Freelancing Revenue Report: Out of the Trenches and Climbing Up the Mountain

Status Report

I’m now in the eighth month of entrepreneurship – my, how time flies by! Much has improved over the past few months, and at the same time, I have also sobered up a bit to my new reality.

It’s been three months since the last report;  I’m sure you’re all curious as to how I’m doing. 🙂 I’ll have some charts and detailed info for you, so keep on reading.

First off, the business has a new logo, thanks to my good buddy Forest from Frugal Zeitgeist. I really enjoyed working with him, and I recommend him for all of your graphics design needs — he is very responsive, considerate, and he always replied quickly to my emails and comments.

I’d also like to commend Robert the College Investor for his very fast turnaround time and excellent service, Simon, Mich, and Crystal & Len for their help and advice, the great community around the Yakezie, and all of the great staff writers here at IIW. There are really too many people to thank, so let me just say that I am grateful to you all. 🙂

The good

• The app has received some really great reviews, with the most recent one that I came across being app of the day over at Pocket Lint!
• The book is making great progress; I’ve now reached the halfway point and the book is going out to technical review.
• Adding advertising to the free edition was a good choice. It’s entirely possible that advertising revenue overtakes paid sales in the future.

The bad

• I’m losing far too much time to administrative tasks. I need to learn how to outsource more, so I can spend more time doing development and marketing, and less time on emails and everything else. Some days I only spend 30-40% of the time producing, with the other 60% – 70% tied up in emails, research, and maintenance activities.

This is how things stand as of now. Let’s also revisit some of the good and bad points from last time around, to see how I’ve improved (or not) 🙂

Good points from last time

• Freemium strategy. I still think that this was the right choice.
• Interacting with the community. I couldn’t attend this year’s Google I/O, and in hindsight I probably wasn’t ready. I’d love to attend future developer conferences, if they’ll have me. Google I/O is basically impossible to get a ticket for. On another note, I’ll soon be ready for more social promotion, and I’ll probably need help with this — setting up Facebook pages and so on. Not my forté.
• Evolving the product. I’ve regressed a bit — I haven’t made as much progress on the app as I’d have liked. That said, however, I have a clearer vision of where I’d like the app to go, as well as my strategy for 2.0.

Bad points from last time

• Slow progress with the book. This has improved dramatically, as I’m now working directly with the senior editor. We still have a lot of work ahead of us, though!
• Time management. I’ve improved somewhat on this but I’m still losing too much to overhead. The next step is probably outsourcing more tasks and activities.
• Two apps in beta. I’ve fallen a bit behind on development, but I’ve also changed my ideas about where I want to be. As a case study, look at the company Rovio, famous for Angry Birds. It took them many tries to get to a hit app, but once they got there, they capitalized on it with incremental innovation in terms of different types of Angry Birds games and side channel diversification with apps on different platforms and their physical store.

  More telling is what they didn’t do:  They didn’t invest a lot of resources into creating a bunch of completely different types of games, while there was still plenty of profit to gain by expanding their most successful product. I think it’s possible to overdiversify, and this is the mistake I’ve seen some people make: Shoot a bunch of stuff at the wall and see what sticks. This isn’t always a mistake — this is a very valuable way of getting market feedback in the beginning, and when you’re looking for a new market. However, when you have something that works, why would you reduce your success by diversifying too many resources away from it?

  Yes, there’s a bit more risk involved, but only in some ways. In other ways, I think that a focused strategy is less risky, especially when you have information, experience, and a strategic advantage.

Revenue

On to something I’m sure you’re all curious about: revenue! As in my last report, the numbers here are reported on a relative basis: 100% represents my monthly nut: my average expenses over a year on a monthly basis, including but not limited to housing, transportation, and food. This monthly nut is on an after-tax basis, so to survive, I need to make at least that much after tax. The monthly nut also doesn’t include vacations and stuff like that, or money for savings, retirement, or the future.

Here is my net income and expenses for May through July:

What does the chart mean?

• Gross income.  This is represented by the overall height of the bar.
• Expenses. This is represented by the red portion of the bar. Now that my tax accounts are open, I’m paying my taxes and as I have an idea for what my end-of-year taxes will also be like, I’m basing this on actual expenses + actual taxes + estimated taxes for the end of the year, on a monthly basis.
• Net Income. This is represented by the green portion of the bar, and is equal to gross income – expenses.

These three months have been better than the first three months

The first three months were tough, as my website income was destroyed and I had little income from other sources. These three months have been better; there truly is light at the end of the tunnel, and faith and perseverance are so important.

Here are some of the main trends:

• Paid app income rose month after month; it now appears to be stabilizing, and growth is currently coming from advertising revenue. Paid revenue overall is still much more important than advertising revenue, but that might not be true in a few months from now. This has important implications to how I approach freemium in the future.
• Website income has returned to a self-sustaining level. It’s not very profitable, but at least it pays for itself, and I’m happy if I have extra after that.
• My net revenue has not risen much above my monthly nut requirements. This has meant little for savings, until very recently.

You might also be wondering what the heck is up with that giant red bar in July. 🙂 Well, my government payroll accounts were finally opened, and I had a massive tax bill to pay for all of the salary I’ve paid myself from the beginning until then. Believe me, having to pay that much felt like getting sand kicked in my face. As employees, we don’t realize just how much our employers have to pay and how much they have to deal with to keep us on as employees.

Relative income to end of July 2012

To better compare, it’s also important to see how I would have done, income wise, had I stayed at my previous job. I was earning a typical middle-class salary for a university graduate in Canada (that is, I wasn’t making minimum wage, and I also wasn’t making a six figure salary):

This chart represents net income to the end of July 2012. As you can see, I would have earned somewhat more net income had I stayed at my job; in fact, the difference would be more than this because I did not include website income in the “Stay at Job” alternative, but I could have easily worked on the sites at night.

Since I left my job I managed to completely deplete one of my savings accounts, and when you see that happen, it’s rather quite scary. That is, in fact, one of the main reasons I’m not attending the blogger conferences this year. Financial blogs are not the core of my business — developing mobile apps is. I can’t justify spending the money on airfare, hotels, and so forth, when I have a hole in my pocket that I need to fill. There are no guarantees, so I need to make sure that I’m well positioned for the future.

Self-actualization

I once nearly gave up on software development. I had a bad experience during my first development stage, and I ended up cutting the whole thing short so I could work at another company for the next four months.

That might have been one of the best decisions of my life. I left a dead-end internship, and the switch enabled me to get a broader set of experience and look at things outside the box, so to speak. I ended up returning to the world of software development with a renewed perspective, and this time, I had the benefit of willing and helpful mentors to help coach and guide me from a completely clueless newbie to the experienced developer of today.

Everything is always relative, of course, and I still have much to learn. There are plenty of developers out there that can kick my ass, and while I am strong in some areas, I am most certainly weak in other areas. There is always something new to learn, and it pays to be humble.

I’m incredibly glad and fortunate that I now have the chance to work on projects that I enjoy, doing the kind of work that I love. I wouldn’t have gotten to this point if not for the company I was working at before, and the people whom have helped me along the way, so it’s important to recognize that life is a chain and everything is connected. Things need to be evaluated from the whole as well, not simply from the black & white perspective of the part.

I have renewed confidence in myself, and confidence is something I’ve been sorely lacking for much of my life. I don’t regret my decision for a second, even if I might have had more money by staying, even if I might have been able to get a package. No matter what happens now, I’m grateful to have been able to take on this adventure.

My greatest assets

As everything in life is connected, what are the greatest assets that have helped me get to where I am today? Without a doubt, those would be the two women who saved my life: my grandmother, and my girlfriend and future wife.

My grandmother saved my life when I was ready to end it, and my biological mother didn’t even care. I’ve gone through depressions, and I still have nightmares from time to time, even today. My grandmother been a real mother to me, throughout my entire life.

My girlfriend saved my life by showing me that I didn’t have to emulate the trash that I came from. Her family showed me the values of hard work & sacrifice, and that we’re responsible for much of our outcomes, regardless of where we started out. Today, she saves my life everyday by being such a great friend and fellow companion; I even miss the arguments and disagreements when we are away from each other. 😉

Without these greatest assets, I’m not sure any of the rest would have been possible. Everything is connected, and life is not final. In spite of the occasional bad dreams and negative thoughts, I am hopeful for the future. I feel confident that I can provide my own children a bright future, and add happiness and love to this world.

No matter where we come from, we can all follow our dreams. As sentient beings, we have free will, and as human beings, we can decide not to follow our genetic and social programming. They obviously place constraints upon us, and we can’t simply will away the emotions that we feel and the thoughts that we face, but given that we’re smart enough to recognize these constraints, we can fight against them, and win.

The future of this blog

As my life has been changing, so has the time I’ve been putting toward this blog. I don’t spend as much time as I used to, and I do feel somewhat bad about that. I’ve made a lot of great connections with people, and I will miss you guys. There might always be next year. 🙂

I would like this site to continue being my personal front, but I will not be focusing much on general financial articles down the road. I’ll still talk about early retirement, financial freedom, and so forth, as my current life path is certainly striving towards those ideals. I’ll also continue to talk about my progress, both the good and the bad.

As always, please feel free to let me know your questions, feedback, and thoughts. 🙂

Recommended reading

• Achieve Financial Freedom: Awesome Lessons to Spruce up Your Finances
• Work is Not a Four-Letter Word
• Never Take Your Health For Granted