The company celebrated its 10th anniversary on Feb 7th. This is our 7th written annual report looking back over the year’s finances at a high-level. The plan was to do this every year, but extenuating circumstatances made that impossible some years.
The goal of this document is to let others know what they can “normally” expect in terms of expenses, income sources, workload, services and more.
Over the last few years, we switched how we were tracking our expenses, invoices and time. In doing so, this report got lost in the cracks, but it is time to revive it and start publishing again.
Three years ago we published our 02017 Annual Report. The 02016 Annual Report, 02015 Annual Report, 02014 Annual Report, 02013 Annual Report and 02012 Annual Report articles before that. Hopefully, these are a useful insight into what to expect if you make the jump to freelancing or running a small business.
Finances
We logged hours on 11 different projects (plus a few more we didn’t log time on) and sent invoices to 6 different companies.
Sadly, in March, O’Reilly Media shutdown their conference division. We lost just a few hours on one invoice, but we had worked closing on four projects in 02020 and even more previous. Even thought the invoice was small, it was a bigger to loose O’Reilly as a customer.
The bulk of our income was from three sources. One we have a day-rate contract with, another is a monthly retainer and the third is an on-site consulting project. The rest of our time was spent on smaller projects with a defined timeline and deliverable.
3 projects were for Icelandic companies and the rest were international.
The split on income in 2020 is 63% international and 37% domestic. Nearly 2:1 foreign revenue. It would be great to have a stronger local-base of customers, but the exchange rate and connections are stronger abroad.
Hours
Our time tracking was pretty lax. We only managed to log around 32% of what we should have for the year. That’s not to say we were only working a third of the time! We had taken on several projects which were fixed bids, locked-day rates, or retainers. We certainly SHOULD have been tracking time on all these, but in the short-term it wasn’t important for invoices. Things that do not have a tight feedback loop, tend to get forgotten or ignored and these project’s time tracking is certainly in that category!
The average time we did log was 2.8h, that’s up from the 02017 report’s value of 2.2. That means that we are working on larger chunks of time. This is good because it means we are increasing our focus time and not context switching every 15 minutes to something different.
Services
84% of the time we did manage to track was to programming. 8% was tracked to meetings. The other 8% was split between 6 other services: Design/wireframes, Consulting, Research, Administration, Writing, and Pitching.
Given that 68% of our time has not been tracked, this is probably not the best gauge of what we are actually doing. Certainly, what is not getting tracked is more programming and meetings, but also a lot of writing. We did our best to keep-up with our weeknotes. That all should count to time writing, but since it wasn’t for a client, it wasn’t logged. Administration is also higher than we logged. Every two months we gather-up all the reciepts and turn them into the accountant. None of that time was recorded.
Travel & Conferences
Unlike years past, travel in 02020 has been non-existent. In Q1, we were mostly at home planning for our own 2020 Material Conference and watching the spread of the COVID-19 virus work its way around the globe.
In 02020, we didn’t do any travelling and we’re already into 02021 and there are no serious plans either.
Material Conference
02020 was to be the 3rd installment in the Material conference. Sadly, the week before the event we had to pull the plug. Iceland was starting to limit event sizes and many of our attendees were travelling from countries who had already impossed a lockdown and/or quarantine of some type. We decided not to pick a future date, which turned out to be a good idea. It’s one year later and we still can’t pick any date in 02021 which we would 100% feel comfortable with.
Expenses
People are usually the biggest expense in any organisation. Of the total expenses in 02020, more than 80% were on people. That includes salary and taxes. What is left are services like accountants, legal, insurance and equipment, office supplies and project expenses. For us, all those other expenses are in the 20% range.
One way to figure out an hourly rate is to ask yourself how much you want to make, mutiply that by 1.4 to include all your taxes (your country may vary) and then again by 1.2 for additional company expenses.
<base-salary> * 1.4 (taxes) * 1.2 (company overheads)
Then divide that by the number of billable hours each per pay period (week/month/year) to get an hourly rate.
That number is what it takes to keep the lights-on for the company. It does NOT include profit, unexpected expenses, growth, etc. Knowing how much more to add in for those is more difficult!
This year, “office supplies” accounted for about 10% of our overall expenses. It is probably larger than a normal year, but we ammortized over a few years when we estimate our costs.
This year was a big hardware upgrade year, a new computer, periferals and phone contributed a large portion to the bill. We also worked on the office, upgrading the doors and installing better fire alarms also encured a large bill from the carpenters. Next year, we won’t have those same expenses, but instead we might stock-up on printer toner or desks and chairs. Usually, grants let you deperchiate hardware over three years. That is a good metric to spread out big hardware costs over those years in your hourly rate.
This year, our travel/conference budget was pretty much non-existant! Previously, when we’d travel for work, it was usually expensed to the client or conference. So even though it is a line-item on a credit card as an expense, it was recuped in an invoice.
Web Stats
Somewhere in late 02019, we switched over to old-school raw log file reports. That means we removed any Javascript trackers from our webpage.
We combed through the 12 months of top page visits and compiled this list.
| Article | Year |
|---|---|
| Future predicting: What might happen in the next hundred years? | 02009 |
| SF Symbols Font | 02019 |
| Ninja EDC: Shinobi Rokugu | 02020 |
| Availability Forecast | 02014 |
| Getting to your minimum hourly rate | 02013 |
| Everybody Votes | 02009 |
| What 2D barcodes aren’t | 02011 |
| Professional Oaths | 02010 |
| Spimes: A happy birthday | 02013 |
| Accessible Color Swatches | 02011 |
| Omnibus 02012 | 02013 |
| CERN Line Mode Browser | 02013 |
| Material: Hierarchies and Systems: Some Futures for Material – Debbie Chachra | 02020 |
| Material: Misanthropic Principals – Matt Jones | 02020 |
| Week #469 | 02020 |
| Material: Catch of the Day – Björn Steinar | 02020 |
| Material: 2018 Synopses | 02020 |
| Week #422 & #423 | 02019 |
| Paying for contrast | 02020 |
| Week #477, #478, #479, #480 | 02020 |
There are a few articles which have dominated this list for many years. The 02009 article about Future Predicting is both long, full of google juice and catches a lot of search terms.
The surprising thing is all the recent articles. That’s great news that people are following along. Older articles have had time to get linked, referenced and build-up credibility in search engines, but new articles less so. Maybe that’s the power of social media or the growth of our RSS and network?
We are going to guess that the Everybody Votes post all about the defunct Wii wisdom of crowds channel is probably a byproduct of a contentious 02020 US Election year! (But maybe people loved the product, we refer to it all the time!)
Notes for 02021
We are already two months into 02021 and had one large client go bankrupt. That certainly affects our next annual report!
We also are seeing the importance and keeping a better log of our time and services. It does mean more Administrative time looking, analysing and dealing with the numbers, but it might have prevented us from going down a few dead-ends.
It is likely, we’ll increase our hourly rate in 02021 to both adjust for inflation and losses in 02020 from Material and this early bankruptcy.
There was a quote recently from @bjornjeffery on twitter
This might be the year we move to Free or Expensive. In the past we’ve helped friends and given them a drastically reduced rate or just never invoiced them. Sometimes those extra dollars go much further helping them than us. So maybe it is time to be much more explicit about this. Increasing our hourly rate isn’t a bad thing, especially if it is known that we do a lot of pro-bono work for others.