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Income Report 1 – Going from £20k to £110 000

Income Report 1 – Going from £20k to £110 000

Today I’m going to start discussing and disclosing my income and expenditure at a high level.

Why am I sharing my income report?

I’ve thought long and hard about this and have asked a lot of you for your opinion (thanks for the feedback). I was a bit skeptical in the past and still kind of feel that way. But I’ve decided that I’m going to take the leap and do it because I think it may really help build your confidence and help motivate you. I’m doing this not to show you that I’m making millions working as a freelancer (because I’m not), but rather to show you that you can indeed earn a comfortable living as a freelancer working from home.

I thought I’d start at the beginning, even before I became a freelancer and even before freelancing from home. I’ll try to be as transparent as possible. All the high level figures are verifiable via various financial sources so feel free to dig around if you like.

I’m not a millionaire but through hard work and long hours, I’m able to ensure that my family is comfortable and well taken care of.

Over the coming months, as I have time, I will detail my income over the last few years on a per year basis until I’m all caught up. If there is any particular month that is significant, then I’ll let you know. I’ll also try to let you know about the highlights of that year.

 

Starting with my permanent jobs…

Let’s go back all the way to 2005. I’m not going to mention specific company names but feel free to look at my LinkedIn Profile to see where I’ve worked.

2005-2006 : Hired as a Software Engineer at a bespoke robotics company : £20000 pa  and received about a 4% increase just about a year after I started.

2006-2007 : Another Robotics Company as a Senior Software Engineer : £28000 pa  and about a 3-4% increase within the year.

July 2007 – September 2007 : A short stint at an IT consultancy in London as a Senior Software Engineer : £42000 pa plus received about 2% increase after being there for a few weeks – it was a company wide bonus – a nice surprise.  I left this one early because I had an opportunity that I just could not pass on, and that was to become a freelancer. So this is where my freelancing story starts…

 

Freelancing Starts Here (Nov 2007)

I incorporated Gadgitech Ltd  and all my freelancing is done via this business entity, be it work from home, in office contracting or any other business ventures. All my clients have very strict Non-Disclosure agreements in place so I have to respect that and as a result cannot post intricately itemised details of projects. So I will provide you with a high level overview of what has gone on over the year. Once I’ve cleared the backlog, I’ll start doing this more frequently, like perhaps every 3 months or so.

 

November 2007 – November 2008

During this period I was working from home and doing a few site visits for certain overseas projects.

Total Income: £110 000

My charge out rate started at £40/hr and about 6 months or so after, that increased to about £50/hr. It was a very very busy year and some weeks were as long as 80 hrs. I can say, that was really exhausting, and prefer not to do that again. But the satisfaction of being your own boss, and working for yourself made it all worth while.

Total Expenses: £13 000

Expenses included stuff like:

– Computer equipment (laptop), hotel costs and software licences.

 

What are the first things that I did.

  1. I registered a Limited company ‘Gadgitech Ltd’. It was a relatively quick and painless process which can easily be done in a few minutes online for UK based companies.
  2. Create a bank account for the company. This is important because your clients will want to pay you and the money needs to go somewhere. It’s best to keep things separate and have a bank account registered under your company. That way, it is easier to isolate yourself from your company activities.
  3. Get Insurance. I’m paranoid. It’s not always necessary but I strongly advise it. Business insurance is pretty cheap, so rather safe than sorry.
  4. The website. I really wanted gadgitech.com. But at that time, it was taken and actively used by another company. I think it was a South African company funny enough (I’m South African / British). But gadgitech.co.uk was available so I bought that and got some free web creation software, free logo from an online logo generator and created something about me and about Gadgitech. Just so that I can start an online presence.  A few years later, gadgitech.com became available, and now it’s mine :). If you are looking to get your own website up and running fast, here’s a walkthrough that I put together. I’d say don’t delay, because you will end up losing business because of it – or the lack thereof.
  5. Find an accountant. As much as I wanted to do the books and crunch the numbers, I thought it would be best to hand it over to someone who is better at it than I am. So I spoke to a few friends and got a good referral. I tried them and it stuck. They are great. I’m still with them to this day.

The things I’ve learned in that first year.

  1. How to write a contract. I had to come up with my own contract but had some guidance from the first company I freelanced at. Not all clients will ask this. Most actually have their own contracts already in place, just for you to fill in your name, company details and sign on the dotted line.
  2. That I can work 20hr days solid for a week before I start hallucinating :). You do really work hard. It’s not all easy. Well, for me anyways. But there is gratification, simply because at the end of the day, you are your own boss and it’s your own company.
  3. I work best at night. Now this is not ideal for a lot of people, but for me, I’ve found that I work my best at night. I’m just able to focus more.
  4. I need stuff in writing. Always confirm requirements and agree them in writing. It is not good enough to send it through via email without an acknowledged acceptance / response. Clients can and will try to get as much bang for their buck. (I’m guilty of the same for when I outsource). I’ve not had bad experiences, in fact, all my clients were fantastic. But this is the one rule I’ve adopted throughout. Keeps everyone above board.
  5. I was a BAD negotiator. I was terrible. I didn’t know how much to charge. I didn’t know how to talk about money and fee’s. I didn’t know how much I was worth.  I also, tended to give away a lot of stuff for free. I still do it to this day but have learned when to do it and how much to give away – or at least I think I do 🙂

 

So that’s my first report. It was a tough first year. I learn’t a lot about business and myself in general. If you are thinking about transitioning to freelancing, be it from home or otherwise, I would whole heartedly recommend it. But keep in mind that it is a tough journey and success is largely determined by your skill, attitude and perseverance.

 

Good luck

 

D

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