Pick up any old business book and what’s the first thing they tell you that need to do before starting your business? Write out a business plan. While I can’t speak for any other types of businesses, I’ve found that as a freelancer, business plans are utterly useless, and in some cases, harmful.
Interestingly enough, larger companies are starting to come to the same conclusion. If you’ve ever read 37signal’s Rework book, you’ll know they’re also not a fan of the business plan. It’s interesting how a seemingly innocent piece of paper has now come under fire from several sources.
So why don’t you, as a freelancer, need a business plan? How can it do more harm than good?
It’s an Excuse
There are some people who want to go into business for themselves, but are terrified to make the jump. So they decide to take some extra time “planning their business” out. In fact, most of them have planned so much, they never actually started anything.
I know someone who’s been working on their business plan for the past two years. Yes, two years. They could’ve built a very successful freelance business by then, but instead, they’re crippled by what the business books tell them is important.
I’ve always been a fan of jumping into something. While I’m normally a planner, business is the one area where I’m completely free of anxiety, procrastination and excuses. If you’re excited about starting a business, the time to do it is now. Six months down the road, you might not be so excited anymore – or the stagnation could kill your enthusiasm for going out on your own.
It’s Useless in the Real World
Business plans are absolutely useless in the real world. While it’s nice to write down your goals, a business plan is a guess. A guess at where you’ll be at six months, a year, two years from now. Unfortunately, business never goes as you plan it. Therefore, what’s the point of wasting your time on a guess?
It’s also useless from the standpoint that it’s just a piece of paper. You type it, print it out, and shove it into a desk drawer where it never ever sees the light of day again. Even if you decide to hang it up next to your desk, how often are you going to look at it when you’re in the middle of client duties? Never.
It Can Hold You Back
Having a business plan can actually hold you back if you actually do try to stick to it. What happens if you’re more successful faster than you planned? With a business plan, you might actually cripple yourself by not raising rates when you should, not firing clients, or not reducing your hours.
It’s important to note, that if you do insist on writing a business plan, that it shouldn’t be set in stone. You should probably rewrite it every six months to change with where you are in business today. However, I suggest that you forgo the business plan altogether in favor of making real goals.
Making Real Goals
The difference between making real goals and writing a business plan may seem negligible at first, but goals are actually something you strive to achieve. Goals have actionable steps that you take almost every day to try to reach them by your specified date. Yes, goals have a deadline!
I prefer goals over business plans because they’re easy to change and update, while being something you don’t really forget about or shove in the back of your desk. Goals are there, in front of your face every day. Goals become the way you run your business, the amount you charge and the types of clients you work with.
So how do you set a goal you can actually achieve? The trick is to choose a goal that’s easy enough to be achievable, but tough enough that you’re going to have to hustle to make it. For an example, a goal of making a million dollars this year by being a freelance designer is probably not possible to achieve (unless of course, you happen to be famous), however, a goal of making $100,000 is something that can be achieved with some work and perseverance.
So how would you go about making the $100,000? First, you need to decide your rates. If you were to keep your current rates, how many hours would you have to work to achieve your goal? Is it possible? If not, you’ll need to raise your rates. What kind of clients do you want to serve? Can they support your raised rates?
After deciding rates, hours and clients, it’s time to put your goals where you can always see them and into actionable steps. I like to break my large yearly goal into small monthly goals. So, if my goal was to make $100,000 a year, that means I’d need to make $8,333 every month. Breaking your goals down into smaller goals makes it seem less daunting, while giving you “check in” points so you don’t forget where you’re going. Make sure you put these steps into your client or business schedule and treat it like a normal business task.
What do you think about business plans? Have you ever written one and stuck to it?
Image by Caitlin Childs