We didn’t necessarily think we had a great shot at raising such an ambitious funding goal, but you never know until you try. So, we tried. And, unfortunately, we fell considerably short.
Before going further, I’d like to offer sincere thanks to those who backed the campaign and to those who participated in the giveaways. We had some fun, learned a bit about crowdsourcing, and some readers got Expert Beginner swag. While we won’t be stocked with a year of inventory and operating a shopify store, we did learn a good bit.
Product Launches by Those Who Don’t Launch Products
In the last year or so, I’ve learned a lot about business in various forms. I listen to podcasts about freelancing, consulting, and entrepreneurship. As I mentioned recently, I’m also participating in a mastermind group, wherein we discuss business ventures and operations. I’m also exploring different business models and branching more into productized services. Add that to the ongoing learning of running my business, and you wind up with a lot of inbound information.
Among all of this information comes a good bit about product launches. If you view the world the way I’ve spent most of my life viewing it, you probably think that this means tying a bow on it, shipping it, kicking back, and waiting to profit. For instance, you might spend a few months building a killer app for Android and/or iPhone. When finished, you ship it to the app store, slap a price on it, and wait for users to discover it and put money in your pocket.
Sure, you’d do a bit more than that. You’d tell you friends and family, resulting in your mom buying one to show other members of your family how proud she was of her little entrepreneur. You’d tweet about it once or twice, probably resulting in no sales. And then you’d surrender yourself to the mercy of the app store.
Product Launches Done Right
Most of my life, that was how I imagined product launches would go. I even daydreamed this narrative from time to time. Someday, I’d write a book or build a piece of software that would magically go viral, and I’d find myself on easy street. (After all, what fun are daydreams involving the messy business of self promotion?)
I just got back from a long weekend vacation and am still getting settled and back into the swing of things, so this is going to be another relatively short post. I’ll soon return to your regularly scheduled extended rants and code-cast posts, but I need a little slack in the meantime.
For the last six months or so, I’ve been making a 5 hour drive twice a week. This has provided me with a lot of opportunities to listen to books through Audible and Overdrive, and I’ve been listening to a lot of non-fiction stuff that runs the gamut from tech to sociology to science. Recently, I took a suggestion from a comment in a previous post and read/listened to “Getting Things Done.”
I’m going to start off with a quote, though I’ve been warned by someone who knows more about writing than I do that this may be a cheesy thing to do. Oh well, I’m living dangerously these days.
“Gentlemen,” he said
“I don’t need your organization, I’ve shined your shoes
I’ve moved your mountains and marked your cards
But Eden is burning; either brace yourself for elimination
Or else your hearts must have the courage for the Changing of the Guards”
— Bob Dylan (Changing of the Guards)
I’ve made little secret of my opinion that the software developer (and knowledge worker in general) is trending toward a life of increased autonomy and agency.
Anyway, I’ve been on my own for a few weeks now, so I thought I’d share some experiences that I’ve had so far. And, I’m not talking about anything especially profound here such as that I’ve reconsidered my life and found nirvana in controlling my own destiny, or whatever. I’m talking about the kind of things that, should you undertake this particular choice in career, are going to prompt you to say, “holy crap, I have to do what!?” Or maybe that’s just me.
You Need a Company
This is cheating a bit, because I did this some years ago, but if you’re contemplating free agency, this is important. Personally, I’ve formed a limited liability corporation (LLC). There are other corporate structures that you can choose from that differ in various legal and tax-oriented ways, but I won’t really go into those. Instead, I’ll discuss my motivations that I think are probably paramount for you to consider.
(I will qualify what I’m about to say with the standard “I am not a lawyer” caveat, so keep in mind that you’re hearing my understanding and recollection of what lawyers and others have told me. These are my motivations based on my understanding of the world.)
My LLC got me two important things: limited liability and a business entity. By default, if you start moonlighting through something like E-Lance, you’re operating as a “Sole Proprietorship.” In a Sole Proprietorship you are Louis XIV, in that you ARE the business. This makes life easy from an income tax perspective because there’s only you, but it makes things a real bummer from a getting sued perspective, since, if you write software that takes down your client’s business for a week, you can be personally sued for damages. If you don’t have enough money in the bank to cover the tab, the client can come after your car and your house (though you should certainly write verbiage into your contract that limits your liability, however you do business). If you create an LLC, on the other hand, you’re creating a separate entity — a property that you own and that can conduct business. Now, you client can sue the LLC for all that it is worth, but the LLC doesn’t own your car or your house, so those are off limits.
The motivation of having owning a business entity (second thing I listed) extends beyond just the limited liability motivation, however. A huge consideration here is that the business entity makes it a lot easier to classify things as business expenses for tax purposes. Having always done my own taxes and operated both in Sole Proprietorship and LLC capacities, my experience is that you can claim a substantially larger amount of deductions when you have a business entity. It also makes keeping things straight for taxes and accounting easier. My LLC has checking, savings, and credit card accounts, so for bookkeeping purposes, anything that DaedTech needs (supplies, equipment, etc) goes through that channel and anything non-business related is with my normal credit cards and bank accounts. On top of that, the business entity lends legitimacy in your dealings with others. There’s a big difference between telling your clients to mail you a check made out to Joe Smith and invoicing them on corporate letterhead instructing them to make checks payable to Acme Inc, for instance.
Creating an LLC isn’t particularly difficult. It’ll vary some by state in terms of the procedure, but you essentially fill out a form and send it into the appropriate government agency in your state (or, potentially another state — a lot of places incorporate in Delaware because of its favorable tax laws or something, but I don’t know what’s required to be able to do this). There will be a fee to incorporate and then an annual maintenance fee and these also vary by state. When you do this, you also notify the federal government of what you’re doing and you are issued an EIN (Employer Identification Number), which is basically your LLC’s social security number, for all intents and purposes. You’ll need this for tax purposes and for conducting certain kinds of business with other entities.
Now onto the things I’ve stumbled across in the last few weeks…
Tracking Your Time
When moonlighting, it was generally easy to keep track of billable hours, since I’d work 9-5 and then come home and do an hour or two of freelance work. I’d have a spreadsheet or something where I’d log the hours as I went. But boy did I discover how wildly impractical that is when doing this full time.
In the first place, I’m now doing billable work for several different entities, so the spreadsheet would need to be more complicated. But even more importantly, I don’t want to just look back on a week and say, “oh, that’s nice, I billed 30 hours.” I want to be able to audit how much billable work versus total work I did (with the idea of maximizing this ratio). There’s a big difference between billing 30 hours and working 30 hours and billing 30 hours while working 60 (the other 30 going to looking for more business, doing clerical work, taking exploratory meetings, side projects, blog posts, etc). In fact there’s literally a difference of 100% of your pay. If Jane bills $100 per hour, bills 30 hours and works 60 total, she’s really only making $50 per hour and not $100.
Other considerations abound as well, such as searches, filtering, different billing rates, and annotations about the work. I saw immediately that a spreadsheet was going to get way out of control very quickly. A younger, wetter-behind-the-ears Erik would have immediately started building a homegrown database app for this, but, bearing in mind how that would absolutely sink my billable ratio, I did some research and settled on Grindstone for logging hours. It has a lot of nice features to it and it also had the advantage that I’d used it previously. It gives me enough granularity that I can easily look back at the tasks I’ve logged all week or month and any notes I’ve appended to them, and generate invoices for individual customers as appropriate.
Working Too Much or Thrashing
This is kind of a weird one, but it’ll probably creep up on you. When I started on the freelance path my concern was that I’d depart from my schedule and start staying up ’til all hours or sleeping until 9 every day or something. What I didn’t anticipate was what actually happened. I had no problem getting up, keeping focused, sticking to a routine, but I did find that I was logging 9 to 6 hours in Grindstone and then also logging 11 PM to 1 AM hours after I was the only one awake in the house. And also Saturday and Sunday hours.
As your own person, responsible for your own income, there’s a much more intense feeling that every hour you’re not working is an hour that you’re leaving income on the table. Every would-be non-technical startup partner with an idea for an app that you don’t meet for lunch is you missing out. Every recruiter call is an opportunity for you to turn the tables and look for contract work. You can’t pass on anything.
I’ve had to fight tooth and nail to give myself the freedom to pass on leads and not pursue everything. Weird as it sounds, my blog post announcing free agency was met with more recruiters calling me about CTO/Dev Manager type positions by far than it was with people interested in my consulting. I started doing some interviews because I’m open to all sorts of possibilities, but I’ve now had to ramp that back and pass on some offers because between scheduling all of that and also earning my keep, I was logging 80+ hours per week in Grindstone. And, while I’m not averse to hard work, I had to look at the fact that doing job interviews and lots of exploratory meetings are unlikely to be revenue generating for me — I have to focus on the most promising/profitable things going on.
That’s been unexpectedly hard, since I’m very enthusiastic and game for things. Anyone approaching me with a project or an opportunity makes me want to say, “yeah, totally, let’s do that,” but I’m learning there’s no way I can say that to everyone or even the majority of those to whom I talk.
Weird Tax Things (Quarterly Filing and Mileage)
Anything related to taxes is always an odd combination of scary and extremely boring, and that led me to procrastinate a bit when it came to “what do I do with all of this gross income I’m getting with no taxes withheld?” When you work for a company, you fill out a W-4 form and your company then sets up your paychecks such that the IRS takes its pound of flesh before the money ever hits your bank account. At tax time, you then get a “refund,” which is really just them saying, “turns out we held on to too much of your money and, oops, look at that, we earned interest on it, but here ya go.” In a case where your employer didn’t withhold enough from your paycheck, on the other hand, you have to cut the IRS a check for what you owe, come tax time.
But if all your money is coming in via checks for services paid, there are no taxes being withheld at all. And that means, come tax time, you’re going to have to write the IRS a massive check for your entire annual tax burden. However, the IRS, while happy to hold onto and earn interest on your money, gets extremely cranky if you hold onto and earn interest on theirs. So, if you’re a free agent, the normal course of action is that you have to send them quarterly checks in order not to face penalties. (If you’re liquid enough and depending on how you structure your business for tax purposes, there are ways around this, but I’m going to focus on the simplest sort of case — me with my LLC).
I spoke with an accountant, and I have yet to actually do this, but you basically fill out a form Schedule C that calculates the business’s profits and losses and then, based on that, you compute/estimate the tax you owe for the quarter and send them a check for that amount. Then, at tax time each year, like a normal, workaday person, you’ll probably either get a small refund or owe a small amount of money, rather than the entire 30% or whatever of your salary that would go to Fed, SS, Medicare and State taxes.
So be aware that you now have to be an active participant in the tax game, rather than just passively waiting for your W2s each year and firing up Turbo Tax or dropping things off at H&R Block.
Forms, Forms, Forms
I earlier mentioned sending invoices to clients. To do this, you need an invoice form. I also mentioned drawing up contracts for clients. To do this, you need a contract form. You’re going to need a lot of forms, so if you’re contemplating a move to freelancing, I’d get these ready in advance.
I’d say you’ll want the following forms in your arsenal: invoice, contract, statement of work, master services agreement. Invoices are obvious — this is simply the way you enumerate the services rendered and request payment. Contract is an agreement signed by both parties for work, often on an ongoing basis. I’d use this for retainer arrangements or “I’ll work 15 hours per week for you” arrangements. Statement of work is a more project oriented document — “I’m going to build you a website and you’re going to pay me for it.” Master Services agreement is an umbrella agreement that establishes general terms for you to do business with a company (e.g. “we won’t steal each others’ intellectual property, we won’t poach each others’ employees, etc”). Usually you would exchange this with a client for the duration of your relationship and then have individual contracts or SOWs underneath its umbrella. This one is probably not quite as critical for fledgling consultancies/free agencies, but may be worth having around.
Where do you get these? Well, if you know or have a lawyer, the lawyer can probably draft them or perhaps just supply you with a boilerplate one. A lawyer will also be happy to review any specifics and mark them up. But if you don’t want to incur that expense, search your inbox for emails on which you were CCed at your company that may have included these. For instance, if you were CCed on some email where your department reached an agreement with Expensive Consultants Inc to do some web design, grab that and use it as a starting point for creating your own. If they’ve been in business a while, they’re probably doing something right.
Keeping the Books
When you’re on you own, running your company finances isn’t quite the same as whatever you do for your personal finances. You want bookkeeping software. I’m fortunate in that I’ve been using Quicken since my finances were no more complex than a checking account and the occasional paycheck, and so the move to Quicken for Home and Small Business was easy.
Quicken (or Quick Books or whatever you use) will allow you to record invoices that you’ve issued and then to keep track of whether payment has been received. This is important because you’ll send out invoices that require payment within 30 days, and then it’s up to you to keep track of whether clients have paid or not. This is not like W2 employment. Companies will straight up forget to pay you. Or not bother. Because, remember, you’re not dealing with an individual and you’re not dealing with a payroll system — you’re dealing with Accounts Payable departments and people who have jobs of which only a tiny portion is sending out the dozens or hundreds of checks per day that a company has to send out. Stuff falls through the cracks, and you need to be checking back on the status of payments that you’re due. If you have only one client or if you’re missing huge checks, this will be obvious, but if you remoted in and helped a former client for an hour or 2 in June, it’s pretty easy to forget that they owe you $150, unless you have software that reminds you.
Software like this also helps you keep track of things you can deduct but wouldn’t think of. Sure, if you bought a computer or a bunch of printer ink, you’ll file that as “business expense” for tax purposes when recording expenses. But what about the mileage you drove getting to a meeting? Record that! It’s tax deductible at about 50 cents per mile. Quicken lets you keep track of this and other similar non-expsense-per-se-expenses.
That’s All for Now
This has become a pretty long post, so I’m going to wrap up here and save other things that I learn for another post, later. And, while I’m speaking somewhat authoritatively on this stuff, it’s stuff I am truly learning the nuance of as I go. A lot of it falls under the purview of “stuff that I’d have known if I’d thought about, but was kind of surprised by its immediacy.” Other things were news to me. And, since this is a learning experience, please feel free to chime in on the comments section with your experiences, tips, or corrections of anything you feel I’ve gotten wrong.
Cheers, and happy free agency to anyone reading in advance of taking the plunge!
I was going to publish the next Chess TDD post today, but I got caught up in the worst kind of yak-shaving where I was basically just trying to get my computer functional again. So, I didn’t get the audio recorded, and I have something different to talk about, to-boot.
Last night, I stayed up late programming and left my computer on. This morning, I got up and it had powered off for some reason or another. When I turned it on, it told me that it was installing updates. Whatever, new OS (for me), same difference on the updates. Except, this time it got to 99% installed, stayed there for a really long time, and then eventually came back with the message:
We couldn’t complete the updates
Don’t turn off your computer
I let this go for around 45 minutes before figuring there must be something wrong. I did a hard reset, and it booted right back into that screen. Tried again, same result. Let it go for another half hour, nothing. At this point, I tried to boot into safe mode, but there are apparently six different ways to do it and three of them don’t work because Windows 8 is too fast or something. It appeared as though the only way to boot into safe mode was to launch the OS normally and enable it. Sigh.
I figured I could boot from some kind of media, but none shipped with the PC. I figured I could make one, but all of the guides about making Windows 8 recovery CDs/USB Drives all seemed to start with “boot into Windows 8 and…” Double sigh. So, pretty much everything you might do to recover the machine in light of an unexpected problem involves you having prepared ahead of time for such a problem. And, while it’s certainly good practice to do so, it hadn’t occurred to me that the source of instability would be an OS update. And, apparently, it’s a common problem with this update that has yet to be fully resolved for everyone.
To solve my problem, I eventually managed to mash F8 at just the right time, get the advanced startup menu, and find a restore point that had been set yesterday morning. After wasting a couple of hours of my life, I’m going to take steps to prevent this kind of nonsense and minimize headaches. If you’re running Windows 8.1, I’d suggest that you follow some of these relatively quick steps. They’ll take you little time and, since these updates seem rather issue-prone, they might save you a huge headache later.
So here’s what I’m doing.
Turn off automatic updates
The last thing I want is to go to bed tonight and have a repeat of this morning. If updates are going to be a source of problems, I want to be opting into them instead of having them pushed. To do that, go to the start screen and type “Windows Update,” which will return the Windows Update menu. Go to “Change Settings” and you can choose a less aggressive setting. I chose “check for updates but let me choose whether to download and install them.”
YMMV on how you want to handle this, but it might be a good idea if you don’t want some update bombing out and costing you a couple of hours.
Make Sure Safe Mode is Accessible
I lucked out in that I was able to get into safe mode, but having that be a crapshoot is silly (and, in my opinion, should absolutely not be the default setting). Here’s a guide for how to do this. You basically have to run a command line utility to make it happen. It might marginally slow down your boot. Whatever, this is a no-brainer, and shaving a few seconds off of boot time at the risk of not being able to launch the OS in safe mode is completely not worth it.
Create a recovery USB Drive
Here are instructions for doing this. I haven’t actually done this one yet, but I’ve ordered a USB drive for the purpose and will do it when it gets here. It never hurts to have options and since my computer didn’t ship with an OS disk, I think this is something I should have.
Windows 8 has a refresh feature that will basically reinstall the OS while leaving your files and Metro apps alone. However, it will blow away your installed applications, which is a bummer. You can create your own refresh image that will include the things you’ve installed, though. Instructions for that are here. I believe you’ll still have to reconfigure your applications when you launch them, but it’s better than nothing.
Create a system restore point before updates
It probably never hurts to create system restore points to recover to (and you can actually use them if you do the F8 enabling). But, given the trouble with system updates, it might make sense to create them immediately prior to trying an update. Here’s a “dummy’s guide” if you’re so inclined, but if you just type “restore point” at the start screen, you can probably figure it out from there.
Remove any extraneous things plugged in
After I had started writing this post, I continued to try to update because I needed to upgrade to Windows 8.1 Pro and because I wanted the problem solved. In the end, I wound up doing a complete “refresh” and then unplugging various things from the USB ports, including a Fitbit and my USB web cam. After these steps were taken together, I was finally able to get through the offending update. I can’t say for sure, but I suspect the latter cause, particularly because at one point I’d found a blurb about someone having the same experience.
So as a good troubleshooting step, you might consider ripping out everything not strictly necessary (and perhaps disabling various applications that startup at boot and anything else not necessary).
Good Luck and Happy Computing
An ounce of prevention is worth a pound of cure… I learned the hard way, today. Hopefully this saves you some headaches, particularly if Microsoft belches out a problematic but ‘mandatory’ system update. I encourage you to do some of these things (at the very least, make sure you can run the OS in safe mode when it’s not critical) now before you’re panicked or furious.
It was a weird problem, because I’d been hitting that code base from 3 machines, each with the same version of Visual Studio installed. One of them never had any problems, and the other two always bombed out with this message, forcing me to go into the command line and committing from there, which worked. I have no idea what’s different among these machines and why it would work on one but not the others. Weird.
A long way down in the reply chain, Buck Hodges provided the answer that worked:
@stevehebert@daedtech so, adding the .ide extension to your .gitignore should address the problem on the machines where you are hitting it
Sure enough, I went in and added this to my .ignore file, and it did the trick. This never would have occurred to me, however, as a possible solution. That whole directory and all of the files in it were created by the IDE-Source control apparatus anyway. It’s not like I went in there and created those files, and it’s not like I was using them for anything. I actually would have assumed they would already be in that auto-generated .ignore file. I mean, this is sort of like the IDE saying to me, “I can’t check in your code because this file I created without your knowledge is being used… by me.” (When troubleshooting, I investigated which process was using the file, and the only one was Visual Studio).
Nevertheless, I was grateful for the fast response and the fix that worked, so I won’t look a gift horse in the mouth.