.)
Where most freelancers go wrong is that they target the wrong things when trying to grow their income.
Instead of asking, “How can I get to the point where at least 95% of my time is billable, and billed at as high of a rate as possible?” they instead seek to scale up their project flow to “fill in the income gaps” without optimizing their effective hourly rate.
In the previous post, I talked about how you don’t need to work with heaps of clients a year to get your income to the six-figure mark.
I have one client whom I work with a couple times a year that paid me $55,665.40 for our last 3-month engagement. (I tracked 202.5 hours for that last project, so that brought my effective hourly rate to $274.89/hr)
Brennan’s weekly rate is $20k for his consulting. (He targets a much higher effective hourly rate than me because he’s got the clout, demand, and “ROI track record” to back it.)
And beyond us, there are plenty of people who run 6- and even 7-figure creative agencies as soloists.
For example, Brett from Designjoy does over a million dollars a year with a premium $5,000/mo/client “unlimited design subscription service.”
(For the math-lovers here, $1,000,000/year for him means working with ~17 ongoing clients)
So with all this being said, how do you decide if hiring makes sense for you?
To help you decide, I laid out a 3-step exercise in the previous post for you to go through before you even consider hiring someone:
- First, I want to you to get clear on what you actually want.
- Then, I’m going to have you track all your time.
- Then, we’re going to optimize & plan next steps.
If you filled out the worksheet in the previous post, you already have step 1 complete. Now we’ll cover steps 2 & 3.
What to do today
Since you surely by now already completed step 1 by filling out the worksheet in the previous post and storing it somewhere super-visible and front-of-mind (right?), we’ll continue on to step 2 of the process.
⏳ Step 2. Track ALL of your time
I recorded a quick video in case you want to follow along and see my process:
What to do:
Track everything you do during working hours.
For me that means 9am-6pm, although I also like to track my morning routine, so it’s more like waking til 6pm for me.
Note: when I say “track everything,” I mean literally everything.
If I take a quick walk, I track it under “exercise.”
If I’m pooping, I track it as a “work break.”
If I’m making coffee, I track it under its own project because I was curious how many minutes a day I spend on my specialty coffee addiction. (Turns out, quite a few!)
👉 If you only track the time where you’re actively working on client work, you’re losing out on really valuable data about where your day’s actually going.
“Zach, that sounds cool I guess, but it also sounds like it’d be a really big pain in the ass.”
It is at first, if you’re not used to it.
But once you have your projects set up and you get into a good rhythm, it’s easy to keep things going without even thinking about it.
And the insights you get from this exercise can be huge.
- Imagine the time and hassle saved on staff recruiting, onboarding, etc. if this exercise helps you understand that you actually don’t need to hire someone?
- Or the clarity you’ll get on the best next steps for your business if you learn exactly what your biggest unpaid time-sucks are right now?
- Or the peace of mind you’ll have if you do this exercise and learn that hiring someone is actually the right next step for you? (No more wondering or second-guessing)
Still on the fence about doing it?
Here’s some “social proof” from a DYF student, let’s call him Peter, who’s freelancing as a side hustle. I urged him to do this exercise because he felt like he wasn’t making enough progress on his freelancing or his app side project despite “spending tons of time on them” each week.
Hey Zach, here are some updates since the last time we talked. I started logging my time and found this practice really useful. It gave me some insights and perks like:
- I can leave my primary job earlier on Fridays because I have a clear conscience that my 40 hours are well spent (I broke down my job into 4 projects I am leading – plus BAU time)
- I know that I put extra 10 hours into reading professional literature or courses or some practice (now I know that my progress during the last 6 years was due to my personal investment and not really related to the primary job)
- I spent only 3 hours on my app and I know that I am not stuck-I am just not working on it enough
- I already logged 3 hours on the website I am working on for my friend. We agreed on the payment after one total week of work and then the first research project phase will be done. I will never again have a «work with a friend indefinitely» project.
Thank you very much for this advice.— Peter’s experience that hopefully compels you to give this exercise a proper try 😅
How long to do it for
Depending on your project pacing and schedule, it’s up to you how long it makes sense do this “track all your time” experiment for.
As a rule of thumb, tracking all of your time for one month is probably a good place to start.
Or if that feels too long, at least commit to a week or two.
As for me, I’m hooked now, so I’ll probably do it forever.
(Though I don’t do it on holidays, vacations, weekends, etc.)
This isn’t about “being as productive as possible” or squeezing every last drop of efficiency out of my work life.
It’s more about rooting my perception of where my time’s going in reality.
(I’ve found that the two are often actually quite different — if there’s work I dislike or procrastinate on, it often “feels” like a much bigger time commitment than it actually is.)
It also helps me be a bit easier on myself when life gets in the way and disrupts my productivity.
In the past, when I only tracked the time I spent on billable client work, I’d often end weeks feeling frustrated when I looked at my Toggl report:
“I’ve been working all week — how TF did I only track 12 freaking hours!?!?!?”— Past Zach
Whereas now, when tracking everything, I have something concrete to remind me that, oh yeah, I was moving to a different country and had to sell all of my worldly belongings, and of course that takes time.
(Or whatever the thing may have been.)
It also helps with my crippling “time optimism” because it shows me that, no Zach, you can’t actually crank out a blog post in two hours, and maybe you shouldn’t expect to be able to write 4 blog posts today, and check the inbox, and work on a new course, and do a couple hours of client work…
How to do it
In terms of the “how,” you can track your time however you want; on paper, with a time tracking app, whatever. I like Toggl for the ease of task switching and its reporting abilities, so that’s what I’ll show you today.
The most important thing is that you categorize your time into useful “buckets.”
(It’d suck if you did this exercise and later found that you had too few clearly-defined categories and consequently missed out on some useful data.)
If you’re following along in Toggl, I recommend you create 2 new clients: one for your personal life, and one for your freelancing business. (If you run some other business or work a day job, I recommend a separate client for that.)
Within these clients, I recommend you create projects for the different “types” of tasks you do.
Note: it’s really important to do these as “projects” if you’re using Toggl — I originally set this all up using “tags” and was sad when I learned that you can’t see pie chart breakdowns based on tags. 😿
For project names, I recommend that you prefix them with some initials to make it easy to see only your projects, vs your project list intermixed with client projects.
For my freelancing biz, I use “ZS” as the prefix; for my personal life, I use “ZZ;” and for Double Your Freelancing I use “DYF.”
Remember that the goal when creating these projects is to capture useful data on where your time’s going.
The “sweet spot” when creating projects is to be specific enough that you get valuable, granular data, but broad enough that you don’t have to sift through a million projects to find the right one when starting a new task.
(And also broad enough that a given task you’re working on has a clear “home,” vs. seeming like it might belong in multiple projects.)
I like to also create a “misc” project as a backup catch-all, and if I look back at the end of the week and see more than an hour or two of time tracked to it, it’s a sign that I might need to create some new “proper projects” for those types of tasks to go in.
Side note: something that I’ve found really helpful is if there’s a certain type of task I’m thinking of outsourcing, I’ll break it out into two projects:
- XYZ Task — Stuff a team member could help with
- XYZ Task — Stuff I have to personally do
I recently did this with “checking the DYF inbox” and it helped me reach the conclusion that if I were to hire a VA to help with the inbox, it wouldn’t actually take much work off my plate, and thus, it’s not worth pursuing right now.
(The exercise helped me see that there are only about 30 minutes a week of “easy, VA-friendly tasks” like resetting passwords, granting course access, etc. to do, and that the rest of it is stuff that either myself or Brennan/Laura would have to do.)
So without further adieu, let’s take a look at what my Toggl project setup looks like.
My Toggl Setup:
Freelance Business Projects
Toggl Client Name: Zach Swinehart Freelancing
Below are the projects I have set up for my freelancing business as a web designer, developer, copywriter, and email marketer, to give you ideas.
If you already have a small team, be sure to add projects for things like “Managing Staff,” etc.
- ZS Administrative
- ZS Biz Dev – Creating SOPs etc
- ZS Biz Dev – Working on my own site / brand image
- ZS Bug squashing, responsive, testing, etc.
- ZS Client Call
- ZS Content Entry
- ZS Copywriting
- ZS Design
- ZS Design – Tweaks
- ZS Development
- ZS Editing / Proofing
- ZS Email Answering
- ZS ESP Building
- ZS Marketing
- ZS Marketing – Proposals
- ZS Sales Call
- ZS Small Updates
- ZS Strategy
- ZS Video Editing
- ZS Misc
Personal Life Projects
Toggl Client Name: Zach Swinehart Personal Life
Below are the projects I have set up for my personal life.
I don’t have kids, but if I did, I’d probably have a whole slew of projects for them. (Yall know Brennan and Laura’s “changing diapers / cleaning up bodily fluids off the walls” category will be overflowing with hours logged if they do this exercise)
- ZZ Animal Care
- ZZ Coffee
- ZZ Distractions
- ZZ Eating / Food Prep
- ZZ Errands (Out of House)
- ZZ Exercise
- ZZ Fun
- ZZ House Tasks / Cleaning / Chores / Errands
- ZZ Journaling
- ZZ Little TickTick Tasks
- ZZ Misc catch-all
- ZZ Routines
- ZZ Skill Level-Up
- ZZ Social Media / Messaging
- ZZ Transport
- ZZ Work Break
Blog / Online Product-Based Business Projects
Toggl Client Name: Double Your Freelancing
And below are the projects I have set up for DYF. These aren’t really relevant for freelancers; they’re mostly here for inspiration/reference in case you run a blog or podcast or something.
- DYF Communication
- DYF Community Interaction
- DYF Connection-Making
- DYF Customer Experience Improvement
- DYF Customer Support
- DYF Customer Support — Stuff a team member could help with
- DYF Customer Support — Stuff I have to personally do
- DYF Financial / Legal Admin
- DYF Learning
- DYF – Marketing – Convertkit Building / Targeting
- DYF – Marketing – Podcasting
- DYF Misc
- DYF Strategy
- DYF Video – Recording
- DYF Video – Editing
- DYF Video – Production
- DYF Website Editing
- DYF Website – Lead Gen / CRO
- DYF Writing – Drafting
- DYF Writing – Editing
The end result: Beautiful, beautiful data 🤤
Having everything separated out gives us access to beautiful data like these:
Armed with this sweet, sweet data, we can now move on to step 3…
🔧 Step 3. Optimize & Plan Next Steps
Once you’ve tracked all your time for long enough and have lots of data, it’s time to review that data alongside your lists from the previous post’s worksheet.
- How much of your time is non-billable and goes toward aspects of the job you don’t like?
- Is there a way that you can apply some creativity to your situation to minimize how much time you spend there?
- Are there certain types of projects you should or shouldn’t keep taking on?
- Certain structures in your business setup that should be changed?
- Would hiring staff be helpful for eliminating these time-sucks, or would it be more likely to introduce more time-sucks (i.e. training and managing the staff)?
- Any disruptive “personal life habits” that are negatively affecting your work life and could use some tweaking?
👉 If a lot of your time is sucked up by lead generation through responding to posts on upwork, cold calling/cold DMing, or networking / replying to posts in facebook groups to try to “manually generate leads,” it could be worth pursuing a better, less “hamster wheely” process for lead generation, like what Brennan teaches in The Blueprint.
👉 If a lot of your time is spent replying to prospective client emails, doing sales calls that don’t pan out, or writing proposals, it could be worth building some good pre-sales processes and learning how to more effectively pitch and sell, like we teach in Charge What You’re Worth and Double Your Freelancing Rate.
👉 If you’re busy with a lot of tracked hours actually working on client work (like, over 20 hrs/week) and you’re not earning enough from that to hit your income targets, make it your goal to own your lead flow and get closer to the money + raise your rates as soon as you can. The solution isn’t to work more hours on client work, because there will always be non-client-work stuff that needs to be done to run your business. Instead, I’d encourage you to aim to build a business where you can hit your income goals with 20 “client work hours” logged per week. It’s possible to get that number as high as 30, but IMO, that’s pretty much the cap if you’re wanting to be regularly investing time into growing your business and not just working in it. (Assuming you value your sanity and work-life-balance, anyway.)
Going through this exercise repeatedly over the years has been really valuable for me and has resulted in some dramatic changes in my business structure.
A few changes I’ve made / wins I’ve personally had over the years as a result of this style of optimization (maybe they’ll give you some ideas)…
Win #1: Doing barely any sales calls
Young Zach used to spend hooooouuuuurrrsss on sales calls trying to convince people that…
- Websites are good things to have, in general
- You should have me make yours
- You should pay me more than a pittance to do it
These days, I only jump on the phone once someone’s already seen a price minimum via email AND expressed willingness to pay at/above that minimum.
This means that by the time I jump on the phone with someone, they’re already pretty dang sure they want to work with me.
My conversion rate for “sales calls” (if you can call them that) at this point is upwards of 90%.
Do I lose some potential business by telling people a minimum price by email?
Yes, I’m sure of it.
But do I loathe spending 90 minutes on a Thursday night talking to someone who doesn’t convert simply because my services are out of budget?
You betcha; I loathe the crap out of it.
Quadrant Motivations from the Step 1 worksheet: 4
Win #2: Down-scaling my agency
After evaluating how much time I was spending on project management and staff management – two of my least favorite types of work, btw – I made the decision to down-scale my agency.
I chose to go from a 3-person agency grossing in the $100-200k area to a solo-freelancer earning around $60-80k.
Due to the reduction in fixed operating costs as a result of this down-scaling, my actual take-home pay took only a small hit, while my work satisfaction and free time both skyrocketed.
Could I have maybe made it work it eventually and grown it to a multi-million-a-year agency?
But yaknow what, I really just don’t like managing people for bespoke agency work. I’m too anal about my vision for what I want the end result to look like, and I don’t have a lot of patience for reviewing team members’ work for mistakes.
Most of the time, it seems like if you want a $1-2m digital agency, you need to employ like 20 people.
Whereas there are plenty of entrepreneurs who run $1m product businesses with just themselves and a couple VAs.
I’ll take that one, please!
I decided I’d rather optimize for time freedom so that I can work on growing a product-based business, rather than trying to grow a business reliant on managing a bunch of humans, which I really don’t enjoy.
Quadrant motivations from the Step 1 worksheet: 1, 2, 3, 4
Win #3: Turning away most clients
Last year, I went from working with a new client every few months to doing ongoing work with one large client.
It was a similar move to the agency down-scaling — another tweak to minimize un-billed prospecting time and client onboarding time.
By working with this one client and doing little housekeeping updates for past clients every so often, I can earn my same targeted ~$60k-80k a year working an average of 10 or so hours a week, with nearly 100% of my freelance business work time being “billable.”
Quadrant motivations from the Step 1 worksheet: 1, 2, 3, 4
Now it’s time to put this into practice.
- Go do the previous post’s worksheet if you haven’t yet
- Then track your time for a couple weeks…
- and review the data to see where you need to optimize next
I’m confident that these 3 steps have the power to transform your business and, dare I say, life.
Give ’em a go and send me an email at email@example.com letting me know what wins, challenges, etc. you had. 🙂