Does launching your entrepreneurial idea feel like gambling away your time, energy, and hard-earned money? While the business world is full of uncertainty, you can help smooth out some of these inevitable bumps with a well-thought-out freelance business plan.
If there’s one saying that almost always rings true, it’s probably “ignorance is bliss.” And the freelance world is certainly no exception.
Just looking at the statistics can be enough to dissuade prospective entrepreneurs from venturing out on their own:
According to a Bureau of Labor Statistics report, about 20 percent of small businesses fail within the first year. Adding to that, 50 percent have failed by their fifth year in business.
And, finally, only 30 percent make it past their tenth year.
These numbers might fill you with doom and gloom, and they’re definitely a bit of a reality check for many of us. However, this data is not a death sentence.
You just need to know how to lay the foundation for your own success.
What Is a Freelance Business Plan?
If there’s one mistake all freelancers make at some point in their career, it’s failing to see their endeavors as a real business.
And this misstep is understandable. To most of us, a business consists of things like a brick-and-mortar building, employees, and structured operating guidelines.
As an independent freelancer, you might not have the first two, but there’s no excuse not to have the latter.
There’s no denying that a freelance business plan sounds good in theory. If this is your first entrepreneurial rodeo, though, there’s a good chance you’re flying blind.
So, what exactly is a freelance business plan?
It’s defining
Before anything else, a business plan is your chance to put your entrepreneurial vision to paper.
As you sit down to draft your new business plan, start by asking yourself these questions:
- What problem does your business solve for clients?
- How do you solve said problem?
- What types of clients does your business serve?
- Where will your business find new clients?
- How does your business differ from existing services?
- How will your business earn a profit?
- What type of expenses or obstacles will your business likely face?
You might be reading through this list and think:
Wow, those questions are so simple they’re not even worth answering.
But they very much are worth taking the time to answer. And when you write out those answers, be as detailed as possible.
Information like this might seem redundant at the start. When you’re several years into your freelance career, though, knowing these answers will keep you moving toward your goals.
It’s goal-oriented
At its core, a business plan outlines your goals and how you more-or-less plan to achieve them.
These goals can include anything from the type of clients you want to take on, how many hours you want to work per week, and how much income you want to take in through your business.
By putting together a freelance business plan at the start, you can help ensure that you stay on track in the months and years to come.
It’s short
If you’ve spent any amount of your life in a business class, you probably have a very different idea of what a business plan actually entails.
Although, yes, traditional business plans can be dozens (if not hundreds) of pages long, that’s not the case with a quality freelance business plan. Instead, just a few pages will do the trick.
It’s flexible
With a traditional business plan, things are pretty rigid. After all, there’s a good chance any changes need to go through multiple avenues of approval before actually happening. If they happen at all.
With a freelance business plan, though, you’re the one and only overseeing authority.
No, you shouldn’t make changes to your business plan on a whim. But you do have the freedom to add, remove, or change anything you want at any time.
In other words, your freelance business plan only exists to guide you. It does not control you.
Step One: Decide Your Plan’s Purpose
Okay, so we could count this as “Step Zero” because, really, it comes before actually drafting your business plan. But it’s also one of the most important steps!
Before you open up a text document, outline your business plan, or start deciding on formatting, you need to ask yourself one very simple question:
What’s the purpose of your freelance business plan?
If you’re not sure what we mean by that, consider how a business plan for your eyes only would need to differ from one being presented to a financial investor.
While it’s true that most freelancers strike out entirely on their own, a well-crafted business plan can be the difference that secures funding for new equipment or an office space.
So, consider your business’ needs before putting pen to paper.
Step Two: Define Your Business
Now that you know how you’ll use your freelance business plan, we can get started.
Before you dive into your goals or plans for the future, you need to define your business as it exists now.
Does your business operate under a registered name? Or do you work solely under your own name? Also, is your business registered as a sole proprietorship, an LLC, or something else?
Where is your business located? This could be your personal address or something else, depending on how your business is registered.
Finally, what, exactly, is your business?
Explain what services your business offers and the type of clients you target. Remember, be detailed. But anything you write here can be changed in the future.
Step Three: Think About Your Goals
You’ve explained what your business is. Now, what do you want it to become?
After you lay down the who/what/where/why/how of your freelance business, you need to decide what the future holds.
First, start by making a list of your goals. We already covered this a bit, but here’s some inspiration if you’re having trouble:
- How much income do you want to bring in per year?
- How many clients do you want to reach?
- Do you want to expand your business to include employees or stay solo?
- Are you planning to run your business full-time or part-time?
Each of these questions helps paint a picture of where you want your business to head in the coming years.
Step Four: Plan for Growth
If you want to achieve entrepreneurial success, you can’t just cross your fingers and hope for the best. You need to plan for it.
With your list of business goals in hand, it’s time to plan out how you’re going to reach those milestones.
For example, you can’t just decide you want to earn a certain amount of money per year and wing it. You need to account for things like how much you’ll charge, how many clients you’ll need, how much income will go toward taxes, and how much you’ll spend on regular business expenses.
In other words, aiming to earn a personal income of $70,000 per year could actually mean bringing in over $100,000 in business.
Determining your annual income is just one example of planning for your business’ growth.
Step Five: Reference and Update
Once your freelance business plan is drafted, you’ll have an invaluable tool at your disposal. And the best part? It’s 100 percent customized to your business.
So, while you might be tempted to file away your finished plan in a cabinet or hard drive, don’t. A well-crafted business plan can make your work life easier in many ways.
If you don’t believe us, just think about how you can:
- Use your business description to effectively market your services to potential clients and differentiate yourself from the competition.
- Compare your financial goals and plans to your records — made even easier with a bookkeeping program like invoicely — to see if you’re on track.
- Share your comprehensive, detailed business plan to secure prospective financing or strengthen other professional connections.
- Help prove your business’ legitimacy, tax status, and your personal role with a well-written business plan.
Whether you use your completed freelance business plan to build relationships with others or just to keep yourself focused on your business’ future, remember that nothing is set in stone.
Just as you sat down and wrote your business plan, you can sit down and change it. As your business grows, your plan will grow with it.
Of course, a freelance business plan isn’t the end-all-be-all of successful entrepreneurship. Fortunately, freelancer-friendly tools like invoicely can help make running your own business (almost) a piece of cake.
Learn more about creating, sending, and saving invoices with invoicely and keeping your business finances on track to reach your goals.