FR OM PAR T-TIM E

TO PR OFE SSION AL:

How to
manage your
creative business

03

Introduction

08
17

Dont sell yourself short

Invoicing can save you time and money

26
35

How to handle an unhappy client

Take control of your taxes

44

Conclusion

2016 Ideaform Inc. No part of this publication may be reproduced

in any form without the prior written consent of Ideaform Inc.
All company logos used are trademarks of their respective owners
no endorsement is implied.

Starting a creative business wasnt something illustrator Michael

C. Hsiungs had planned. After receiving his degree in English Literature and securing a job as an assistant grant writer at a museum,
drawing was still a hobby. Hsiung kept drawing and uploaded his
work to his websitesoon enough, people began to notice this
quirky, charming characters.

Introduction
I started getting invited to shows, selling works, contributing to
zines, and I guess just creating a following. It was an unlucky
turn of events that catapulted Hsiung into his career as a full-time
freelance creative. Laid off from his position at the museum, he
began building his creative business.
One of my first clients was actually Saatchi & Saatchi / Doc
Martens, which at the time, sounded too good to be true,
remembers Hsiung. The opportunity lead to Hsiung creating two
pairs of shoes for Doc Martens which sold in Asia and Canada.

Michael C. Hsiung

INTRODUCTION

03

But despite working with Vice, The Hundreds, Burton and Vans,

It can be a very intimidating timeaccording to the Freelancers

Hsiung recognizes the difficulties creatives face when they

Union, 13% of part-time freelancers and moonlighters say that

decide to pursue a full-time freelance business. It definitely

paperwork and administrative overheads keep them from

wasnt easy and still isnt, he admitted. But I think what ulti-

entering the freelance workforce full-time. For commercial and

mately is the hardest part is rolling with the ups and downs that

editorial photographer, Diego Texera, the realities of launching

come with being your own boss. Not having money, not being

a freelance creative career were all too real.

able to go out, having no insurance

What derails
creative professionals:

Now is the time to start tackling the business side of becoming

a creative professional. In a perfect world, your job would end
after creating beautiful work you are passionate about, but
there is a lot more that goes into running a business. How much
are you going to charge for your time and services? How are you
going to handle a client that never pays on time? What if a client
is unhappy with your services? How do you even begin to tackle

~ Lack of organization
~ Poor pricing model
~ Failure to negotiate terms

the tricky task of filing your taxes?

This wasnt my first attempt at self-employmentI had
Freelancersindividuals who have engaged in supplemental, temporary,
or project-based workmake up 34% of the American workforce.

already failed twice, Texera explained. I was ready for all the
ins and outs of running a company. That doesnt mean I enjoy
accounting, taxes, managing a website, designing a logo or
printing business cards, but its an important part of being a
one-man show.
While you may find yourself getting caught up in the creative
elements of your work, and ignoring the somewhat boring
business side of your work, dont. The skill set you need to be an

Independent Contractors: 40% of independent workforce

Moonlighters: 27% of independent workforce
Diversified Workers: 18% of independent workforce
Temporary Workers: 10% of independent workforce
Freelance Business Owners: 5% of independent workforce

exemplary creative is not the same skill set needed to become

great at business explained Rob Harr, VP of Sparkboxx. We
have to unlearn things to become good at the business side. It
is important for creatives to not take the business management
aspects of their career lightly.
INTRODUCTION

04

There are many things to consider when it comes to running

your business, and it may seem totally overwhelming. Worse yet,
it may feel like the dull administrative tasks could take up all of
your time. The opposite is actually true. Keeping your mind free
from a backlog of unpaid invoices or angry emails filling up your
inbox affords you more time to do what you do bestcreate.

Youre the creative, now let us help you

become the professional
Every year, the freelance community adds $715 billion to the
American economy. And 43% of the current creative workforce
identify themselves as self-employed. With so many creative
professionals running their own profitable businesses, theres
no reason you cant follow suit. Thats why were sharing how
you can manage your creative business when it comes to:
~ Correctly pricing your services
~ Best invoicing practices
~ How to manage unhappy clients
~ Tips to help you navigate your taxes
If you dont have an MBA, dont panic, well be helping you
sift through the noise to make the right decisions. Youre the
creative, now let us help you become the professional.

Melissa Cowan

INTRODUCTION

05

Creative success
lives here.
Within 48 hours of posting
images to his Format portfolio,
photographer Michael George was
contacted by National Geographic.
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learning to code.
Photography by Michael George

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06

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ONE

Dont sell
yourself short
How much are my services worth?
Its a tough question, one that freelance professionals often
struggle to answer. For creatives, there is an added layer of
difficultymany find it hard to see themselves as a business.
But to actually survive as a professional creative, you need to set
rates for your work that are competitive and reasonable.
Starting out as a photographer at nineteen, Minh Bui was trying to learn
the ropes and land her dream client. I knew little to nothing about
managing a business or myself as a brand, she said. But after six months
spent shadowing a professional photographer, Bui began to attract her
own clients such as BCBGeneration and Ashley Tisdale. After developing
her own list of clients, Bui came to one main conclusion about working
as a freelance creative professional: You, your work, and your business
deserve to be rightfully compensated and protected.

Jason Bassett

DONT SELL YOURSELF SHORT

08

Its an uncomfortable subject.

So we push the money conversation
to the back burner.
Putting a price on your work may seem slightly awkward but it is
one of the most important business decisions you will to make.
Its an uncomfortable subject. So we push the money conversation to the back burner, Sparkboxx VP Dan Harr told HOW
Design Live podcast. But business is an exchange of goods
and services for money. I believe we have an inherent fear of
talking about money with our clients because we think these
things we do are for some higher calling.
Overcoming that little bit of discomfort is crucial to your success
your creative career isnt going to last long without cash flow.
The good news is that 77% of freelancers are making the same
or more money than they did at their traditional 9-5 jobs and
43% expect their wages to continue to grow year to year. You
dont need to be a financial analyst or economic whiz, but its
important to establish a basic, cost-plus pricing model.

Minh Bui

DONT SELL YOURSELF SHORT

09

77% of freelancers
make more money than
they did at traditional
95 jobs. 43% expect
their wages to continue
to grow year to year.

Minh Bui

DONT SELL YOURSELF SHORT

10

Using a simple formula, you can establish a price-per-project

Overhead costs can be a bit intimidatingyou want to start

model that will not only provide you with a return on investment

making money, but first youve got to spend on equipment and

but also with your desired profit amount.

software. You need to spend money to make money is a cliche

for a reasonbecause sometimes its true. Overhead costs are

The first step is to take your expenses into consideration. This

the items and services that do not directly generate revenue,

is important as it will help you to ensure you arent taking too

but are essential to the day-to-day operation of your business.

much money as profit.

Think equipment, software, advertising, and a work space.

These costs are going to vary from profession to profession
and person to person.

There are two kinds of expenses youll be dealing with: fixed

and variable. Variable expenses include costs that vary based
on what kind of work and how much of it you dothink travel

Take for example, your workspace. As a freelancer, you probably

costs, assistant fees or casting. Fixed expenses include

dont have a supplied office like a normal employee. Instead,

equipment, marketing, communications, and other business

it is up to you to figure out where youre going to conduct busi-

necessities. Fixed and variable expenses are further broken

ness. Maybe youll rent a desk in a shared office space, convert

down into overhead, material, and labor costs.

part of your home to an office, or post up in a local coffee shop.

No matter which you choose there will be an overhead cost
whether its a rent cheque or a small fortune in americanos is
up to you.

+
Cost of Materials

+
Cost of Labor

=
Overhead

With self-employment comes a category of overhead costs

you may never have considered as a 9-to-5 employee. As a
Total Cost

full-time employee, your salary also takes into consideration

business costs like health care, licensing, taxes, and other
business essentials, Ryan Robinson, Content Marketing Lead

+
Total Cost

at CreativeLive, said. But when you work for yourself, youve got

=
Desired Profit
(ex. 20%)

to cover all of that. Taxes and health care should be factored

into your overhead costs, lest they become a costly surprise.
Final Sale Price

DONT SELL YOURSELF SHORT

11

Once youve calculated your overhead costs, consider the cost

of materials that you may incur. Certain professions will have

Average Yearly Overhead

Expenses For A Creative
Professional

higher material costs than others, but it is important to always

keep track of these variable expenses.
Photography, for example, will often require printing, photo books

~ Office space/co-work membership

and framing. Dont forget the costs associated with your digital

- $5800/year for 250 sq/ft

filesmost creative professions require you to store something,

~ Web hosting - $388/year

whether its vector graphics or project briefs. Digital storage

~ Accounting Software - $300/year

comes at a price too, whether its hard drives or the cloud.

~ Internet - $1080/year

~ Phone - $1200/year

Once youve calculated the hard costs, its time to factor in

~ New laptop every 2 years - $600/year

the cost of labor. This is where things can get tricky for a new

~ Promotion & marketing - $1200/year

~ Miscellaneous software - $348/year

~ Accountant fees/tax prep - $1000/year

~ Healthcare costs - $5615/year

~ Self-employment tax - $5700/year

~ Total yearly expenses: $23,231

creative professional. When starting out, you might be tempted

to try and and lure in new clients by offering your services at
a price that barely covers your expenses, let alone the cost of
your time. Thats not the smartest way to think about running
your business, according to Freshbooks CMO Shawn Cadeau.
When youre in business for yourself, time is your most valuable asset, Cadeau told Format Magazine. There are never
enough hours in the day.

Sarah Pabst

DONT SELL YOURSELF SHORT

12

Understanding the value of your time means understanding the

Coming up with an hourly rate that you feel your time is worth is

real value of your skills. When setting cost of labour, it is easy

subjective. Whatever amount you decide on, your work should

to undervalue yourselfespecially when you love what you

reflect that. When youre taking on your first clients, this wont

do. But this could be to your own determent. For every piece of

be an astronomical figure, but as your reputation builds, so

work that you do, you should know how much time it will take

should the value you place on your time.

you to deliver the final product. From showing up at a shoot,

to editing, to travel time, you need to consider pre- and post

Keep in mind that you are not charging your client the hourly

production in your calculations.

rate you decide onit is only one component of the formula. If

youre charging by the hour, youre leaving money on the table,

How many hours per week do

you work on freelance projects?

and making it harder to take on multiple projects at the

same time, writes web creator Mat Vogels for WebFlow.
Charging an hourly rate will not always match up to your

Full-Time Freelancers

evolving skills. If a project takes you 15 hours to complete

27.6%

in your first year as a professional, it might only take you five

22.6%
Percentage

20

10

by the time you reach your second year. To make the same

17.7%

14.7%

amount of money youll have to increase your hourly rate

9.0%

8.5%

0
<10

1120

2130

Hours

3140

4150

>51

to a higher number, and that could be off putting for your

currentand futureclients.
The ideal pricing model takes into account your overheads,
your material costs and your carefully considered cost
of laboradd them together to get the total cost of your
next job. From here you need to add in your desired profit
percentage to the amount and there you have ityouve got
your final sale price.

DONT SELL YOURSELF SHORT

13

Put your profile to work with client proofing

Client proofing is a part of you day to day business. Why not make the process seamless and easy
for your clients by adding proofing to your portfolio?

Share private proofing galleries

Review client feedback

Make your client proofing sessions painless by integrating them

Showing your clients unedited photos and allowing them to

with your online portfolio. With a few clicks of the mouse, you can

choose their favourites can save time and money. With client

present images to clients professionally and privately. Galleries

proofing, you can receive client feedback instantly. Favoriting

can be password protected, customized to your needs and shared

makes it quick and easy to see which images they liked best.

directly from your site.

DONT SELL YOURSELF SHORT

14

Enable downloads

Watermark your images

Cut out an extra step in your sales process and enable full or

Protect your images from unauthorized distribution by using

restricted image size downloads to let your clients download

Formats built-in watermark tool. Or upload your own watermark

directly from your site. Set notification to be alerted when your

to feature of all of your images.

clients have downloaded an image to stay in the loop.

Try Proofing

DONT SELL YOURSELF SHORT

15

Adding profit is very subjective. You need to have an accurate

understanding of your works worth and the value you bring to a
project overall. When calculating your profit percentage consider:

While you might think that

just covering your expenses is
the best way to make yourself
appealing to clients, it can suggest
something entirely different to
potential clients.

~T
 he quality of your work and how you package your
finished product
~T
 he perceived value of you and your products in the
marketplace
~ How confident you are in your skills
Take stock of the other creative professionals in your area
what are your peers charging for the same kind of services and
products? Your clients will be doing this, so why not get a leg up
and ensure youre priced competitively? While you dont have
to completely change your pricing model, research will help you
to be aware of your local market.
Pricing will differ from one job to the next. While it is helpful to
have package offers on the ready, remember to stay flexible
when it comes to pricing (especially when you are starting out).
Always remember, dont undersell yourself. While you might
think that just covering your expenses is the best way to
make yourself appealing to clients, it can suggest something
entirely different to potential clients. Basement-level pricing
can suggest that youre not particularly good at what you do.
Your prices suggest your own sense of worth, and that needs
to reflect a confidence in your abilities.

Minh Bui

DONT SELL YOURSELF SHORT

16

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