Scaling Your Freelance Business, Episode 141

Episode Transcript

Carrie: Howdy everybody! Welcome back to officehours.fm. Today I am chatting with Marius Vetrici. Did I say that correctly?

Marius: Yes Carrie. Thank you so much for rehearsing my name. I really appreciate that.

Carrie: It’s the worst to mispronounce people’s names. I appreciate you letting me practice there. I’m thrilled to be bringing Marius to you guys today and introducing you to him if you haven’t met him already. He is very active over in the Bucharest WordPress space leading a meetup over there. He is speaking at local WordCamps. Marius? I’m going to let you introduce yourself more thoroughly here in a moment. Before coming into the WordPress space he had a software company that he was leading. How long have you been doing WordPress?

Marius: That’s a great question.  It all started around 2006 when I started blogging and it was love at first sight. At that time I was running my other software company. We were making document management software for the USA market.  I had some interesting stories to share about how to run a company, management, etc. WordPress was really handy. I switched to WordPress and making money out of WordPress around three years ago. After I closed my other software company, I started freelancing and started making good money out of WordPress. After about a year and a half, I decided to scale up one more time and build a team around the WordPress business. Here it is the WordPress Riders wpriders agency. We have six full-time people now on board. We are happy to have a lot of work from recurring customers.

Carrie: Well I want to chat with you about that from the beginning to how you’re getting to those recurring customers. I know a lot of folks that listen to this show are freelancers or looking to be freelancers. I know from the experience you’ve had both in your software agency (and now and your freelancing turned small WordPress agency) you can give a lot of great advice. We were talking before the show and I don’t want to make my listeners feel like they’re missing out on all the great conversations we had. So let’s walk through some of those things that have helped you get from where you were to where you are in terms of what’s important to focus on. The first thing you mentioned to me was a business plan. Can you describe what that is and how that has been helpful to you?

Marius: Yeah. The term business plan may sound scary to some but in reality, it’s just a word document with one or two pages that brings you clarity. This is the keyword. You need to as a freelancer, future freelancer, or future agency owner, to know what you should be focusing on. When I say focus you need to choose what you are not going to do and what kind of services you’re not going to provide. This might sound contradictory. Whenever you start a company you have so many things to do and so many opportunities around you that you just have to sit down and see which of those activities will bring you the highest return on investment. Which of those activities will bring you the happiest customers? Basically, you need to choose a very specific niche and a very specific set of people that you can serve. You need to spend a lot of time with them, talking to them and understanding them as much as possible. You need to define and write down (it’s very important to articulate that on paper) in your word editor. You need to articulate for whom you will provide these services. As I also mentioned, you need to decide what services you are going to provide. Another important part of this business plan is how are you going to be generating new leads on an ongoing basis. This is quite crucial. It’s like the food that you need get on a daily basis as a human being. Your company will need new leads and new projects on a recurring basis.

Using a business plan to decide what services you will offer

Carrie: So let’s start with the “what” you’re going to do. I love that you said what you’re not going to do. Sometimes, I think that’s easier to identify then maybe what it is that you want to focus on. In terms of your agency, WPriders, can you share what niche you have focused on and who your ideal customers are?

Marius: I will share that with you. I think what would be more useful to your listeners is how I came to that list. Initially, I was doing everything. That is pretty normal to do everything for everyone for a few months. I was keeping a written track of what I was doing. I was writing down types of projects. I was creating and inventing services and types of plans that I was working on. It is not too difficult to keep. You’ll probably end up with 5, 10 or 15 items on your list. For instance,  you can do web design. You can do theme or plugin development. You can do support. You can do website migrations. You can do speed optimization, etc., etc. There are myriads of task types and project types in the WordPress world. After I nailed them down, I started listening to my heart or guts. Which are the customers that I am most happy to work with? This is an important sign. If customers feel they are happy to work with you and you are happy to work with them that’s an important point when choosing that particular niche. Secondly, a very important item is how much money are you making from those customers? How much money (again, this can be boiled down to what is your margin with those customers)? Are you able to charge a premium hourly rate while you work with them? The actual question boils down to are you able to generate that much value? Are those customers comfortable paying you a premium hourly rate? The bottom line is finding those customers that you can create the highest value for. You can solve some very painful problems that they have. They are of course willing to pay you a higher hourly rate. This is how I narrow down the list.

Carrie: How do you find the people that are willing to pay you that premium rate?

Before Choosing you ideal customer, you need to have customers to choose from

Marius Before having many customers, you need customers. It might sound like a truism but before having some customers to choose from you need to have a base to choose from. For that, you should look around for places that can easily generate leads for you. In our case, we went on some freelancing platforms. That’s because the freelancing platforms were doing all the heavy lifting of the marketing. By the way, I am not very good at the marketing or technical work in this agency. So they complimented us quite well. They were generating leads for us. I started with Elto which later got acquired by GoDaddy. Then we had success with Codeable.io. They have high-quality leads and we still get half of our work through Codeable.io. We also partnered with some other agencies that have leads and they are not able to serve those leads. They are outsourcing those leads to us. We are also getting some customers through our website. That would be the channels that we have used and you might also use to generate leads and have a base to start and choose from.

Carrie: I love that. You said you have six people as part of your team. Can you describe how you built your team? How did you pick the right people to be part of what you were doing?

Marius: Yes. That’s a very interesting process. Even if you’re going to hire a full or part-time developer I think some of these principles will still apply and aid you in choosing the right people. I started as a freelancer (as a solopreneur). I was doing everything and wearing many hats. First and foremost, I hired two developers. Before hiring two developers, I made sure I had at least enough work for one month in advance. How did I do that? I was just taking more and more work through Codeable (because Codeable is also an escrow service). Basically, when a client hires me, they put a deposit on Codeable. Then I know that the person or client is serious. He is really going to work with me. Then I was just scheduling them in my calendar. By the way, if you want to be effective, you need proper tools. For scheduling, I was still using the forecast app from Harvest. Yeah. Later on, if we have time I can share some of the tools that we use to get organized. Coming back to choosing the right people…First of all, I made sure I had enough work in advance. Then I hired two people. I hired these two developers. We’re still working together and it seems like a family. We are like a tribe. I was looking for people that shared my common values, because I was alone at that time. Alongside with my business plan I wrote down my reason to exist. Some call it the company mission. Our company mission is quite simple. It’s success online. We help our customers be successful online. Then I nailed down the values (those cornerstone items that we come back to everytime we make an important decision). So I wrote down our values. I was looking for people that truly are those values. By the way, you should BE those values. It’s not enough to have those values. Be the values you want to see in the world (if I were to paraphrase). How did I do that? I listed those together with a paragraph explaining that right in the job ad. So the people that read that job ad, specifically knew what kind of person (I was only one person) what kind of person they would find on that team. How do I view the projects, business, hiring process, etc.? In our case, things that worked and still work for us I think are worth mentioning. The first one is be accountable. The second one is integrity. Always do the right thing. The third value is personal growth. Try to improve and learn as you go. The fourth is contribution because we are part of the bigger open source family. We are part of the WordPress community and we are trying to give back everytime we create something. This is how I hire people. Of course there were technical interviews. The first interview is the getting to know you interview. The second one is a technical interview, where the candidates should write some code. I want to see him writing code either by side-by-side or screen sharing with me (if he or she is remote). Seeing how a person codes you can understand the way he or she thinks. What kind of problems does she see? What questions arise in her mind? This is very useful. Basically, this is my small plan. There is no magic, just a very structured plan.

Carrie: Have you had to let anyone go? Were the hires that you made right from the start?

Marius: I was lucky enough to make the right hires from the start.  We had a person that left our company. It was not a developer. It was a project manager. I had the chance to hire developers in my previous company. I had never hired a project manager (especially for a WordPress agency). I think I chose the person with the wrong skills for what we needed. It was not the wrong person. It was a miss match between skills. By the way, I want to share this with you. I hope you don’t make this mistake. I hired a non-technical person. It was an experienced project manager but she was previously working in a corporation. We had some misalignment of values even with all my effort to align with her. Still, someone that comes from a Corporation into a startup might pose some challenges. It was a non-technical person. That was a wrong decision.  Now we have another project manager that is actually one of our former developers. She’s like blooming. She fell into place. It’s like when a good seed finds the proper soil. It’s just like that.

Carrie: That’s a great analogy. Awesome stuff! So Marius? When you were talking about hiring your team, one of the things that you mentioned that I thought was really critical was you made sure that you had work in the pipeline for at least a month to pay for those two developers. Can you talk a little bit about cash flow? How have you budgeted and planned for that? How have you used that in your business?

Managing Cash Flow

Marius: Yeah. Some say that cash is king. I think cash flow is King Kong. A start up without constant cash flow will just dry out and disappear. You need a constant flow of cash either from a recurring customer, a current partner (as we have with Codeable) or from a recurring project or product. This is the case for theme developers or plugin developers.  About cash flow, one simple rule of thumb that I have been following is set aside at least 10% of our income that we have on a monthly basis. This allowed us to build a cash flow airbag (if you will). Yeah, we have cash for three months of taxes and salaries (fixed costs basically) in our bank account. I openly share this information with my colleagues, developers and managers. They’re really happy. They feel more secure. This is really important for the people that want to be hired. For my developers, it might be less important. So, three months of cash. How was I keeping track of all of this? I use a very handy which is tool called: you need a budget YNAB. I’m using this for my personal budget and for my company. It worked really well so far. In the concerns of tracking the actual workload, there is a trap and I hope you will avoid it. It is taking on more work than you can possibly handle. There’s a caveat here. I don’t think there ever is too much work. I think there’s only mismanaged expectations. You can take work in advance for six months as long as you clearly tell your clients that they’re going to be served starting in 4 months from now. Therefore, if you make that extra effort to add all your deadlines with a tool like Asana (we are using Asana by the way) we are able to lay down all the hours that we estimated in this Harvest forecast. That will easily help you calculate the next available spot. By the way, I do take the time to thoroughly estimate every task in the project that I take. If a task is larger than 4 hours, I take the time to break it down into smaller 4-hour bite sized pieces. This lowers the estimation risk quite a lot.

Carrie: Do you ask your developers to track their time?

Marius: Yes this is what we are selling. We are selling our time. We are using Harvest as a time tracking app. By the way, we have an internal target of productive quality coding hours of 5 hours per day. Up until 8 hours, we have time for research, study, or maybe to help some clients that just came back with extra requirements. We are not doing much over time. It’s only like one or two hours extra per day a couple of times. Normally we don’t have this.

Carrie: I think that’s really important for people to hear because if you’re inexperienced with this you assume that every hour of your time is billable time. It’s simply not true because of administrative overhead, meetings, and research. There are all these other tasks that need to be considered as part of your overall budget for a project.

Marius: Right.

Carrie: Is there anything else on cash flow?

Marius: Yes, regarding the cash flow…you need to get paid every month. So find one or two clients and try to make them really happy. As long at you’re happy. If you have a not so good client and you are working too well…if he says to you, “well, work on this cheaper and I will have many more projects for you”. This was the trap I was lucky enough to avoid a few times. The thing is, I cannot afford to get paid the next month (or two months). I need to get paid every month. So if it’s a smaller project then I make sure I have money during that specific month. If it’s a larger project I break it down into manageable milestones. Whenever I deliver that milestone, I ask the client to be paid. It’s through an escrow service like Codeable I just ask them to close the task and the money will automatically get transferred to us. What worked for us was to have recurring clients.

Carrie: I love tying payments to milestones. That’s something I didn’t learn until much later in my career. I wish I had learned it earlier. I wish I had interviewed you much earlier Marius.

Marius: Thanks for the compliment. It’s a matter of how much you take from this lesson. It’s not a matter of IF. It’s a matter of WHEN and how much.

Carrie: Exactly! You have alluded to some of the tools that you use. You said you use Harvest for both forecasting projects and actually tracking projects. You use Asana for overall project management.

Marius: For task management, managing deadlines and the promises that I made to the client. Every time I promise something to the client, I write this down as a deadline in Asana. We always add one to two days on top of our estimate. What this boils down to is the clients get their tasks (at worse) on the day that we promise. It works pretty well for us. Normally we deliver one or two days in advance. It’s a small trick. We didn’t invent this; we are just applying it which is nice. Our tools are Asana, Harvest, WYAB and Forecast. We are also using LastPass to manage passwords. We have more than 1,000 passwords and we need a secure way to manage those. We are using WordPress, by the way. We use PHPStorm for coding and debugging. We have an account with CrossBrowser testing service, which allows us to test our projects on all browsers, and devices that you can imagine. We are using Skype for communication, Google docs for collaboration, Sublime text and we are testing Slack with some customers. This is pretty much all of it. Speaking of recurring revenues, we launched a WordPress update service. Besides doing the updates, we thoroughly test all the updates. For this service, we signed up for a screenshot comparison tool. It’s called Cross Browser testing. The other one is a free tool call race. Cross Browser allows us to do screen shots before and after an update and to quickly spot out any inconsistencies. It’s a pretty handy tool. It’s somewhat expensive but it works fine for us and our packages. We’re also Codeception as a tool. It is more of a framework. We are running

Speaking of recurring revenues, we launched a WordPress update service. Besides doing the updates, we thoroughly test all the updates. For this service, we signed up for a screenshot comparison tool. It’s called Cross Browser testing. We use another one that is a free tool. Cross Browser allows us to do screen shots before and after an update and to quickly spot out any inconsistencies. It’s a pretty handy tool. It’s somewhat expensive but it works fine for us and our packages. We’re also Codeception as a tool. It is more of a framework. We are running codeception tests. For those of you who do not know what it does, basically, it allows us to automate clicks in a browser. Whenever we update a website, we need to make sure it is still working after the update; that the check out is still working and that the contact forms are still working. We just went ahead and automated all these mundane tasks. Now we have these scripts and tools running through this browser stack with Cross Browser testing. We have the same script that runs on multiple browsers and multiple devices. You can quickly spot out any problems with the features. You can have the best tool in the world but you need the process or checklist. For us, it is really a simple list of steps. We always follow these when working on a client’s project. As a rule of thumb, we never touch a website before making the list. By the way, we use BlogVault. We signed up for blog vault for backing up the websites. Then we start working on the website. We might use Git if it’s a larger website.  We might use Git as a tool for repositories. We might use Beanstalk. It is somewhat better than GitHub because it has automatic deployments build in. Whenever you make a Git Push it automatically copies the files via ftp or sftp to the web server. A good process ensures that we can deliver the same quality level over and over again without surprises and without missing anything. Both tools and the right processes in place will get you productive.

Carrie: All right! For all of you listening in, I will have links to all the tools that Marius has mentioned over at officehours.fm.  Just look for this episode with Marius. Marius? I have one last question for you. You talk about the importance of a business mentor. Why is that important?

Marius: It is important because you have a certain visibility range. Let’s say you see to the horizon but you need someone that is able to see beyond your horizon. A mentor is a person who can answer your phone every now and then whenever you have an important decision to make. I am lucky enough to have a business mentor (a person that runs a 150 employee company). He is a friend of mine. If I have doubts about hiring somebody or whenever I had to fire someone…I was earlier talking about our project manager… it was a very delicate thing to properly do the un-hiring. We had some coaching or mentoring sessions and role-played for how things should flow. For instance, we recently decided to sponsor WordCamp Europe in Paris. It is a bold decision to take three people to Paris and to pay all the expenses and pay that sponsor fee. A mentor is very handy and good to have in these kinds of moments when you feel like it is a good decision but maybe the numbers aren’t right or you still have doubts. You need someone who is not involved on a daily basis (operationally speaking) in your business but somehow cares about what you’re trying to do or has some passion for helping or for seeing startups grow. You should see for yourself what’s in it for your mentor. That’s also important. A mentor helps me have a broader visibility and just double checks some important decisions that I am going to make. By the way, my mentor told me to make this cash buffer of three months. It was one of the most important decisions that still supports our emotional well-being in my company. Another example was where my mentor advised me to share the profits of our small agency with those employees that stay with the company for at least one year. It’s not a matter of shares of options. It’s just a matter of…if we do well, everyone is going to do well on an individual basis. At the beginning of 2017, I made all the calculations with our accountant and shared some profits with my employees. We’re going to keep doing this. The feedback was very good. This type of advice is more personalized and tailored to your day-to-day challenges and activities. If you are from the US as a listener, I can also recommend that you go to score.org. They are offering business mentorship for free. I had some very good advice from a mentor that unfortunately has passed away recently. It was a time when I was so unfocused. He just told me to stick to one thing. He told me “Marius? You have to be known for something otherwise you will be known for nothing.”

Carrie: What a wonderful resource. Thank you for sharing that. I will be sure to add that in the show notes as well. Marius? It’s been a wonderful chatting with you. Where can people find you online to check out more about your business or say hello?

Marius: Twitter would be the best place to get in touch with me. I regularly check my account. @Mariusvetrici. You can also find me on our agency website WPRiders.com and Facebook. You can catch up with what we are doing and what will be our next steps.

Carrie: Thank you for your time, Marius. I appreciate it.

Marius: Thank you! It has been a privilege to be here and to speak with you.