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Expanding a freelance business

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Zvi TwerskyExpanding a freelance business
by on Feb 17, 2013 at 11:55:03 pm

I have been cruising through life and have posted questions here on COW for years. I have come to a place in my life where business and freelance came to play and Google brought me to this forum. I must say, I was deeply inspired and touched by the support and personal stories that were posted here in "Business & Marketing" and I haven't even gotten to page 3 yet! The story that inspired me the most so far was Bob's in this thread:

Anyway, you guys made it to my bookmarks. Hopefully, one day I'll be able to help others here, but for now, I'm the one in need of advice, so let me tell you my story as briefly as I can.

(note: I moved from the States to Israel at age 13. My story is in Israel, where I live now).

Unlike Bob, I haven't been around 2000 studios, but I've had my share of "being around". I'm turning 40 soon and I have shifted my carrier path drastically over the last few decades. 10 years in medical and security, 6 years in computer engineering and the past 7 years - video editing - while within the last 5 of those years, adding videography too, but mainly editing. Like most starters that are thirsty to learn a new profession - I worked as an editor for free for the first few months. Editing was the only profession that I was self taught and didn't go to classes for. Being that in the past 10 years, there was a wealth of information online for self teaching, I took advantage of that and was a quick learner.

I found a job as a video editor at a big, well known bridal salon that was around for 30+ years. They had it all, from wedding dresses to massage rooms, to printing their own digital albums - they had work all year round. But they only had one video editor. When I came in, I learned that I was replacing him so I'd be on my own. My bubble of hope to learn from someone more experienced than myself was busted. So off I went, working and learning from my mistakes, researching new trends and workflows. Being a computer programmer, I wrote code to help my editing workflows. I even wrote software for my boss to make his daily, repetitive tasks more simpler. (Maybe hoping that becoming more valuable would make me more money... never happened :-)

The pay wasn't the greatest but was decent for editors that worked as employees at big companies. Had I been single, it would have been enough money. Unfortunately, at the time, I was recently divorced with 5 young kids. Like in most Countries, child support was biting me in the a**. I couldn't afford rent any more. Being that my boss liked me so much, he offered to let me "live" in the studio, rent free. It was a semi-convenient solution, being that I had no other choice. There was a washer and drier (for the wedding dresses and barber towels), a shower, kitchen... the only thing I didn't have was privacy and a bed. The place was monitored 24\7 with security cameras and the cleaning lady would come at 6:00 A.M and brides followed at 7:30 A.M. so I had to be up and showered by then. I slept on a mattress in the storage room with all the cameras. Every night, I'd be woken sometime between 1:00 A.M. and 3:00 A.M. by the noise of the camera guys coming back from weddings and putting away the equipment. Some would even call my phone, asking me to come downstairs to unlock the door for them because they forgot their keys. This went on for 3 years.

Finally, I had the brilliant idea of learning videography, filming at nights and using that extra income to rent a small place of my own, where I can tell the cleaning lady what time to come and have no brides prancing around in their massage robes at 7:30 in the morning... The plan went great. It took me 6 months and about 50 weddings (that I filmed for free) but I did it and got my own place. I worked as an editor at days and filmed 3 nights a week.

2 years later, I was still earning less than my expenses and debt was adding up. I had a big choice to make... either move back into the studio, or get out of my comfort zone and take the risk of opening my own editing business. I chose the latter. Having edited and filmed for years, many people in the production industry got to know me and my work - which was quite good I must say - and I used that fact against the risk factor of starting a freelance business. Scared as I was, I quit my job and started editing from home. On the get-go, I charged double what I made at my previous job. It was a little more than the market price of freelance editors but having doing research, I went for that price range. At first, jobs came in slowly but steady enough for me to keep my rented place and make payment plans with my creditors and keep up with the payments. I also filmed occasionally with rented equipment.

Being a freelancer also meant I had to have a sales pitch - what do I offer that my competitors don't. I added some editing services and quality into my work to stand out, and after a few months, business started to pour in. I must remind you that I have never advertized myself or asked for work from anyone. It was all mouth-to-ear. Now I'm coming to my question about advice, that happens to be the main reason I am writing all this...

Since my debt had added up over the years I was employed, it will still take me about another year to clear myself of debt. This alone is very exciting to me and I am proud of myself for achieving this. My problem is that right now, I have too much work coming in. Now take that grin off your face and let me explain... :-)
I always had a dream to expand my business and take on more editors and workers. It seems, to the naked eye, that if I have all this work from mouth-to-ear only, imagine what I could bring in if I marketed myself... right? I should be able to easily rent a small studio, hire a secretary and another editor or two, while my commission off the additional workers would pay the extra expenses of the new work place, plus some more for my pocket, right? But when I start to make a business plan, I quickly realize that you need cash to start this. You need rent for the new place, more computers, desks and chairs, air-conditioning, toilet paper... and of course, there is always the risk factor you must consider in every business plan and have an "out-plan" in case things go wrong. If you remember, I am still paying off debt and can't take loans for another year. So I have the option to decline new clients and\or work from existing clients, but that seems like murder to a business expansion opportunity... or I can decide to get my feet wet in risk and go for it... with no money, hoping that the new editors will work fast enough to cover the expenses.

Ok, I must add that I don't have an option to out-source work because my clients expect a certain level of quality that I would have to supervise, at least at the beginning, which by the way, would also take up some of my time - teaching my techniques to new editors - which is a further expense. Yes, it seems like a great plan for the near future but the first 6 months or so is what scares me the most. The months of investing new equipment and teaching time... I can't see how it can be done. But deep inside me, I feel that everyone who starts poor and succeeds, must have been in the same situation as me and I must be missing something.

I think I need advice on how to straighten my thoughts.

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Nick GriffinRe: Expanding a freelance business
by on Feb 18, 2013 at 4:21:51 pm


Glad you found the COW's Business and Marketing pasture. Welcome!

From afar we really have no way of knowing just how good, or how RISKY your future flow of business is. BUT… from what you have described my personal inclination would be to go slow. Rather than incur additional liabilities while you are still in debt, wait. I say this because employees are, by their very nature, rarely able to transition from being a cash drain to a cash generator. This, along with many other reasons, are why businesses have cash reserves. If you are already in the hole don't, for now, risk going further down.

Instead you might look to ways to "extend your brand" with add-ons and related services which can bring in more revenue but not require much investment. For example: if you are shooting weddings in HD you should have sufficient resolution to pull acceptable quality still images from most static shots. An album of stills is a sideline service you could provide for existing customers.

Another could be anniversary projects where, in future years, you re-visit the happy couples and their lives (quite possibly children) and intercut this with scenes from the original wedding. Sure that wouldn't be an instant business, but it could be a lucrative long term source of income -- as well as a real differentiator from competitors.

There are lots of ways to take the base of business you already have it provide additional work, you just have to look for them.

I hope some of this advice will, at least, help your thought process.

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Mark SuszkoRe: Expanding a freelance business
by on Feb 19, 2013 at 3:26:32 pm

You seem to be in the valley between two peaks: more business than you can comfortably handle, but not enough cash and business to outweigh the expense and risks of expansion.

I would consider a small increase in what you charge. This has a couple things going for it:

It will get you debt-free a little sooner.

It will reduce your "too many clients" problem.

No additional investment or expenses at this time.

It allows you to maintain the high level of personal involvement with each project.

Obviously, setting the rate is a very delicate issue with established clients. I would say, start with all new first-time clients and hit them with the new, higher rate. Repeat clients should get a heads-up and a grace period in which they could lock-in the lower rate with a long-term commitment.

There is the danger of chasing off some clients, granted. But you also have the opportunity to catapult yourself into a smaller but richer clientele which makes each job pay off bigger.

If I was in your position, this is the gamble I'd take before trying to expand beyond hiring one assistant editor. When you become an employer, there are a lot of new issues to face and you sound like you're too busy to face them.

Busy is good. Much better than the alternative.

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Al BergsteinRe: Expanding a freelance business
by on Feb 23, 2013 at 7:52:33 pm

Mark is very right on with this, and this is all good advice. The basic thing you are facing is that you are 'under-capitalized'. I was too, once. And I eventually sold my business because I was in the same cycle you are in now. I went out and did other work for a number of years before I came back to this being properly capitalized. My buddy who I sold the business to, ran it on a shoestring for another twenty years before he sold it for a profit. But he had a great time and did good work. There was enough money for one employee, but not two.

Do not take on other employees until you know that you can afford them. You might consult your accountant and your banker, which helped me gain what's called "accounts receivable" financing to bridge bigger jobs properly. Not sure if that's standard practice in Israel, but I bet it is. But bringing on employees adds a lot of work to your load. Payroll, and other government mandated programs and processes.

But do raise your rates, as described. I remember reading that even the great photographer Edward Weston was living in poverty on the California coast, complaining of not making any money, and I believe it was Ansel Adams who told him to raise his rates. He did and got more work than ever before. So he continued raising his rates and still got more work. I believe he eventually hired an assistant (G). You might be getting too much work because you are too cheap. Those customers often aren't great clients, either.

Lastly, one of the key things that you should remember, in any job, is pay yourself first. That keeps your number one employee happy (G).

Best of luck Zvi. Kul Tuv.


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Zvi TwerskyRe: Expanding a freelance business
by on Feb 23, 2013 at 8:06:10 pm

Thanks for all the advice so far.

I would just like to say a few things: First, I am not underpaid and actually, I take more than any other freelance editor I know, or that I researched in my area, does. Second, my plan was not to take an editor as an employer but to have him open his own small business (I don't know what it's called here but in Israel, if you make under a certain margin, you are exempt from most taxes) and I would get a receipt from him on every job I pay him for. This way, I don't have the head-ache of managing and paying taxes and benefits on employees.

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Al BergsteinRe: Expanding a freelance business
by on Feb 23, 2013 at 8:15:25 pm

Ah. Ok. Thanks for clarifying this. Glad to hear you are pricing well! That's always the right start. What you describe is what's called a 'subcontractor' I believe here in the states. You are saying that they would work for you as a subcontractor, and you would pay them? That might work, yes. But I would still check with your accountant to clarify any government rules on having that person in the same physical space. Brings up issues like insurance, etc.


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Ross WebbRe: Expanding a freelance business
by on Feb 25, 2013 at 12:13:22 pm

Hiya Zvi,

Firstly well done on building yourself up over the years. But I guess you're not here to hear how well you're doing but for advice of where to go from here.

I can't tell you what to do of course, but I can share my experience with you.

I started off, like you, getting more work than I could handle as a single freelancer. I also actually ended up sleeping in my client's filing room where I put my PC's. I then was able to grow from that tiny little room to a company of 12 people.

I wouldn't say we were well capitalised at all, and I funded this all out of my own pocket.
The reason we were really able to expand very quickly was because all our work was VERY high margin. Or I should say, MASSIVE margins.

I think one of the most scary things to do is to turn down work (especially as someone who never had any of it at one stage) but you need to turn down the low margin stuff.

One of the other good moves we made (and I have to say we because it was more than just me as soon as I took on the first employee) was to hire a very aggressive and charming producer. He was able to say no to clients and explain our pricing as well as ensure that we were paid on time.

Getting paid on "Approval" was something we had written into our contracts as well that the usual 50% upfront, 50% upon approval. Its a small distinction but a very important one. Not 50% upon "Completion". In other words, for a new client, there is ZERO chance they would receive the artwork without the second 50%.

So back to MASSIVE margins. To do that we had to stand out in the market and really focus on one thing. As Seth Godin says in The Dip, you need to be the best in the world. And by the world he means YOUR world. Whatever that is. We became the best at what we did in our little world and for a number of years were able to really dominate that niche. It means saying no a LOT. But then some of the shows we did are still running in their 9th seasons.

It really can be done and with the right partner on the business management side (I don't suggest taking on an equity partner, that came back to bit me in the a$$). I also suggest really working hard on your branding and positioning. Easy to say, hard to do.

Hope that helps and gives you some actionable items. Looking forward to hearing about your success in the future.

Ross Webb,
Co-Founder, Mindway Media

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Zvi TwerskyRe: Expanding a freelance business
by on Feb 25, 2013 at 7:49:54 pm

Thanks Ross,

Like you, I like excellency and strive to be the best at what I do. Although for a while my dream has been to work in more high-end production projects, at this time though, I am doing mainly events. With event editing, as an editor trying to make a living, you have a constant battle between quality and time. I can do a 2 cam wedding with a third DSLR in a day and a half. Of course, if I wanted to, I can take two weeks to edit the same wedding, working 2 days to get perfect color correction on every shot, 3 days on VFX, maybe some matting, tracking, etc... but we all know that no wedding editor would be able to make a living like that, so I'm limited to minimal color correction, sound enhancements, story-telling etc... but at least I know that all event editors do the same. So how can I be "the best" when you hit your quality and time limit with all you've got? I know I'm good - maybe very good - since there is a demand for my work - maybe it's because I'm very strict on small details, thus less than 1% of my work returns for fixing or changes and this gives my photographer clients peace and quiet.

In the past 5 years, I'm constantly researching the best of event cinematography and editors and learning anything I can. 5 years ago it was easy to impress clients... the more effects, page turns and flashes you added to a movie, the more "Wow" factor it got. Those days are over. People want emotional, classic highlights and a clean edit. I do the best of what I know but can't seem to think of anything to add to my event editing, without spending to much more time on one project - but standing out from the rest. I'm good at 3ds-Max, After Effects, Mocha, Photoshop and more but can't see how it's possible to spend time with these in a wedding project without spending many hours more than I already do. Once I got my music in place and the cuts and story are flowing to my liking, it's time to wrap up the project. Maybe this is how it is with events - or maybe I'm missing something. Check out my latest clip - what would you add or change to go from "good editor - but not unique" to "Best editor out there"?

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Ross WebbRe: Expanding a freelance business
by on Mar 2, 2013 at 11:55:27 am

Hiya Zvi
Great video.
You know it reminds me of when I had my wedding in Israel. I never got offered much by way of camera person at the wedding venue. I had something in mind and it was very disappointing I wish they had offered a Silver, Bronze and Gold package for example.
There was a great example about 2 years ago about a very expensive wedding in India and the film makers really told a story. I would have paid twice what the wedding venue in Tel Aviv were offereing for this. (btw it was Gan Oranim if that makes sense. In other words, not a cheapo venue. I did expect more from them when it came to camera (stills) and video.
So I think there's a huge opportunity to offer high end, high margin work. I am convinced there's a market for it (hey they should have offered to shoot the Henna ceremony and make it part of the DVD. You'd think people would actually offer the services properly)
So yeah as a director who's won awards and built up a VERY proftiable post and production facility I'd say target the high end market AS Well with a different price package. The first couple you might need to do below coz but u'd create a name for yourself and really differeniate yourself in a market that unfortunately sees your skills as a commodity. I really hope you are able to that and it pays off for you.
Please feel free to mail me directly If i can offer you more advice.
Hope you have a great weekend,

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Zvi TwerskyRe: Expanding a freelance business
by on Mar 2, 2013 at 4:00:49 pm

Thanks Ross for your reply. The thing is, I don't have couples as clients but my clients are production companies, videographers and photographers. I don't really have much margin to make "packages" as you mentioned. My clients tell me what style they want and that's what I edit. I just can't think of anything to add to the edit itself to be better than other editors. I feel that once a perfected the cuts, music and story... I'm done.

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Ross WebbRe: Expanding a freelance business
by on Mar 2, 2013 at 5:57:51 pm

I dont think you can. I think you're a "commodity" in the eyes of your clients.
What I did when I started was pretty much in the same position as you and then I moved up. I went from doing some motion graphics as the clients told me to until I was doing the entire production and post production and controlled the budget.
Its not easy but its very doable.

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