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.
Do you have a freelancing business plan? Is it written down or in your head?
Share your answer in the comments.