Freelancers: Doing the Math

To start, thanks to Phil Wade for his recent post on life as a freelancer and the challenges it entails.  Based on his insights, it may then be the right time to discuss how to manage your freelance business.

Working in Thirds

Based on management consulting, law firms, and other professional trainers we have a nice model to shoot for.  They tend to work in thirds.

1. 33% billable hours
2. 33% developing the product
3. 33% developing the company

Billable Hours

In nearly all cases, this means class time.  The goal here is to charge a high enough rate that it covers the other two thirds of your time.  There are two considerations then when setting pricing targets.  First, we need to determine how much we want to earn and fit it with what the market will handle.  Second we need to look at it from the client's perspective in regards to how many total training hours they will receive.

For example, let's assume we want to earn €36,000 per year net.  This means we will need to send out about €60,000 in invoices (not including sales tax) to cover income taxes, health insurance, retirement, etc.  Assuming there are 1760 working hours in a year (44 weeks x 40 hours), we will have to set our prices at €102/hour to reach this goal.  This is because we are assuming that only 1/3 of our time will be billable.

But it also depends on the training.  If we have 6 participants in a course for 1 hour, that is 6 training hours.  This translates to roughly €17 for each participant.  Yes, these numbers seem a bit high for some markets, but we'll look at how we can make up for that.

Developing the Product

This third includes several tasks.

• Training prep
• Materials writing
• Identifying and adapting materials
• Travel
• Post-lesson correspondance, feedback, and notes
• Professional research with direct training impact (e.g. reading a CUP teacher's handbook or english onestop)

Most freelancers I have worked with tend to underestimate how much time this takes or bill accordingly for it.  But the answer is rather simple... charge for what you do.

If a client is receiving fully customized training, the time spent to develop and produce that training is billable.  After all, a consulting firm doesn't only charge for the time they are in meetings, rather also for the research and preparation.  If you walk into a company and say, "I add 30 min of billable time for each hour of your training so that I can provide you with a fully customized package," most will easily accept the proposal.

There are other ways to make this time add to the bottom line.  If you are running a course website or online portal, this is also billable and is training.  If you are offering assistance per email or telephone for participants, this is billable.  If you are sending the participants follow up exercizes and links to websites post-lesson or part of your flipped classroom concept, this time is billable.  If the client does not want to pay for it... don't do it.  This will then leave you room for upselling in the future.

My recommendation is that the basic classroom training is the door opener.  Then once trust is built and they are satisfied with the training, additional outside the conference room support can be added to the project.

Developing the Company

This is perhaps the most important but also most neglected areas for longer term business success.  These activities include:

• Billing and admin tasks, including handling taxes and expenses
• Marketing and branding
• Industry profile (social networking in ELT, blogging, article writing, professional organizations, conferences, etc.)
• External profile (social networking with target market, website & advertising, identifying and acquiring new/prospective clients, retaining and upselling current clients)
• Professional development not related to a specific client (conferences, training courses, online/print research, etc.)

These tasks will never be paid directly by a client, but are the ticket to stability and business growth.  Also, they almost never result in an immediate return on investment, but when they do pay off it happens suddenly and big.

The Work Week

So, by allocating and dividing our time in thirds (and supporting it financially) freelancers can achieve business growth, stability, and obtain a more suitable work life balance without burning the midnight oil.

To close, let's make this a little more tangible by showing how this would look for a normal 40 hour work week.

14 hours in class

13 hours developing the product

• 5 hours preparation - some billable
• 2 hours out-of-class contact (email feedback, course website, etc.) - all billable
• 2 hours travel
• 2 hours professional research for specific clients
• 2 hours writing materials

13 hours developing the business

• 4 hours industry profile
• 4 hours external profile
• 3 hours professional development
• 2 admin work (the key here is to make this as efficient as possible)

Of course this is only averaged.  In fact, the times will shift depending on priority.  But the concept remains the same.  We need to manage our time and maintain flexible prices to accurately reflect the value we are providing our clients.  But perhaps more importantly, we need to balance our well-being with our clients' expectations while still meeting our financial goals.

Intercultural Training; The Options for a BE Trainer

Of course any issue covered by Chia Soun Chong gains immediate attention and debate.  And of course it is great to see some of my mentors like Marjorie Rosenberg and Ed Pegg add their thoughts.  So, I figured it might be time for me to reflect a bit on my approach to intercultural communication and how it applies to my business English training.

I have identified several options for the BE trainer to train the effect of cultural interference on their communication.

Option 0 - Ignore it.

Option 1 - Train 'above the surface' aspects for various cultures (etiquette, dos and don'ts).

Option 2 - Train values, norms, and beliefs for selected countries pertaining to class or likely interactions (often BRIC and US/UK).

Option 3 - Train learners about their own culture (whole iceberg) to raise awareness of differences and perceptions.

Option 4 - Train overarching concepts of inter-cultural communication (e.g high/low context, ethnocentrism, non-verbal message codes, uncertainty avoidance).

Option 5 - Train learners to recognize when culture has affected communication and how to resolve it.  This is often in the form of 'critical incident' training.

In discussion with Carl Dowse, he offered another option, giving learners a skill set (such as that provided in Bob Dignan's book Communicating Internationally in English) for the learners to handle a range of cultures and personalities.

Each of these options has advantages and disadvantages and the choice should depend on the training situation.  For this reason, the trainer should know when to apply various resources in training.  Course books handle this in various ways.  For example, Market Leader has tended to go for option 1, whereas Intelligent Business has gone with a mix of option 3 and 4 with an introduction to inter-cultural communication concepts and a rating scale for the learner to assess their own culture.  Either could be appropriate depending on the learners.

For this reason, we need some kind of assessment criteria for how to introduce this into our training.  I offer several criteria...

Needs - what do they want?
Time - how much time do we have and are we sacraficing language work?
Trainer and learner expertise/experience
ROI - how much will the training impact their communication effectiveness?
Behavior change - how much will the learners change/have to change to meet the goal?
Relavence - how likely are they to experience these concepts?
General to specific - where do we balance dealing with culture and handling personality types?

On this last point, we need to assess which cultures we are talking about here.  Ed Pegg and I were on the verge of a book deal on this one in Glasgow.  Hopefully, he can remember what we talked about.  Are they purely national?  Probably not.  Instead, they most likely include a whole range of cultural influences.

At the end of day, we can look at the materials we have and determine which option is best.  In my case, I most often find that option 3, teaching them their own culture from an outsider point of view, is most effective.  I train monoligual and often monocultural classes.  For them, the greatest benefit comes from seeing that what is normal and understood amongst themselves is often a far cry from what outsiders see, hear, and believe.

To give you an idea of the training, I have included the template presentation I give to my German learners.  Not all slides are used in training and this presentation does not include the discussion or activities which emerge from it.  These slides are generally introduced with the scenario: "This is training for employees in the US.  Your job is to review the presentation and determine if it is accurate and helpful for them."

Germany intercultural communication training

View more presentations from charlesrei.

So with all these options, it really is up to the trainer and learner to decide on what the right course of action is.  Simply training culture merely because it is in the material is not the best plan.  Additionally, not considering it at all is certainly not appropriate.  As business English trainers, our mandate is to improve the communication our clients.  If we stop at the present perfect continuous we are not realzing our value sold.