COVID-19 Economic Injury Disaster Loan – Information for WordPress Business Owners & Freelancers

TLDR; If you have business income, go apply now. You will get up to $10,000 that will not have to be repaid.

COVID-19 has quickly brought on unprecedented changes in our way of life. To help small businesses like ours survive the coming tough times, the US Federal Government has made a stimulus package available which offers solopreneurs and small businesses a SBA loan advance of up to $10,000 that does not need to be repaid.

Here’s a conversation I recorded tonight with my accountant, Joanie Gable.

The SBA website says…

In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000… Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.

You can apply for this loan advance whether you have a business entity like a corporation or LLC, or even if you’re a sole proprietor without any business entity at all.

The loan application is quick. You’ll need the following information to complete it:

  • Your EIN or SSN
  • Gross Revenues for the 12 Months Prior to the Date of the Disaster (January 31, 2020)
  • Cost of Goods Sold for the 12 Months Prior to the Date of the Disaster (January 31, 2020)
    • Note: your COGS can include hosting, software licenses, etc. that you use to create the things you sell but not expenses like gas, meals, internet or power.
  • Business Activity… this can be tricky. For most WordPress folks working with clients, you’ll probably want to choose Business Services and then None of the Below

The questions are simple. The government is expediting dispersal. The application even includes your bank account and routing number. Funds will appear in your account 3 days after approval.

Listen to the conversation in the video above between me and my accountant where some of the details are discussed. If you’re have a business, you should apply.

For ongoing accounting advice, join the Accounting for Profits Facebook group, where my accountant will be sharing thoughts and strategies for managing your money through this crisis.

Using a Rolling 12 Report to Understand Income Trends

Unpredictable income is something that every freelance web developer faces. While developing recurring income streams can help to stabilize our finances, there will likely always be significant ups and downs in our monthly earnings.

There are seasons in freelance work

There are good times and bad times. Like King Solomon wrote in Ecclesiastes, there is “a time to sow and a time to reap… a time to mourn and a time to dance.” That’s life.

As freelancers we need to come to terms with this fact of financial seasons and develop strategies and tools that help us survive and prosper. The Rolling 12 Report is one of these tools.

Understanding the Rolling 12

If you charted your finances from month to month, you’ll likely create a line graph that looks like the Himalayas. Lots of peaks and valleys. It’s hard to see trends when we deal with so many ups and downs.

That’s where the Rolling 12 becomes helpful. Instead of looking at your income from month to month, you look at the average of the last 12 months as of today. As each month comes, you drop off the oldest month and add the newest and chart the decrease or increase in revenue.

Download the Rolling 12 Excel File

Examining the Sample Data

Start with the Raw Data

Start with the Raw Data tab. Two years of monthly totals are supplied as an example. At the 12th month, an average is calculated in cell E17. Each month thereafter, the average is recalculated using the current month and the 11 previous months.

The Actual Income Chart

 

actualchart

Here are the peaks and valleys that are common for all of us freelancers. Looking at this chart, it’s hard to grasp where we are with our finances.

The Rolling 12 Chart

rolling12chart

When we chart the average of the last 12 months, we can more easily start to see trends and the numbers become meaningful.

Give it a try

Take some time and fill in your actual numbers and see if the ups and downs in your business income start to make more sense.

Note, you’ll need to click into each of the charts and manually adjust which cells are being rendered. There is likely a more elegant way to do this that an Excel guru could figure out, but hopefully this tool will provide you some value immediately!

The Rolling 12 Report can help you get a more accurate view of trends in your variable income as a freelancer.

The Problem with Being a Problem Solver

Most web developers are problem solvers. It’s in our nature. We enjoy confronting a problem and cobbling together the technology that provides a solution. The problem with being a problem solver is that sometimes our drive to find a solution makes us lose sight of the ultimate goal.

See if this situation sounds familiar…

You’re working on a web project and you’re having fits with an ecommerce plugin. It’s supposed to do one thing and it’s doing another. You’ve tinkered, you’ve tweaked, but nothing you do has fixed the issue. So you google, and you try something – and it doesn’t work. You google again, and you try something else – and that doesn’t work. This process continues for hours until finally a piece of magic code solves the problem.

Your greatest weakness is your greatest strength taken to an extreme.

Now here’s where our nature as problem solvers becomes a problem in itself. When we finally find that magic code snippet, we’re thrilled. We celebrate. We pat ourselves on the back for a job well done and leave our desks with a feeling of immense accomplishment… when in fact we are unintentionally reinforcing a poisonous productivity habit.

Someone has said that your greatest weakness is your greatest strength taken to an extreme. Being a problem solver is no different. We love to solve problems so much that we don’t want to face a simple fact…

You don’t have to be the one to solve the problem.

Really, you don’t. As a matter of fact, insisting on being the problem solver can actually be a huge detriment to your business. Consider the scenario above. Wasting hours solving a small problem will kill your productivity.

Let’s say that your hourly rate is $100 an hour. If you spend 4 hours solving a niggling little problem, that answer just cost you $400. Was it really worth that much?

Yes, I realize that the problem certainly needed to be solved, but it’s likely you could have found the answer cheaper than what you paid with your investment of time (you need to view your time this way if you don’t already).

Solving the Problem Solver’s Problem

There comes a point when we hit a wall and it would be wiser to surrender the problem to someone with more expertise than we have.

As problem solvers we need to be honest with ourselves. There comes a point when we hit a wall and it would be wiser to surrender the problem to someone with more expertise than we have. That means having resources to turn to for quick answers when we need them.  None of us are proficient at every aspect of web development. It’s impossible. But all of us should have a short list of problem solvers who have the skills that we don’t.

Instead of spending four hours trying to solve a problem in the scenario above, what if you stopped about 20 minutes in and realized that you hit a wall. Instead of trudging ahead and wasting hours, you Skype your programmer friend who knows exactly what to do and fixes the issue in about 15 minutes. Say that programmer charges $150 an hour. The answer just cost you $75 instead of $400.

Now say that instead of going to a $150/hour programmer, you locate a few providers on Fiverr (or some other freelancer marketplace) who specialize in the ecommerce plugin that is driving you mad. You send a message to several of them describing the issue and asking for a quote. One comes back to you with a price of $25 (which is very realistic in this scenario).  Now your answer costs you just $25 instead of $400. See how this works?

Getting More Productive

Problem solvers don’t always have to solve the problems. Sometimes we just need to know the best way to find the answer.

Of course, this issue isn’t just about touching code. Maybe you’re great at that. But all of us have areas where we might have some competence, but not expertise. And as a result, we end up wasting time that would be more productively invested some place else.

What is your place of greatest expertise and what are the areas where you would be better served to hand things off?

How much productivity would you save if you self-imposed a 20-minute time limit to solve a problem before you outsource to an expert?

Problem solvers don’t always have to solve the problems. Sometimes we just need to know the best way to find the answer.

[takeaway]You don’t have to solve every problem. Be honest with yourself when you hit a wall. Set a time limit, and once you hit it, hand off the problem to an expert.[/takeaway]