You
may have heard of the 80/20 rule in business, which says that 80 percent of
your income (and your work) comes from 20 percent of your clients. In the
gaming industry, they call the high-rollers “whales,” and casino staff do
everything possible to encourage them to spend time, and money, at their
casinos.
Do
you know who your whales are? The only way to be sure is to do (eek!) some
math.
The
end of the year is the perfect time to take a closer look at your income. Every
quarter, I add up my gross income, but the last quarter of the year I take it a
step further, and divide it by client. Then I categorize my income into
categories--like money from original magazine articles; money from my own books; money from ghostwriting and coauthoring clients’ books; money from
reprints; and money from teaching and speaking.
Totaling
these figures tells me where my money is coming from, and what types of work
have been the most lucrative for me. It also helps me set my goals for the
coming year—such as increasing the percentage of income I receive from books,
for example, or doubling the amount I make from reprints, which are a
relatively easy way to make extra money.
You
can do the same thing quite easily. At the end of the year (or any other time
you want), list your clients, and add up what each has paid you this year. Then
determine what types of work you’ve been paid for in the past year. The
categories you use will depend on the nature of freelance work you perform. If
you write for magazines, do PR work for nonprofits, and do copywriting for corporations, for example, then add up the income you've made for each type.
Adding
up your income and where it came from is a critical first step. With this
information, you can set more specific, realistic career goals for the coming
year, focusing on what areas of your business are promising. You’ll also
identify your whales--the clients who provide with you with the most work and
money. Those are the ones you want to continue to work for. It’s much more
efficient to do a lot of work for a small number of clients than it is to do a
small amount of work for many clients. This seems obvious, but a lot of
freelancers don’t take the time to determine who their most valuable clients
are, and focus more time and energy on them.
Your
mileage, of course, may vary. If you write books or do ghostwriting, you may
have more one-shots, or clients you only write for once. In this case, you may
have different whales each year, but I still suggest you stay in touch with
each--they’re a source of referrals and possibly more work in the future.
Then go a step further and consider cutting ties with
clients who aren’t worth the time and effort. If you’re writing for more than
ten clients a year, chances are that there is some dead weight--let’s call them
remoras--on your client list. Maybe you’ve been writing for a client for years
but your hourly rate isn’t all that great--or the client’s PIA factor is so
high, you’d like to cut him loose. Every client you work for involves
opportunity cost, and if you never get rid of your remoras, you may be losing
out on more lucrative ones.
**This post comes from Secret 52: Name your whales, from my latest book on successful freelancing, Writer for Hire: 101 Secrets to Freelance Success. If you want to make more money from your freelancing in 2013, I suggest you pick it up! And happy holidays to my readers...I'll be back in 2013!