4 Essential Elements of Freelance Business Planning

Some freelancers strongly advocate the use of business plans for freelancers. Other freelancers will tell you that you don’t really need a business plan at all.

So, which advice is right? Do freelancers need a business plan or don’t they? In my opinion, both opinions are correct.

While not all freelancers need to have a formal business plan like the kinds that you would take to the bank or to investors, all freelancers do need to engage in some sort of business planning. That’s just part of running a business. (However, do keep in mind that if you do plan on going to bank for a business loan, selling your business, or going public with business–then a formal business plan will most likely be needed.)

In this post we’ll go over the four essential elements of business planning that freelancers can’t ignore (even if they choose not to use a formal business plan). My goal is to streamline the process and make it easy for most freelancers.


Element #1: Your Freelancing Vision

What is a business vision?

Simply put, it’s the difference between having a vague idea that you want to be a freelancer and knowing that you are starting a freelance web design business that specializes in creating customized WordPress themes. Vision gives your freelancing business a purpose and a direction.

Your freelancing vision should reflect your business and personal values as well as your dreams for the future of your business.

Now that we’ve explained the importance of having a vision as part of your freelance business plan it’s time to discuss the importance of goals.

Element #2: Your Freelancing Goals

Goals are the objectives that you are striving for as a freelancing business. They should flow naturally from your freelancing vision.

The best goals are:

  • Specific–Business goals are more specific than business visions. You should know exactly what it is that you want to do.
  • Measurable–To measure your goal, you need to identify a quantity that you are striving to reach. For example, “get five new clients” (the quantity is five) as opposed to the more vague goal of “get new clients.”
  • Achievable–A good business goal is achievable. Over time you should be able to predict what your freelancing business is able to achieve. At first, however, you may need to make an educated guess (and that’s okay).
  • Time-based–Your goals will change over time. In fact, your business environment will also change over time. For those reasons, it’s best to set a time limit on your goals.

An example of a good freelancing goal for the freelance web design business mentioned above would be: create two new WordPress Themes by February of 2012. That goal meets all the criteria: specific, measurable, achievable, and time-based.

Another element that is closely related to your freelancing goals is action steps.

Element #3: Action Steps

Action steps are the road map that allows you to achieve your freelancing goals. They are extremely specific and detailed.

Your action steps are your plan for how you are going to achieve your goals. You may find that you need to tweak your action steps fairly often to make them work more smoothly.

The final element of a good freelancing business plan is measurement.

Element #4: Measurement and Analysis

At the end of the time period that you specified you need to measure how successful you were at meeting your goals. While there are a number of professional tools designed for this purpose, most freelancers may want to use a less formal approach. A spreadsheet may be helpful.

The most important questions to consider when measuring and analyzing business goals are:

  • Did I meet my freelancing business goals for this time period?
  • Why (or why not)?
  • If my goals were off, how much were they off by?

Your goal measurements will help you determine how successful your freelancing business has been and guide you in planning and in setting future goals.

Final Freelance Business Planning Thoughts

In this explanation, I’ve tried to streamline and simplify the business planning process in a way that will meet the needs of most freelancers. If you own a more mature business or are considering selling your business or getting a loan, then you may need to use a more formal business planning process.

While many freelancers keep their informal business plan in their head, if you’re like me you’ll benefit the most from keeping a written copy of it. It doesn’t have to be formal document–just a list that you can glance at from time to time so that you stay on track. For me, it’s just too easy to lose track of goals that aren’t written down.

Your Turn

Do you have a freelancing business plan? Is it written down or in your head?

Share your answer in the comments.

Comments

  1. says

    Laura you are definitely right about mapping a plan before you startup. I made a business plan in which I actually covered a lot more than just my vision and milestones. I never tried for getting an investment but still had all financial implications chalked out. Now, after 3 years I see I have somewhat achieved my milestones but not in the exact timeframe, but having that helps me a lot.
    Thanks for writing a great post and happy holidays to you and the entire Freelance Folder’s team.

  2. says

    Colorado Springs Defense Attorney–Thanks for your comment. :) I’m glad that business planning helped you. You’re right that while you may not always meet your goals, at least you can measure your progress. Happy holidays to you as well.

  3. says

    I love the whole ‘get focused’ theme in this. Applies not just to this business but in almost anything in life.

    We actually plan each week as a team, starting every monday morning. By lunchtime, we’re all set for the week. If we miss our goals, we better have the right answers.

  4. says

    Hi Morgan & Me,

    The weekly team planning meeting–I love it! :) I think it’s especially valuable to touch base when you have a team like that.

    It’s true that many good business principles work for other aspects of life as well (and vice versa).

  5. says

    Hi Laura,

    This post reminds me that it’s that time of year again — time to reiterate my freelancing goals and adjust and make new ones for the baby new year. My biggest stumbling block involves actually quantifying my financial goals so that they’re challenging, yet doable.

    At the end of last year, my goal was to double my previous year’s freelancing income. Well, that was pretty darned easy, since I had only gone full-time a that year! This year I’m thinking of making the same goal — double my freelancing gross income.

    Do you think it’s really reasonable to make a “new client” goal? For example, a goal that says, I’ll land seven new clients in the first quarter — or something like that?

    I also like to make little goals that are a mixture of my business and personal family life. This year I allowed my sons and daughters to participate in my business in small ways. They got so much joy from it! They felt as if they were a part of actively helping our family financially — and they were!

    Thanks for this post. It reignited my excitement about making goals for my business.

  6. says

    Hi Samantha!

    Great questions. I know several writers who doubled their income several years in a row, so I think it could be doable (depending on your situation). Remember, the goal is something to shoot for and measure your progress against–but it can also help motivate you.

    I would definitely integrate your goals into your life. If your family is as important to you as mine is to me, then any goals that go against what you want for your family won’t be doable anyway. :)

    Best wishes for next year (whatever you decide on for your goals)!

  7. says

    Here are my impressions of your wonderful article.

    As a grant writer, I am well familiar with “SMART” goals or objectives, but I noticed you skipped the R (realistic) component. Maybe you were telling us to dream big. And I agree about achieving goals in small steps. As the adage goes, “How do you eat an elephant? One bite at a time.”

    I agree about measurement as essential in planning. In budgeting, you have projections and the actuals. For my actual income/expenses, I use free financial services like Mint.com, which tracks my income and expenses in one package. Also, Mint will nag me when I am going over budget and celebrate when I am meeting my saving goals.

    To be honest, how I implement my plan is quite different than the written document. A lot of the time, I feel like I am stumbling through a dense wilderness in the dark. But then I look up into the sky and the moon and stars guide me along the uncertain path.

  8. says

    Hi Laura,
    I think setting goals in a marketing business is possible, but when it comes to freelancing as a web designer or an attorney, it all depends on how many clients you get. When business depends on such factors then there is no way to measure.

  9. says

    Hi Laura,

    My plan is mostly in my head. However, you make a compelling point about writing out a plan. I do have some goals in mind that probably should be written out. My main plan this winter was to rebrand my business. For 2012, I would like to expand it. I definitely think writing out a plan would be a great exercise in goal setting and planning. Thanks for the information! It was quite thorough and thought-provoking!

    Megan

  10. says

    Plans can be tricky and I strongly believe that all of them should be realistic, at least when starting out. If you shoot too high you might fall flat on your face and that doesn’t really feel good.

    S.

  11. says

    Hi, I always search for some information that may help me in gaining knowledge about this, and I found your post really good and I thank you for sharing this with an expectation to find some more post like this by you.

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