Surviving the Early Stages of Building a WordPress Business

Surviving the Early Stages of Building a WordPress Business

Working freelance is great. No boss breathing down your neck and telling you what to do. The freedom to set your  own working hours and work from wherever you want. And the opportunity to make a great living doing what you love and what you’re best at. But it does come with its downsides.

The main one, especially in the early days, is financial. Your income isn’t guaranteed, you don’t have a regular pay check, and you have to cover your business expenses.

If you don’t manage your money effectively, your new career could go downhill very quickly. More small businesses fold because of cashflow issues that lack of income – in other words, it’s less important what you earn but more important that you manage your money effectively so that a lean month doesn’t mean you can’t pay your bills.

In this post, I’m going to give you some tips on managing your money as a freelancer. Whether you’re a designer, developer, marketer or content creator, these tips will help you strengthen your business.

I’ll cover:

  • Setting your rates
  • Identifying your costs
  • Keeping financial records
  • Having a separate bank account for your business
  • Using invoicing and accounting tools
  • Being prepared for dry spells.

So let’s get started with that all important question: what rate should you set?

How Much Should I Charge For A WordPress Site?

Many people struggle with this at first. I know I did, and I pitched my fees way too low to start with, figuring (wrongly) that it would get me more clients.

Instead of plucking a figure out of the air, you need to make some calculations.

Here’s what you need to calculate. First, your target income:

  1. Identify the annual income you need to have once all your costs (including taxes) are deducted. This may be the same as the salary you had in your last job, or it may be based on your cost of living.
  2. Add the proportion of your income you’ll need to pay in income taxes.
  3. Add your business expenses (more of which shortly).

The figure you’ve arrived at is your annual minimum income target. Of course, earning more would be nice, but this is what you need to earn to pay your bills.

So, for example if your target income is $40,000, your tax rate is 20% and your expenses are $10,000, your calculation will be $40,000 * 1.2 + 10,000 = $58,000.

Now calculate your working hours:

  1. Identify the number of hours per week you’ll be able to work (be realistic and don’t try to kill yourself).
  2. Multiply that by 0.8 – this gives you one day a week when you’re working but not earning. You’ll use this time for admin and personal development. If you’ll need to do a lot of development to learn your new trade, then multiply it by 0.6 instead. This gives you your chargeable hours per week.
  3. Identify how many weeks’ holiday you’ll take each year. If you’re going freelance to enhance your quality of life, this could be high. For me, it’s 12 weeks, as I take time off for school holidays. If you plan to work harder during your first year, it could be as low as two weeks. Don’t assume you won’t need any vacation – you’ll burn out or get ill, meaning less work in the long run.
  4. Subtract your weeks’ holiday from 52.
  5. Multiply that figure by your chargeable hours. For example, if you plan to work 40 hours per week and take four weeks’ vacation, your calculation will be 40 x 0.8 x 48 = 1536.

Now you have your chargeable hours per year.

Divide the annual target income by the chargeable hours per year. So, using our example above, the minimum chargeable rate would be $58,000 / 1536 = $37.76.

That is your minimum chargeable rate. If you don’t manage to work all the hours you plan to, or you don’t get enough work to fill all of your chargeable hours, you’ll be unable to pay your bills. So I would recommend multiplying it by 1.5 to ensure you have a buffer. website
A tool like will help you make these calculations

How much you can charge will depend on your experience and the going rate in your industry – if you’re experienced, you can charge a lot more than someone just starting out. You’ll also be able to command higher rates if there’s high demand for your services.

My rule of thumb for client work is that if all potential clients accept my rates, then I’m charging too low. If I get knocked back by 10% to 20% of them for being too expensive, I’m probably pitching it about right.

Over time, you’ll also find that you can charge more per hour because you become more efficient, developing processes and learning skills that mean you can work faster without sacrificing quality. When this happens, make sure you increase your hourly rates so you’re not charging less for the work actually done. Or you might want to switch to a flat rate per project.

There’s a lot of factors that might influence your pricing.

Identifying Your Costs

It’s very easy to underestimate your business costs. Items you might have previously considered personal expenses will be covered, and then there’ll be expenses such as computer equipment and software that were paid for by your previous employer. Identify all the things you’ll have to pay for in your first year, including equipment, software, subscriptions, learning materials, books, travel and other relevant expenses.

Once you’ve got this figure, add a 10% contingency. You’ll then plug this into your calculations for your chargeable rates (above).

I keep a spreadsheet with forecast and actual costs which I update with my expenditure each month. This helps me keep on top of things and identify any changes I might need to make to my forecast. It’s boring, but it helps me manage my business and prevents any surprises when I come to do my accounts at year end.

Keeping Financial Records

Now you’ve set up your own business, you’ll also have to manage your accounts. Boring, yeah?


Our best pro WP tools in one bundle

Try free for 7 days
30-day money-back

I know, but if you don’t do it, you could find yourself on the wrong side of the law. And even if things don’t get that bad, not keeping records will make life much, much harder when the time comes to submit your accounts.

The law will be different according to where you live, but most people will be required to keep:

  • Copies of invoices
  • Receipts
  • Records of any tax you charge or pay.

You’ll need to pull all these together in a format that your tax office or accountant can understand at year end. For some, it’s a spreadsheet, and for others, a bookkeeping and invoicing package helps keep everything in one place. More on this shortly.

Having a Separate Bank Account for Your Business

This is vital. You should keep business funds separate from personal funds. This helps you avoid accidentally spending money you’ll need later to pay your tax bill or for a business expense.

These days, you might not need an actual bank account if you’re operating as a sole trader. If you establish a company, you will need a bank account which will be owned by the company and not by you. This protects you from any personal liability arising from company debts and can also have tax advantages. But I’m no accountant, so speak to yours before deciding what to do.

If you do all of your transactions online, you might prefer to use a service like Paypal or Stripe instead. The fees can be lower and you’ll find it easier if dealing with customers who use a different currency. I know my bricks and mortar bank charges way more than Paypal for foreign currency transactions.

PayPal website
Paypal could be cheaper than a bank account

It’s also a good idea to set up a savings account where you transfer all the tax your clients pay you, so you have the funds available when your tax bill comes.

Whatever you choose, be careful to keep personal and business transactions separate. This will help you manage your finances, avoid breaking the law, and prevent you from running out of money.

Using Invoicing and Accounting Tools

I touched on invoicing tools in the section on keeping records, above. A good invoicing and/or accounting tool will help you keep records and manage the more mundane aspects of your business such as following up on estimates.

Here are some of the functions you might look for in your invoicing/accounting tool:

  • Generating and sending estimates
  • Creating and sending invoices
  • Automating recurring invoices – this saves me many hours of work
  • Taking payment via a payment gateway
  • Creating reports of your income from invoices
  • Generating tax reports from invoices (and automatically adding the correct tax rate to them)
  • Logging business expenditure and storing copies of receipts
  • Generating expenditure reports using categories you define or the ones used by your tax regime
  • Providing income/expenditure reports for the year to date, the quarter or the month so you can track profitability
  • Linking to your bank account to automatically log expenses and payments received.

You might decide to use one system for all of this or multiple systems to do different jobs. Look for one that can be used on mobile, especially if you want to keep copies of receipts – it’s so much easier to take a snapshot of a receipt immediately than deal with it when you’re back at your desk.

freeagent website
Freeagent is one of many accounting packages available

There are dozens of suitable packages. Some will also help with other tasks such as project management or customer relationship management. Some are web-based, some have an app (some have both). Some are cheap or free, others are expensive.

Find the one that works for your requirements and your budget. (It’d be great to get some recommendations based on readers’ experiences in the comments!)

Being Prepared for Dry Spells

There will be times when cashflow isn’t great. Maybe a client is late paying an invoice, you had to shell out for a new laptop, or you’ve found less work this month.

Here are some tips to help you minimise and weather the lean times:

  • Invoice a proportion of the fee before starting work. Some web developers invoice 50% upfront; I invoice 40%. This means you’ve got money to tide you over while you’re working on the project.
  • If a project will last some months, take staged payments each month. You can’t afford to wait for it all at the end.
  • Try to plan your work in advance so you’ll have a steady flow of work. Look at your schedule for the coming weeks and try to fill any gaps. Avoid trying to do this at the last minute.
  • Keep a savings account with a backup fund in it. I would recommend having three month’s worth of your required income in savings at any time. This means that not only can you pay yourself if you have cashflow problems – but it also means that if you’re ill or injured, you have money to tide you over.
  • When you do have to make a withdrawal from this backup fund, make sure you put it back as soon as you earn the money.
  • Don’t forget to keep your taxes separate from other income, too. When you were an employee, tax was probably straightforward – you never even saw it. But now you’ll have to hold onto that money for a year or more. If you keep a separate savings account for the tax you collect, you won’t find yourself scrambling to find the money when it’s time to pay your bill.

Managing Your Money Can be Daunting But Isn’t Difficult

You didn’t become a freelancer because you wanted to spend your time managing money. But getting it right can be the difference between a successful business and one that doesn’t last. Follow these tips and you’ll have a better chance of building a great freelance career.

Good luck!

What tools do you manage to support your business finances? Let me know in the comments!

Rachel McCollin

Rachel McCollin Rachel is a freelance web designer and writer specializing in mobile and responsive WordPress development. She's the author of four WordPress books, including WordPress Pushing the Limits, published by Wiley.