Sage Advice from Audio Engineering & Production Instructor Chris Holmes

Chris "Hollywood" Holmes
Chris “Hollywood” Holmes

Some seriously sage advice from Audio Engineering & Production instructor Chris Holmes on how to navigate the perils of being self-employed.

Six things Chris learned working for himself:

I’ve been an audio engineer in some capacity or another for over 15 years now, and have spent roughly six years of that being a 100% independent engineer. What this means is that for the last six years, I’ve been my own boss, and have enjoyed a lot of flexibility in my work life that most people simply can’t relate to. I can start work at 6am or 4pm; I can work 2 hours or 16 hours, and I can take a day off to do nothing but binge-watch Netflix whenever I want.

However, this flexibility comes at a price: I am solely responsible for finding, completing and getting paid for my work. Over the course of my career, I’ve learned a lot of things, and made a lot of mistakes while running my own business. If you’re thinking about starting your own company, here’s my list of things to consider.

#1: Self Motivation Or Bust

Setting your own work schedule is just one piece of a very large puzzle when you’re self-employed. Finding new clients, dealing with billing and taxes (more on that later), maintaining equipment and disposables, as well as having a life outside of work are all things that need to be balanced perfectly.

Here’s a simple reality every creative business owner needs to understand: 90% of your time will be spent doing non- creative work.

If you’re a film editor, you’ll spend 10% of your time editing films, and the rest of your time doing admin work, chasing clients, and managing the other aspects of your business. The fun part of your job will be the thing you do the least, so make sure that that 10% will be enough to keep the creative fire burning.

#2: Nothing Is Consistent

The main thing you’ll come to realize as you work for yourself is there’s no linear path to finishing a project. In a perfect world, every project would be simple: You start a project, you finish a project, you get paid, and everyone’s happy.

The reality is there can be dozens of pit stops and delays between point A and B. Projects get delayed randomly, people return over and over for “quick changes”, payment is delayed for whatever reason, and various other hiccups can cause projects to stretch indefinitely.

As I write this article, I have a project on the books that is approaching 365 days since it initially started, which had an original schedule of 60 days. What happened? Life happened. People get sick, people have career changes, things take longer than expected, other delays you can’t fathom.

In my line of work, there’s an expect pay scheme of 50% up front, and the remaining 50% when final files are delivered. If I had been counting on this one project for my bills within 2 months of starting it, I would be in real trouble.

For this reason, I have consistently had 3-7 projects on the go at any time. I can’t count on one project for any necessary income, so I spread my time over multiple projects to try and keep a consistent stream of cash flow coming in.

One last reality check: you’ll never be fully paid up on your invoices.

At any given point in a year, I have between $2,500- $5,000 in outstanding billings. Then some comes in, but now someone else owes money. It’s a constant revolving door of sending out invoices, getting paid, and having to chase people for money. This brings me to point three…

#3: Peaks & Valleys, Feast & Famine

Your cash intake will be all over the map and you need to be prepared for that. You might make $5,000 in
a month and feel like you’re making a good livable wage. Then you’ll make absolutely nothing for two months, and suddenly that $5,000 isn’t that big of a deal. Other times you’ll look at your incoming projects and realize you’re going to make 15k over the next two months, only to have every single project cancel before the start date.

Simple lesson: Don’t spend the money you have unless you have to, and don’t plan with money that you haven’t received.

Projects crash and burn before the start date all the time. Artists get cold feet, alternate funding falls through, they find someone cheaper, there are a million different reasons. You need to budget accordingly and make sure you have additional funds available during a drought of work, or a less than professional client dodges you for payment.

Whenever you get a large deposit or payment, SAVE IT. You have no idea when the next chunk of change is coming in, so don’t eye up that new piece of equipment you want but don’t need just because you have the cash for it right now. That money might be what feeds you a month from now.

Another thing I suggest is to never put something into your calendar without a nonrefundable deposit, and never commit to a project until initial payment comes in. Clients ask to book sessions with me multiple months in advance and are often offended when I ask for a deposit. “We’re 100% confirmed” or “We’re good for it I promise” are two phrases I’ve heard more times than I can count. Artists have the best of intentions, but until you force them to put their money down, assume that a project isn’t happening.

You will also come across a lot of “planners” in your life. These are people that enjoy the process of planning a project more than actually doing the project. They’ll call you for quotes, ask for quotes for studio space, additional staff, and other things.

They’ll want to talk in detail about schedule dates, travel accommodations, and their giant future plans. But when push comes to shove and they have actual start the process, most of them abruptly call off the project. Don’t waste time with these people: Always get a deposit before any real planning takes place.

#4: Changes Are What Cost You

If you work in a creative industry, you have probably dealt with changes. You do a project, and then the client comes back with “one tiny change”; then they come back again with “just one other small thing”. Next thing you know, you’ve done twelve revisions of the project, going over your budgeted amount of hours by almost double.

Revisions/Recalls & changes need to be managed effectively. My life revolves around changes, unfortunately, but I’ve become very good at dealing with them. Firstly, when you hire me to mix or master a song, I have a clause that states that I only do two revisions per mix/master, and additional changes will be billed out hourly. This has two benefits; the first is that I have allocated time to doing fixes before I even start. I’m committing to these changes as much as the client is. This is worked into what I charge per song, and if the client wants more changes, they pay a higher hourly rate. The second benefit of this is that it forces clients to be selective and detailed with their changes. If they know they only get two chances for free, the notes I get are thorough and descriptive. They focus on everything and make a comprehensive list I can deal with, as opposed to picking one single thing to bring up every time I send a new mix.

The lesson here is you need an hourly value for your time.

You may charge per project, per day, or some other time value, but your time needs to hold a dollar amount in your head. I hate doing vocal tuning and it’s a cumbersome, labor-intensive job, so I charge $75/hour because I know it’s never a quick fix. If I were to charge per song, I may end up in a scenario where I spend 5-6 hours on
a single vocal, and make roughly minimum wage for my efforts. Drum editing, on the other hand, I can generally hammer out a song in 15-20 minutes, and charge my clients $75 a song. This rate basically sets me up to make roughly $200 / per hour for something I’m very effective at, as well as giving me a buffer for when an impossibly difficult one comes in which takes three times as long to complete.

For me, my time is worth $50-75 an hour. If I’m not making that, I’m wasting potential earning hours. Why waste 5-6 hours of a day making changes on a song that I’m being paid a flat rate for when I could be doing variable work like drum edits making two to three times my hourly rate on. Maximize your earning potential by spending as little time as possible on things that aren’t directly making you money.

However, there is one thing to consider with changes, and that’s your relationship with your client. If spending an hour doing a tedious change gains you a return client that has far more value than the hour or two of wage you may have lost. As I said above I do changes every day, and a lot of them for free, because it builds relationships that turn into very valuable assets for my business.

#5: Don’t Mess Around With Taxes

This one should be obvious, but let me just spell it out: Do your taxes and do them properly.

Working in the creative world makes doing taxes more difficult than it should be, and the Canadian tax code is intentionally unclear for small business owners. There’s a variety of write-offs and deductions you can use to help support your business, but there’s also a lot of things you’re not allowed to do.

Explaining all of this is far beyond the scope of this article, so take my simple advice and follow these three steps:

i. Keep detailed books

– log every invoice, payment, and purchase and save your receipts. I do mean everything, even if you think it’s not business related, it may be worth something in deductions you weren’t aware of.

ii. Hire an accountant

– Are you an expert in Canadian Tax Law? If not, hire an accountant. Most can be hired for $250- 1000 once a year to do your filings and the money they will save you will almost certainly be more than their cost.

iii. Don’t Cheat

– The CRA isn’t stupid. If you claim you make $11,500 a year while secretly making $30,000 in under the table cash, they will find out, and if you’re lucky it won’t involve jail time. If you’re ever audited, it would take a CRA agent two seconds to realize you are spending more on living expenses than your claimed wage would support, and they will investigate. I’ve watched many friends make this mistake and have the CRA come knocking with
a new tax bill for tens of thousands of dollars. In the end, it almost always sinks your business.

#6: Avoid G.A.S.

G.A.S. or ‘gear acquisition syndrome’ is a real thing. The need for new software, new equipment, new toys, will be ever lingering. You will tell yourself that your business will only grow if you get X component. Unfortunately, the more equipment you own, the more debt you acquire, and the more monthly bills you end up having to deal with.

Carry as little overhead as possible.

Having the equipment to do your job effectively is critical, but be aware that it’s far more effective to have someone else carry that load. I get asked often why I don’t own a studio and the answer is always that I don’t want the overhead. I would rather pay someone else $300-1000k a day to use their studio for the days I need it, then to carry the debt of rent/utilities/ equipment for a studio. You should look at it the same way. Do you need that fancy lighting rig or can you rent it for the singular day you need it for a shoot?

Hopefully, after reading you understand that running your own business isn’t easy, but it can be incredibly rewarding.