Too cool! The team over at FreelanceSwitch.com built a calculator for you to determine your hourly rate. It asks you questions about your budget for office and personal expenses and even asks you how much profit you want to make. What a great application - I’m suprised I haven’t seen someone come up with something similar sooner. I’m really impressed with their site overall (very Web 2.0) and they’ve definitely made a subscriber out of me.

I’m happy at my new job and I’m toning down the side work a bit, but this is a great confidence booster for anyone trying to make the switch from a salaried position to a freelancer. I do want to throw out a caution that I think my friends in sales can back me up on - you should use this calculator only to get your breakeven rate.

I always think of it this way - when you go the local market down the street to buy something at the deli, do you ask the owner how much it costs him or her to keep the lights on or how much his mortgage is? Of course not - you buy based on market value and what you’re willing to pay to get good quality meats and produce.

I’m a huge fan of billing based on value - not by hour and certainly not based on your overhead. It’s not about how much time you put in or how valuable that time is, it’s about the value you provide for your customer. If your customer is maintaining a website that costs $500/month in labor to maintain, can you show the value in a $6000 investment to automate some of that maintenance? If your client has an e-commerce site that isn’t marketed well, can you project how much market share you can create for them to justify an investment in your services?

If you lack the confidence to sell based on value, I don’t think you’re ready to make the switch. Have pride in promoting yourself and what you can provide for your prospects. Then, ask your first few customers to help you identify where you bring value and what it’s worth.

I stumbled upon Administaff while talking with a small business client on Friday. It really turned me on to the whole idea of a PEO (Wikipedia Article). Essentially, as a small business owner you can contract a third party to be the employer of record for your employees. They manage your payroll, benefit packages, and other HR related functions you don’t want to deal with. What a novel idea. I’m sure it’s making a lot of people rich (Looks like 2006 was a good year). These are the win win relationships that make small businesses better. This is definitely something I’ll consider when I’m looking to hire employees.

The only thing I couldn’t find is how cost effective it is. I’m sure there’s a significant cost, but the convenience of the whole relationship must make it worth your money.

Kyle and I took some time to submit our Compeet idea to YCombinator for their annual funding run.

It was the type of thing that started out as “let’s give it a shot.” Admittedly, I was doubtful at first but Kyle convinced me to go through the application.

After we were done, I felt like we had done a great thing. Putting your idea to paper and challenging it with the right questions is a useful exercise regardless of the potential for venture capital. Sometimes, I get so caught up in the work that I forget to step aside to set the pace and the direction.

I listed some of the good questions below. Are you asking the right questions about your business? Are you taking the time to challenge your idea(s)? As a business owner, you set the tone and the vision. While getting the day to day business done is important, I’m becoming convinced that my role needs to evolve more into planning and business development. But hey, that could be a little of The E-Myth talking.

Some solid questions from YCombinator that I wanted to share:

• What’s new about what you’re doing?
• What do you understand about your business that other companies in it just don’t get?
• How long will it take before you have a prototype? A beta? A version you can charge for?
• What might go wrong? (This is a test of imagination, not confidence.)
• Why would your project be hard for someone else to duplicate?

Are you asking the right questions? Can you quickly delegate the work you have currently so that you can answer them? More importantly, are you stuck in stagnation? Then, if you don’t plan for your business, who will?

So I’ve been so busy I haven’t been able to post about how my retreat went 2 weeks ago. It went really well, but I did fall short on my objectives. Here’s a brief overview of what panned out.

• Objective 1: Determine what type of business I want to build - what are its ideals, its mission, and product?
• Honest, Simple, Practical - these are the 3 main descriptors I want our customers to use when they’re referring to the way we do business
• We make running small to mid sized businesses and organizations easier. We’ll try to find proven and practical software to meet your needs - if we can’t find it, we’ll build it.
• Initially, Enlight Solutions will sell expertise in Information Technology and Software Development. We’ll eventually break into a Software as a Service (SaaS) model offering all small and mid sized businesses affordable solutions that make good business sense.
• Objective 2: Determine action steps - what will it take for me to get there? Who will I have to meet? How will I meet them?
• Develop long-term relationships with quality customers
• Regularly attend networking events
• Maintain existent relationships
• Find a mentor
• Develop a proof of concept to create buzz
• Save at least 3 months worth of a salary
• Objective 3: Develop a rough business plan
• Objective 4: Develop a rough sales plan

This all needs a bit of refinement but you get the general idea. I didn’t really get to tackle Object 3 and 4 as I got sidetracked brainstorming on a proof of concept. I want to build something out that works great for all small businesses. I came up with triptracker.biz - track your business mileage for tax purposes and travel reimbursement. It’s a really cool concept and I’m looking forward to building it out. I tried to think of a tool that everyone in a small business could use, and I definitely think this falls in that category.

So I jumped in to today’s activities well-rested and motivated. Now, I’m a bit tired, but I think the results of my work today has really made some headway on this week’s progress. I started with some life planning. I followed something very similar to the format found on StartupNation.com. I’ve used this format before in project team and other organization retreats and have been very happy with the outcome. What resulted is the following “personal manifesto:”

Positive, healthy relationships – build trusting and significant relationships (both professional and personal) with people that are like me or that I like. I want to know everyone’s name that I work with. I want to know what’s going on with their families and just general things about their lives. I want to help my friends reach their goals and offer advice. When I get older, I want to help young people like me start out. Productive, Complementing Teamwork – have a great team that is constantly refining and fine tuning their abilities and processes. The team should have a great work ethic, and shouldn’t worry about someone that’s not pulling weight or is being too demanding. The dynamics shouldn’t have to be developed or cultivated, it should just be natural. Well balanced life – while work is important, it’s impossible to be personally unhappy and productive at the same time. I have to be able to section off time. I shouldn’t feel guilty about not being in the office every weekend, i.e. I must always be doing what I love, both in my profession and at home. This is sort of the part where you say “doesn’t everyone want that?” Well, that’s why this is called goal setting. It’s what I want and it’s what I’m aiming for. I understand that even the best teams require attention, cultivation, and growth, but it doesn’t necessarily have to feel like it.

From this manifesto I discovered I’m definitely in the right field: entrepreneurship. It’s something I’m committed to pursuing - I’m passionate about leadership and making businesses work for everyone involved. I also think it puts me in a great position to build the deeper personal and professional relationships I’m looking for in life.

So where’s the plan part? I’m afraid this step didn’t yield anything earth shattering. For some reason, however, I did find it empowering to put on paper. This is my action plan.

• Shake the full-time job to become a full-time Entrepreneur
• Start meeting the right people to help me reach my goals
• Mentors
• Potential Customers
• Team members
• Investors
• Generate passive income to reduce risk in other Entrepreneurial endeavors
• Investigate what to sell
• Learn how to sell it
• Sell it
• Implement It

Over the next few days, I’m hoping to make these goals SMART with business and sales planning.

I also spent some time today working on Objective 1 (What type of Biz to Build) - particularly in the vein of what to sell. The age old question continues to come up - should I consult or should I build a piece of software and sell it? After talking with a few people, it seemed like I might be able to do both, but that I needed a focus regardless of what I choose. I definitely think my objective will be to release some sort of software for small businesses, but we shall see how the remainder of the week works out.

All in all, I evaluate today as a success in getting more in touch with my personal needs and objectives. If anyone tells you business/professional goals should never interfere with personal ones or vice versa, they’re fooling themselves. These days, I think it’s impossible to segregate the two. When you’re life planning, be sure to account for all aspects of life and how they can influence each other. Without that consideration, I don’t think you can plan realistically.