Working as a freelancer has its perks – and drawbacks.
Hourly billing is either a perk or a drawback, based on who you ask. I’ve always maintained that it’s a huge perk and that the pros outweigh the cons. For example, consider these benefits in comparison to a fixed salary:
- You always get paid for “overtime” – 60 hour work week? Yes, please!
- Immediate opportunity for advancement – With each new client, you could theoretically increase your hourly rate. That’s been my strategy over the past five years.
- Weekly pay schedule (in many cases) – If you work on oDesk, for example, you get paid every single week. Compare that to a monthly or bi-monthly salary check.
- See the full fruits of your labor – Before Uncle Sam takes his 25% (or more), you get to briefly have full possession of every dollar you earned. In other-words, you by-pass income tax withholding that an “employee” is subject to.
Sure, these sound like compelling reasons to be a freelancer. But, I would be less than honest with you if I glossed over the drawbacks. For many freelancers, this many include:
- You’re responsible for billing clients (accurately) – Not good at accounting and staying organized? Well, you might be in for trouble as a freelancer. That is, at least without the right tools.
- Your family depends on you to successfully execute your plan – How much do you want to earn next week? Do you know? If so, how will you plan to bill enough hours at the right rate to meet this goal?
- Different clients have different rates – Although this can be a positive, charging different hourly rates creates a headache for many freelancers.
My Solution: This Spreadsheet
When I started freelancing about five years ago, I realized that I needed to become better organized – especially for hour tracking. My entire business (and family) depended upon me creating and following an accurate plan. After years of tweaking, the following hour tracking spreadsheet was born. I use this spreadsheet every single day, and I could not feel organized without it. Here’s a brief overview of how to use this spreadsheet:
Step 1: List your clients and hourly rate in columns A & B.
Step 2: At the beginning of each week, update your “plan” columns for each day of the week. Enter the number of minutes you plan to work on that day for each client. (Remember, this is just a plan and is not set it stone. You can adjust the plan daily, as I do.) Take note that cell A27 “Week’s Earnings” updates based on your plan and hourly rates.
Step 3: As each day progresses, update your “actual” columns to track progress versus your plan.
That’s it. I hope you find it useful. If so, comment below and let me know what you think.