Now that I’ve passed 2 years as a small business owner, a lot of thoughts are opening up for me.  One being how as a small business owner you can take home more money versus an employee at the same salary because of the write offs.  I also now have a completely different view on finances.  I’ve always been good with money, but I was lucky to ever have even $500 in my checking account when I was an employee – I spent and spent and knew I’d get paid in another 2 weeks.  It’s fun, but you find yourself in an endless cycle of having to work because you have no money.  And a lot of people start spending their next week’s paycheck (before they even get paid).  With a couple of years experience under my belt, even though I’m a sole proprietor at this point, I find myself stashing away money like a squirrel because you never know when an income drought is going to happen.  I’ve gotten into a better market of business – instead of creating many small sites for small companies, I’m finding clients who need work more consistently – that need work for their clients and that work is outsourced to me.  I also have a couple of fully custom projects that I’m really enjoying, but that’s a smaller segment of my income.  In a vast majority of the work I do, I make my client more money than they are spending on me to do the work.

Let me tell you a short story.  In 2011, I was desperately trying to get a position at a growing social media company as a web developer.  I applied to that job, as well as many others.  I did my due diligence and did my weekly follow ups with all the companies I applied for.  It took the better part of a year, but I finally got the job at the social media company.  I wondered what took so long and why it’s such a process.  Now I kind of get it.  A company is not going to hire you if they aren’t going to make more money than they are paying you, and obviously they need enough wiggle room in their cashflow to be able to afford you when cash is low.  In a total employee mindset, I didn’t understand that.  I was always semi-unappreciative as an employee.  When whatever company I was working for at any given time would announce that they are doing so well, “We made X million dollars” – I’d always be like, what do I care, I don’t get to see any of that.  That’s kind of true, at least immediately.  Sometimes when a company is doing well, they will eventually pay its employees more or they’ll give other incentives, like a bonus.  What you don’t really see as an employee is the roller coaster effect that upper management is dealing with.  The low income months, struggling to get paid, a law suit, etc.  While an option to lay off employees could be going through their minds, you usually don’t know until it’s too late.  I’m not saying I can deal with that roller coaster better than others, it’s emotionally hard, but I understand it more now that I’m in those shoes – though the whole company is just me.  I have a larger vision of the struggles that larger companies deal with.

Brennan Dunn, the author of Double Your Freelance Rate, charges an extraordinary amount of money to his clients – but if they are making more from his recommendations, what does it matter to them?

It’s a person with money mindset.  What I mean by that is I think the average person, an employee, middle class, etc, doesn’t think of high expense the same as someone with money, whether that is just one individual or a group of individuals – investors, a company, etc.  The average person thinks, “How much is that?  That’s too expensive”.  Someone with money thinks, “How much will that make me?”  The average person can take less risk – if you spend money, take your chances, and lose it, the you might not be able to pay your mortgage.  Someone with money can take the risk and still pay their mortgage.

What I’m trying to get to is as someone who is trying to start a business, it’s not about how much you charge, it’s about finding the right clients and providing them with value.  I’ve worked with a good amount of clients all over the board in terms of how much they have, or at least are willing to spend, on web development.  There are some clients that complain about $150, and some that would pay $1,500 for that same functionality I created.

Now it’s making more sense that even though it could take me 80 hours to create a blog theme, for example, why someone would only pay $30, but for that same amount of working, creating an eCommerce-based site, someone will pay $3,000.  Someone with only a blog is probably doing that as a hobby or in the very beginning stages of a business.  Someone that’s opening an eCommerce store is going to get an ROI, at least they would hope.  And actually, all of the eCommerce solutions I’ve made have done really well and have easily made their money back.

I have to go on a slight tangent because it’s kind of funny, but it also proves my point a little more.  Back when my wife and I were on our honeymoon in Chicago, she forced me to watch Teen Mom.  It took me a little bit to get into it, but it is comical and dramatic and fun to watch, especially when you get to know their personalities, which brings me to one of the Teen Mom girls, Farrah.  She’s so unappreciative of her family and the position she’s in – like the contracts with companies, MTV being one of them.  She treats the camera crew with disrespect.  Even complete strangers.  Anyway, this all boils down to my point too, is she’s making MTV more money than they are paying her – maybe not immediately, but in the long run re-airing the episodes and creating specials.

I’m not saying you should go out and be a complete jerk to your clients, as long as you’re good at what you do – but it does make more sense to me why other people who have terrible customer service, high prices, and terrible software can make more money than me, who doesn’t come off as absurdly confident, not the greatest at sales, but the best customer service and extremely competitive prices you can find – my clients are making many multiple ROI from what I’m providing them.

If you need some inspiration for your journey as an entrepreneur, I’ve created a list of the 10 books every entrepreneur should read.  Take a look, and let me know your journey!