Hey there!
Hope you enjoyed / are enjoying / will enjoy my WordSesh talk. 😅
Below are the resources from the session, in the order that I mentioned them:
My Freelancing Journey Timeline
In the talk, I mention my various evolutionary phases as a freelancer — this is where you can see them
My freelancing journey timeline, at a glance
Freelancer Sales Process / Funnel Cheat Sheet
An at-a-glance overview of a simple freelancer sales funnel
Freelancer Sales Process / Funnel Cheat Sheet
Business vs. Freelance “Money Math” Deep Dives
Below you’ll find the deep dive “money math” from the session. Numbers are pulled out of my butt and I didn’t double-check math so specific numbers etc. could be wrong.
“Real Business” Money Valuation Math
Core requirements of a “real business”
- You “know your numbers” and know what it’d look like to use money to increase your leads, sales, or fulfillment
- You could 4x your fulfillment if you wanted to by scaling your team
- If you 4xed your leads, you could find a way to fulfill the projects
- If you wanted more leads, you could “pull a lever” to get them
For a “real business” (a.k.a. an agency in the example below) that scores well in the 4 criteria, the valuation “money math” would look like this…
//* Project-Specific $project_price = 10000; // $10k $fulfillment_cost = 3000; // $3k $client_acquisition_cost = 1500; // $1.5k //* Company-Wide $monthly_max_project_capacity = 10; // 10 projects/mo max capacity with current staff & infrastructure $monthly_fixed_expenses = 8000; // $8k/mo for non-delivery staff (e.g. project managers), office expenses, etc. $effective_fixed_expense_project_cost_share = $monthly_fixed_expenses / $monthly_max_project_capacity; // $8k/10 = $800/project //* Net Project Revenue: $4700/project $net_project_revenue = $project_price - $fulfillment_cost - $client_acquisition_cost; // $10k - $3k - $1.5k = $5.5k $effective_net_project_revenue = $net_project_revenue - $effective_fixed_expense_project_cost_share; // $5.5k - $800 = $4700/project //* Monthly Gross Profit: $47,000/mo $effective_monthly_gross_profit = $effective_net_project_revenue * $monthly_max_project_capacity; // $4,700 * 10 = $47,000/mo $effective_annual_gross_profit = $effective_monthly_gross_profit * 12; // $47k * 12 = $564,000/yr //* Take-Home Pay $monthly_taxes = $effective_monthly_gross_profit * 30%; // $14,100/mo $monthly_profit_in_the_owners_pocket = $effective_monthly_gross_profit - $monthly_taxes; // $32,900/mo net revenue in your pocket $annual_profit_in_the_owners_pocket = $monthly_profit_in_the_owners_pocket * 12; // $394,800 annual take-home post-tax //* Business Asset Valuation // Small business valuations are often done at 3-4x "SDE" — Seller's Discretionary Earnings — a.k.a. the gross profit from above (pre-tax) $sellers_discretionary_earnings = $effective_annual_gross_profit; // $564,000 $business_valuation_low = $sellers_discretionary_earnings * 3; // $1,692,000 Business Asset Value $business_valuation_high = $sellers_discretionary_earnings * 4; // $2,256,000 Business Asset Value
Typical Freelance Business Money Math
Core requirements of a “real business” ranked for most freelancers:
- 👎 NO — You “know your numbers” and know what it’d look like to use money to increase your leads, sales, or fulfillment
- 👎 NO — You could 4x your fulfillment if you wanted to by scaling your team
- 👎 NO — If you 4xed your leads, you could find a way to fulfill the projects
- 👎 NO — If you wanted more leads, you could “pull a lever” to get them
Freelancer business valuation money math for a freelancer who’s doing pretty well & grossing 6 figures:
//* Project-Specific $project_price = 10000; // $10k/mo $fulfillment_cost = 0; // $ 0 = DIY $client_acquisition_cost = 0; // $0 = referrals only //* Company-Wide $monthly_max_project_capacity = 1; // 1 project/mo max capacity $monthly_fixed_expenses = 100; // $100/mo for random stuff $effective_fixed_expense_project_cost_share = $monthly_fixed_expenses / $monthly_max_project_capacity; // $100/1 = $100/project //* Net Project Revenue: $9,900/project $net_project_revenue = $project_price - $fulfillment_cost - $client_acquisition_cost; // $10k - $0 - $0 = $10k $effective_net_project_revenue = $net_project_revenue - $effective_fixed_expense_project_cost_share; // $10k - $100 = $9,900/project //* Monthly Gross Profit: $9,900/mo $effective_monthly_gross_profit = $effective_net_project_revenue * $monthly_max_project_capacity; // $9,900 * 1 = $9,900/mo $effective_annual_gross_profit = $effective_monthly_gross_profit * 12; // $9.9k * 12 = $118,800/yr //* Take-Home Pay $monthly_taxes = $effective_monthly_gross_profit * 30%; // $9.9k * .3 = $2,970/mo $monthly_profit_in_the_owners_pocket = $effective_monthly_gross_profit - $monthly_taxes; // $6,930/mo net revenue in your pocket $annual_profit_in_the_owners_pocket = $monthly_profit_in_the_owners_pocket * 12; // $83,160 annual take-home post-tax //* Business Asset Valuation // No one wants to buy a freelance business because it's just a job $sellers_discretionary_earnings = $effective_annual_gross_profit; // $118,800 $business_valuation_low = $sellers_discretionary_earnings * 0; // $0 Business Asset Value $business_valuation_high = $sellers_discretionary_earnings * 0.25; // $29,700 Business Asset Value if you have a client roster or something they want to buy
The “All Freelancer Marketing Strategies, Ranked” Database
The low-down on how all the most common marketing strategies for freelancers stack up
The “All Freelancer Marketing Strategies, Ranked” Database
The $200k/yr Freelancer Roadmap
The step-by-step roadmap of the big steps that go into a $200k/yr freelance business
The $200k/yr Freelancer Roadmap (Full Version)
The “Skimmable High-Level At A Glance” Version lives here
The $200k/yr Freelancer Checklist
A check-off-able companion to the Roadmap
The $200k/yr Freelancer Checklist
The “Service Offering Value Thermometer”
A useful reference to help get your head around how your services impact your clients’ businesses
The “Service Offering Value Thermometer”
Old Canva version lives here (has a more detailed intro section)
“Problems → Attempts → Solutions” → Offers Infographic
A helpful reference to understand how to ideate valuable service offerings for a given audience
Here’s a shitty Canva infographic illustrating this one
$200k Freelancer Course & Waitlist
If you want to be walked step-by-step through the entire process of building your own $200k/yr lead gen machine, you’d probably enjoy hopping on the $200KF ($200k Freelancer) waitlist.
How Was My Session? Got Any Questions?
Feel free to reach out at hello@doubleyourfreelancing.com 😊
Cheers,
— Zach Swinehart
Owner & CEO, Double Your Freelancing