Small Business

How Getting a Custom Freelancer Contract Can Help you Save or Earn Money

 

Freelancers Contract

Illustration by Viet Vu

By Tristan Blaine, Esq.

Contracts. The word stirs up such excitement, doesn’t it? But seriously, contracts can actually be sort of fun when you think about all the possible uses for them and you realize how empowering it can be to use them effectively. But not only is it empowering, a contract can help you save or earn serious money. How? Well, to start with, it can help prevent a client from skipping out on the bill, and save on the time and money that may be necessary to track down payment.

To be clear, this post is not meant to be legal advice, and some or all of it may not apply to your situation. I don’t recommend drafting your own contracts. The best way to use this information is to take it to a small business lawyer and discuss how it relates to your freelancing business. Try to find a lawyer who has reasonable pricing and flat fees (they do exist, and I’m one of them!). It probably shouldn’t cost more than $500, unless you have a particularly complex situation. If that still sounds like a lot of money, keep in mind that it’s likely a tax deductible business expense. And having a great contract could easily help you save or earn thousands of dollars, much more than what you would be spending for legal help.

Also note that the client may not necessarily agree to any of these provisions, in which case you should decide whether to drop the provisions or drop the client.

All that said, here are 6 important contract provisions you should know about to save and earn more cash.

1. Detailed description of scope of work
This one is pretty basic, but is often overlooked. Describing in detailed and specific terms what you will do for the client makes it clear that anything other than what’s in the scope of work will cost the client more money. So if the client tries to say they thought your flat rate included, for example, several rounds of revision until the client feels satisfied, you can point to the scope of work that (hopefully) says your price includes only one revision. Often the client will then concede and pay you for the extra work.

2. Intellectual property provisions
Make sure you are up to speed on what intellectual property rights you have in your work (a topic for another post; or find a good intellectual property lawyer), and that you clearly state in your contract what rights you are and are not giving to the client. Generally, if the client wants more (or all) of your rights, they should pay you more.

3. Clear payment terms
Another seemingly obvious one, but have you included exactly how and when payment is to be made? If not, the check could get “lost in the mail.”

4. Late fees
Part of the payment terms, but this one deserves its own category. Late fees are a great way to incentivize clients to pay on time, every time.

5. Limitation of liability
You may not be thinking about what happens if your client sues you, but unfortunately it’s a possibility. But did you know you can limit the amount of money the client can sue you for to only the amount they paid you? Yep, just make sure you have one of these nice little provisions, and you could save some serious cash.

6. Liquidated damages
Sounds complicated, but it’s not really. It’s simply a way to make it easier to enforce the contract in case your client violates certain provisions. You see, sometimes it’s hard for a court to determine how much one person should pay the other for not following the contract. For example, if the client uses your intellectual property but doesn’t credit you as you had agreed, how much is that worth? Maybe it’s your lost profits, but it’s often hard to figure out how much profit you would have made had they credited you properly.

To deal with this you can simply stipulate “liquidated damages” of a reasonable dollar amount or percentage of your fee, and this is the amount that the client would likely have to pay you for breaching certain parts of the contract.

Fun stuff, right? Let me know if you have any questions or comments on any of this!

Tristan Blaine is a “freelance lawyer for freelancers,” which is a fun way of saying that he has his own law practice and works primarily with freelancers and small businesses. He also created a website, Law Soup, for everyone to get some quick answers on a variety of legal topics.

Skimp or Splurge: On Opening Your Own Restaurant

When 27-year-old Jamie Woolner first opened the artisanal pizza eatery Pizza of Venice in the Los Angeles enclave of Altadena, he wanted to do food his way, and pizza was his canvas. At 23 he began creating his own concoctions, and sold his artisanal pizzas in frozen form at wholesale to a wine bar and a coffee shop. A year later he opened his own storefront restaurant, and POV has just celebrated its three-year anniversary. 

“I’m too creative, I’m not good at doing the same monotonous thing over and over again,” Woolner explains. “I was a terrible employee, so I figured I should be a boss.” He had worked as a line cook at different restaurants around town. During the family meal, which is where the kitchen staff sit down and enjoy a meal together, he normally would volunteer to cook the meal. “I was just dying to make something different, to put my own personal taste on food.”

As a restaurateur, food that’s homemade and made of top-notch ingredients is top on his list of priorities. “ If I wanted to serve people shit, I would be in the manure business,” he says. “I don’t understand why people get into food if they don’t want to serve quality,” says Woolner. “They could just as easily start a Porta Potty business and get rich.”

That being said, if you have aspirations to be a restaurateur, here, in his own words, are Jamie’s top tips on what items you should splurge on and what you can skimp on when opening your own restaurant:

Fridge: Splurge
You want to buy new because you want the warranty. If something happens to say, the condenser, you want to make sure you have that insurance policy which is your warranty.

Pizza Oven: Splurge (if you can)
You can buy it used as long as you have someone who can fix it. On the other hand, I bought an oven that was bought in the ‘70s, and we went through two different mechanics, a bunch of new parts, and they still couldn’t fix it. I would say when it comes to buying equipment, if you can afford it, buy new. You don’t always have the luxury to do that. When we first got started, we bought a $900 on Craigslist glass door convection oven, which was basically a pastry oven that we hot-wired to get to 700 degrees.

The reason why we got it rid of it was our volume was getting so high that every time we opened the oven, and heat would escape and it would slow us down. One night our line cook closed the door, and the glass shattered because it was so hot.

One has to do what they must to survive. If you don’t have the luxury to get the proper equipment, you do what you have to do. With that trusty $900 oven, we got written up in the L.A. Weekly. Our pizza oven from the ‘70s was $7,000. If I was to buy the same one brand new, it would be $25,000.

Insurance Policy: Splurge
It’s like my dad says about insurance: you hope that you never have to use it. We have liability insurance, which is a $300 a month policy that covers anything that could possibly happen. If it burns down, if something happens that’s not due to just pure negligence, it’ll be covered. You can shop around for the best rates.

Seating: Skimp
Cafe-style open seating is a huge way to save money. Urth Cafe is a good example of this. They bring you food, the food is good quality but at a decent price. If it were a sit-down restaurant, you’d be spending 20-25 percent more as a customer. Labor costs is what costs you the most in the restaurant. If you can find a way to reduce labor costs, you’re killing it. Communal bar food, cafe style is a great thing. You stand in line, get a number, and have a runner give you the food.

I feel like more and more people don’t care about table service as much as they once did. They know enough about food from watching TV, they can figure out the menu description on their own. They don’t need someone to hold their hand through it.

Ingredients: Splurge
We have plates that serve our pizzas on, and we have to-go boxes. Let’s say a to-go box costs .30. We figured out the costs involved in washing a plate, and we found that it’s more expensive to wash a plate than to put it in a to-go box.

As far as ingredients go and the quality, I really believe firmly in the highest quality ingredients you can get in season. It just depends on the type of restaurant you’re opening. If you’re opening a place where the whole motto is to save money, well then the value you’re offering will be different than the value of an upscale, sit-down restaurant. You’re just not going to offer high-profile items.There’s different kind of value at Burger King than at a fancy steak restaurant.

It depends on the demographics. The standard food cost percentage that most restaurants follow, which is 20 to 25 percent of the price of the item, should go toward the food cost. So if I have a $10 item, I’ll spend no more than $2.50 on ingredients. If you’re getting into upper echelon fine dining, where you’re selling filet mignon, you’re getting more profit than Joe Schmo.

Sometimes you’re going to be spending $30 for a steak, sometimes you’ll be spending $50 for a steak. And the difference might be the level of service being provided.

At Pizza of Venice, we give people value. We definitely give them top-quality products: homemade chorizo, homemade pepperoni, and we’re curing pancetta, but we’re in a strip wall and the service is much more relaxed. It’s a more casual, friendly atmosphere.

The key is you want to give people value. You can’t just be in it for the bottom line. You can’t just do your cost-percentage analysis. You have to put yourself in the mind of the consumer. Would I be happy with this at this price? I can serve crappy burgers just like everybody else or regular cheese pizzas with processed pepperoni on top of it, and do higher volume with lower prices, but I wouldn’t charge as much and I probably wouldn’t be as happy.

Value is not quantifiable, it’s more ephemeral than anything else. Knowing what value is something you’re brought up with. Maybe you’re born with an understanding or a good palette. Having role models around you that teach you what quality is. It’s about growing up in a society and knowing what the majority of people can spend. It’s an art to know what people want. And we all know what value is when we see it.

Skimp or Splurge: How to Run a Bomb Ass Etsy Store

In our brand spanking new Skimp or Splurge series, some of our favorite self-employed folks offer their tips on running your own business. They share their wisdom on what aspects of your business you can skimp on, and what can loosen the purse strings and splurge on. It’s not just where to spend your money, but also how to best use your time and creative juices.  I’m excited that Amina and Sal Mucciolo of Studio Mucci are our first entrepreneurs to be featured in the series.

I became friends with the phenomenal Amina and her adorkable husband Sal a few years back through one of my good childhood friends. Donned the “Tassel Fairy,” Amina creates colorful creations of whimsy in the form of tassel garlands, unique party wares, and apparel. I’ve had the fortune of seeing their business explode the last few years. What was a humble business run entirely by the married pair in Oklahoma is now a full-stop operation at their lovely loft in Downtown Los Angeles.

They’ve been featured in every bridal, design, and lifestyle magazine that’s worth being noted in, and their luxury paper wares have been sold at Free People, Urban Outfitters, and Brit & Co. They’ll be doing a lookbook with ModCloth this summer, and just recently launched their lifestyle blog for lovers of pastels, unicorns, and all things fun and magical.

Here are their tips Sal and Amina has for those growing their Etsy stores:

Photography: Splurge
Photos are very important. Rather than spending a lot of money on an expensive photographer you can use your smartphone—the iPhone’s camera is as good as many consumer cameras you can purchase. You also don’t need expensive photo editing software opting for less expensive app options.
Takeaway: Photos are a great part of building your brand. Be resourceful, but make sure your photos are stellar and appeal to your audience.

Online Advertising: Skimp
Paying for online advertising is risky and can be very expensive. In many cases the ads you can afford aren’t worth it. Sending out free items can be an inexpensive way for people to learn about your shop. We send out free items all the time; it’s an easy way to establish connections and relationships with other small businesses. Instead of spending $300+ on a banner ad, it makes much more sense to spend $25 in inventory and shipping to someone with a large following who will advocate for you and the experience you provide.
Takeaway: Traditional advertising, like banner ads, is a thing of the past. Instead, gain visibility for your brand by sending free items to blogs and businesses you admire and that attract the same targeted audience.

Social Media: Splurge
Making social media your hobby really helps your shop because it gives you a platform for sharing yourself and your items with the world.
Takeaway: Social media determines whether your small business will sink or swim. So get on it, suckas!

Amina+of+Studio+Mucci

Quality of Products: Splurge
It’s important to invest what you need to in the items to make them truly great. You can’t compete with the price of sweatshop labor, but you can compete by creating amazing high-quality items that cannot be easily produced by a sweatshop.
Takeaway: People nowadays will pay for artfully crafted, unique products that they love.

Quitting the Day Job: Splurge
Once you’ve got a product, and you’re getting into the swing of things, “splurge” by quitting that day job and focusing on your real career. You want to spend all the money you’re saving on doing things to make your business better, taking it seriously, and making it the focus of your efforts.
Takeaway: Get a roommate, move in with your partner, move back home, if you can…even if you can’t quit work fully, the more time you can focus on your work, the more successful you will be.

 

Other entrepreneurs in the Skimp or Splurge Series: Downeast Cider Boys

Tales from an American Picker

Cheapster Dan offers his expert knowledge for pickers just starting out.

By Dan Dao

A funky tribal shirt, a true gem Dan found while pickin’.

I starting getting into swap meets and garage sales when I was a kid. Growing up Asian, being frugal was a way of life. For a while I was embarrassed of getting caught looking for deals in people’s homes and lawns but now I enjoy and look forward searching through others possessions.

I moved to Topeka, Kansas a few years ago for a job. And being a SoCal boy for most of my life, I found the Midwest to be a great, untapped resource for fine pickings. The amount of one-of-a-kind stuff I’ve found at estate sales and thrift shops was more than I ever dreamed of. The best part was that people there deemed most of this stuff as mere junk.

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