“Failures don’t plan to fail, they fail to plan,” says best-selling author and business motivational speaker, Harvey MacKay.
If you are planning to start freelancing part-time, you should have the time to put together all of the plans and start saving for the just-in-case rainy-day money. On the other hand, if you plan to move straight into full-time freelancing, remember that you’ll have those looming deadlines as soon as you take on projects. Even so, it doesn’t mean that you should ignore planning or preparation.
For most people, the concept of business planning is likely to provoke a jaw-dislo cating yawn. However, it’s much more productive to welcome this as an exciting time, where you start to understand where you really want to travel on this freelance path. The world really is your oyster—you’ve made the emotional commitment, perhaps you already have some prospective clients lined up, and you may have already done much of this planning work in the back of your mind. It’s invaluable to take a little time to write these thoughts and plans down, for future reference and as a way to refine and catalogue your thoughts.
Many freelancers and small businesses fail in their first few years, and it’s widely agreed by experts that the number-one reason for such failure is because those business had little or no form of planning. This planning document doesn’t need to be a huge tome of numbers and words; it really is the summation of what you have been thinking, committed to paper.
This document is where you start to list known and unknown areas of your plans, so you can elaborate on them over time. A good business plan is an evolving one, so don’t consider it a chore to be completed in an hour and then stuck in a desk drawer and forgotten about.
There are a myriad of web sites dedicated to sharing templates and ideas about what they consider a great business plan. Perhaps the most important element of a business plan is that you remain actively involved with it. Review it frequently, adjusting and editing it where required—especially during those first few months.
Your plan could be just a few pages, or it could be dozens, but unless you have grand plans to circulate it for investors or financial institutions to read, avoid using buzzwords and reams of useless blue-sky figures. The plan is for your eyes only, so keep it succinct and to the point, and an honest appraisal of the “who, what, when, and how” of your plans.
There are many elaborate methods for writing a solid business plan, but let’s start by creating a text document, and answering what questions we can from the list in Example 2.1. For those questions to which you don’t know the answer yet, just write the question, reminding yourself to add that material as you go.
Remember, plans change, so at this stage your efforts are likely to be more crystal- ball gazing than actual fact. You’ll expand on the plan, filling it out in more detail as you work your way through this book and progress over the first weeks and months of freelancing. And it’s fine to add other notes besides the questions included here—even if they’re rough dot points, the more notes the better!
Creating a SWOT
The planning term SWOT first appeared in the 1960s. A SWOT analysis is really just a simple strategic planning method that helps evaluate projects and businesses. It’s based around a four-square grid, shown in Figure 2.1, which covers Strengths, Weaknesses, Opportunities, and Threats. I’ve used it a number of times to help me make decisions around new products or service offerings under consideration, and it works just as well for business models.
summary market
■ What is the initial concept?
■ What is your current situation?
■ What will your key success factors be?
■ What are your longer-term vision and goals?
analysis competitive
■ What does the current market look like?
■ What is your target market?
■ What are the characteristics of your perfect client?
■ What do your target clients require?
overview
■ What does your industry look like?
■ Are there many competitors?
■ Who are your five closest competitors?
■ What products or services do they offer?
■ What opportunities do you have to be unique? (Can you fill a niche or be different from your competitors in some way?)
■ What are the risks and threats?
sales and marketing
■ How will you attract clients?
■ How can potential clients find you?
■ What marketing activities would you consider?
plan of action
■ What do you need to do in order to kick things off?
■ What should you do in the medium term?
■ What are some longer-term plans?
To start, list all of your strengths and weaknesses—these can be thought of as the internal elements, over which which you have some degree of control. Continue by identifying all of the opportunities and threats that you can—these are generally external forces, such as competitors and the industry at large. Then, look for ways to use your strengths, improve on your weaknesses, exploit the opportunities available to you, and fend off the threats.
Establishing Goals and Milestones
All this talk of business-planning documents and SWOT analyses may be making your head spin, and you’re forgiven if you find yourself glossing over them in your rush to make a tangible start on your own business. However, I strongly suggest that you take a moment to write down some simple goals and then define some mile stones.
Goal-setting helps filter all of the thousands of thoughts and ideas you have into a list that’s far more manageable. High achievers in every field from sports to business consistently suggest that goal-setting is an invaluable part of the process. Goals can help you define your objectives, help you to understand what’s important to you, motivate you towards achievement, and build your self-confidence.
I find goal-setting is most helpful in distinguishing what’s important and what’s irrelevant. This helps me concentrate on what really is crucial to me, and gives me the freedom to spend less time on the rest.
Many people use the acronym SMART when creating goals, as well as for other project management methods. SMART stands for:
■ Specific: is the description of the goal precise?
■ Measurable: do you explain how you will measure results?
■ Attainable: is it possible to achieve, with some effort?
■ Realistic: do you have the power to control the results?
■ Timely: do you have a deadline for the goal?
The reasoning behind SMART holds that a vague goal is an almost useless goal. As an example, say I needed to win more projects; I could define a goal as, “Get more web site projects.” Sure, this is better than nothing, but how much more inspiring would it be if I changed it to say, “Win five more web site projects this quarter.”
See the difference? I’ve been specific (I want to win more projects); I’ve been measurable (I want five more in the next three months); my goal is attainable (who couldn’t win five projects in three months?); my goal is realistic (I know I can deliver five projects within that time); and it’s timely (it has a three-month deadline).
Setting a great goal should challenge and stimulate you. If I downsized my goal to winning one project in the next two months, I’d be more likely to slack off. It also needs to be realistic, though, so some impossible expectation of getting ten projects in three months would set up almost certain failure. It’s a good idea to limit yourself to just a handful of short-term and medium-term goals—writing an exhaustive list of everything you would like to complete prior to your death is a sure way to demo tivate yourself.
Goal-setting Help
You may have heard of the popular Web 2.0 application, 43 Things.2 This site presents a great example of goal-setting at work—try listing your goals on 43
Things, or simply use a text file or whiteboard, and see how you go!
Now, when we think of milestones, we normally recall a large web project we’ve been involved in. Think of a milestone as a landmark towards your longer-term goals.
A typical milestone is to realize a situation where you’re earning more than your current salary within a year of going solo. There are some smaller milestones you can place along the way to see how you’re shaping up.
The first milestone would be having the ability to pay yourself enough to survive on. Let’s say that’s about half of what you earn today. Set a milestone based upon how long you believe it should take to reach this point—it may be a month, or per haps three months, depending on your situation.
Now, let’s consider your return on investment, which is initially to reclaim all of those start-up costs involved in your transition to freelance life. These vary, of course, from person to person, but you should have an idea of how long this would take.
The third milestone is that of bringing home the same salary as you currently earn. Will this take six months, or nine months, or even longer?
Write down your milestones and refer to them over the coming months—you’ll be surprised how quickly you reach them, exceed them, and find yourself setting more goals for future success!
Planning the Start-up Shopping List
An important element of this big planning phase you’ll need to do before (or while!) you’re making your move to freelance is to start preparing yourself for some of the expenses you’ll be faced with over the first few months.
Now, I’d like to say there won’t be any costs, but that’s simply not true. However,
I can say that shopping around for the best deals, looking for opportunities to swap services with suppliers, and staggering your expenses will certainly alleviate the sting of spending money when all you want to do at this stage is earn a little.
There are immediate costs, depending on your current situation, and then there are costs that you can delay for a while. The best method of allowing for these costs is to create a list, prioritize what you need in which order (based on your current
situation), and then expect the higher end of the price range. That way, when those costs work out to be cheaper than anticipated, it’s a bonus for your bottom line.
“Must have” costs include:
■ business card printing
■ domain name registration
■ web site hosting
■ telephone costs
■ hardware
■ software licensing
■ legal or licensing costs
“Should have” costs include:
■ insurance for office contents
■ income insurance or business continuity insurance (if you’re able to be covered)
■ office equipment (desk, chair, light, filing cabinets, printer, and so on)
Ideally, you would cover these costs at the same time as the must-haves, but the reality is most people won’t be able to take such a budget hit in their first month of freelancing, so they can be slightly delayed.
Thrifty Bargain Hunting!
Don’t forget how much cheaper it is to seek out second-hand office furniture and equipment—you can find bargains through the likes of eBay, your local trading post, or used furniture stores. You can set yourself up with perfectly functional trappings at a fraction of the cost of all-new, shiny furniture.
“Nice to have” costs include items such as:
■ new hardware
■ dedicated servers
■ magazine subscriptions
■ industry association memberships
These would be great if you have the capital, but they can easily be delayed if cir
cumstances dictate.
Through good planning and careful attention to your cash flow, these costs won’t have as much impact as they may seem to have now. We’ll go through finances in more detail in the next chapter.
Leasing versus Buying
When it comes to any high-investment equipment you might need, leasing is a well-known method of improving your cash flow by paying a far smaller amount per month over the life of the lease.
Although the end result is that you pay more for the equipment than if you bought it outright, the benefits of having more cash on hand can be an excellent comprom ise. You’ll often be surprised at the small difference in final figures, and realize the benefit of being able to hand the equipment back or upgrade it at the end of the lease term.
For most people, the concept of business planning is likely to provoke a jaw-dislo cating yawn. However, it’s much more productive to welcome this as an exciting time, where you start to understand where you really want to travel on this freelance path. The world really is your oyster—you’ve made the emotional commitment, perhaps you already have some prospective clients lined up, and you may have already done much of this planning work in the back of your mind. It’s invaluable to take a little time to write these thoughts and plans down, for future reference and as a way to refine and catalogue your thoughts.
Many freelancers and small businesses fail in their first few years, and it’s widely agreed by experts that the number-one reason for such failure is because those business had little or no form of planning. This planning document doesn’t need to be a huge tome of numbers and words; it really is the summation of what you have been thinking, committed to paper.
This document is where you start to list known and unknown areas of your plans, so you can elaborate on them over time. A good business plan is an evolving one, so don’t consider it a chore to be completed in an hour and then stuck in a desk drawer and forgotten about.
There are a myriad of web sites dedicated to sharing templates and ideas about what they consider a great business plan. Perhaps the most important element of a business plan is that you remain actively involved with it. Review it frequently, adjusting and editing it where required—especially during those first few months.
Your plan could be just a few pages, or it could be dozens, but unless you have grand plans to circulate it for investors or financial institutions to read, avoid using buzzwords and reams of useless blue-sky figures. The plan is for your eyes only, so keep it succinct and to the point, and an honest appraisal of the “who, what, when, and how” of your plans.
There are many elaborate methods for writing a solid business plan, but let’s start by creating a text document, and answering what questions we can from the list in Example 2.1. For those questions to which you don’t know the answer yet, just write the question, reminding yourself to add that material as you go.
Remember, plans change, so at this stage your efforts are likely to be more crystal- ball gazing than actual fact. You’ll expand on the plan, filling it out in more detail as you work your way through this book and progress over the first weeks and months of freelancing. And it’s fine to add other notes besides the questions included here—even if they’re rough dot points, the more notes the better!
Creating a SWOT
The planning term SWOT first appeared in the 1960s. A SWOT analysis is really just a simple strategic planning method that helps evaluate projects and businesses. It’s based around a four-square grid, shown in Figure 2.1, which covers Strengths, Weaknesses, Opportunities, and Threats. I’ve used it a number of times to help me make decisions around new products or service offerings under consideration, and it works just as well for business models.
summary market
■ What is the initial concept?
■ What is your current situation?
■ What will your key success factors be?
■ What are your longer-term vision and goals?
analysis competitive
■ What does the current market look like?
■ What is your target market?
■ What are the characteristics of your perfect client?
■ What do your target clients require?
overview
■ What does your industry look like?
■ Are there many competitors?
■ Who are your five closest competitors?
■ What products or services do they offer?
■ What opportunities do you have to be unique? (Can you fill a niche or be different from your competitors in some way?)
■ What are the risks and threats?
sales and marketing
■ How will you attract clients?
■ How can potential clients find you?
■ What marketing activities would you consider?
plan of action
■ What do you need to do in order to kick things off?
■ What should you do in the medium term?
■ What are some longer-term plans?
To start, list all of your strengths and weaknesses—these can be thought of as the internal elements, over which which you have some degree of control. Continue by identifying all of the opportunities and threats that you can—these are generally external forces, such as competitors and the industry at large. Then, look for ways to use your strengths, improve on your weaknesses, exploit the opportunities available to you, and fend off the threats.
Establishing Goals and Milestones
All this talk of business-planning documents and SWOT analyses may be making your head spin, and you’re forgiven if you find yourself glossing over them in your rush to make a tangible start on your own business. However, I strongly suggest that you take a moment to write down some simple goals and then define some mile stones.
Goal-setting helps filter all of the thousands of thoughts and ideas you have into a list that’s far more manageable. High achievers in every field from sports to business consistently suggest that goal-setting is an invaluable part of the process. Goals can help you define your objectives, help you to understand what’s important to you, motivate you towards achievement, and build your self-confidence.
I find goal-setting is most helpful in distinguishing what’s important and what’s irrelevant. This helps me concentrate on what really is crucial to me, and gives me the freedom to spend less time on the rest.
Many people use the acronym SMART when creating goals, as well as for other project management methods. SMART stands for:
■ Specific: is the description of the goal precise?
■ Measurable: do you explain how you will measure results?
■ Attainable: is it possible to achieve, with some effort?
■ Realistic: do you have the power to control the results?
■ Timely: do you have a deadline for the goal?
The reasoning behind SMART holds that a vague goal is an almost useless goal. As an example, say I needed to win more projects; I could define a goal as, “Get more web site projects.” Sure, this is better than nothing, but how much more inspiring would it be if I changed it to say, “Win five more web site projects this quarter.”
See the difference? I’ve been specific (I want to win more projects); I’ve been measurable (I want five more in the next three months); my goal is attainable (who couldn’t win five projects in three months?); my goal is realistic (I know I can deliver five projects within that time); and it’s timely (it has a three-month deadline).
Setting a great goal should challenge and stimulate you. If I downsized my goal to winning one project in the next two months, I’d be more likely to slack off. It also needs to be realistic, though, so some impossible expectation of getting ten projects in three months would set up almost certain failure. It’s a good idea to limit yourself to just a handful of short-term and medium-term goals—writing an exhaustive list of everything you would like to complete prior to your death is a sure way to demo tivate yourself.
Goal-setting Help
You may have heard of the popular Web 2.0 application, 43 Things.2 This site presents a great example of goal-setting at work—try listing your goals on 43
Things, or simply use a text file or whiteboard, and see how you go!
Now, when we think of milestones, we normally recall a large web project we’ve been involved in. Think of a milestone as a landmark towards your longer-term goals.
A typical milestone is to realize a situation where you’re earning more than your current salary within a year of going solo. There are some smaller milestones you can place along the way to see how you’re shaping up.
The first milestone would be having the ability to pay yourself enough to survive on. Let’s say that’s about half of what you earn today. Set a milestone based upon how long you believe it should take to reach this point—it may be a month, or per haps three months, depending on your situation.
Now, let’s consider your return on investment, which is initially to reclaim all of those start-up costs involved in your transition to freelance life. These vary, of course, from person to person, but you should have an idea of how long this would take.
The third milestone is that of bringing home the same salary as you currently earn. Will this take six months, or nine months, or even longer?
Write down your milestones and refer to them over the coming months—you’ll be surprised how quickly you reach them, exceed them, and find yourself setting more goals for future success!
Planning the Start-up Shopping List
An important element of this big planning phase you’ll need to do before (or while!) you’re making your move to freelance is to start preparing yourself for some of the expenses you’ll be faced with over the first few months.
Now, I’d like to say there won’t be any costs, but that’s simply not true. However,
I can say that shopping around for the best deals, looking for opportunities to swap services with suppliers, and staggering your expenses will certainly alleviate the sting of spending money when all you want to do at this stage is earn a little.
There are immediate costs, depending on your current situation, and then there are costs that you can delay for a while. The best method of allowing for these costs is to create a list, prioritize what you need in which order (based on your current
situation), and then expect the higher end of the price range. That way, when those costs work out to be cheaper than anticipated, it’s a bonus for your bottom line.
“Must have” costs include:
■ business card printing
■ domain name registration
■ web site hosting
■ telephone costs
■ hardware
■ software licensing
■ legal or licensing costs
“Should have” costs include:
■ insurance for office contents
■ income insurance or business continuity insurance (if you’re able to be covered)
■ office equipment (desk, chair, light, filing cabinets, printer, and so on)
Ideally, you would cover these costs at the same time as the must-haves, but the reality is most people won’t be able to take such a budget hit in their first month of freelancing, so they can be slightly delayed.
Thrifty Bargain Hunting!
Don’t forget how much cheaper it is to seek out second-hand office furniture and equipment—you can find bargains through the likes of eBay, your local trading post, or used furniture stores. You can set yourself up with perfectly functional trappings at a fraction of the cost of all-new, shiny furniture.
“Nice to have” costs include items such as:
■ new hardware
■ dedicated servers
■ magazine subscriptions
■ industry association memberships
These would be great if you have the capital, but they can easily be delayed if cir
cumstances dictate.
Through good planning and careful attention to your cash flow, these costs won’t have as much impact as they may seem to have now. We’ll go through finances in more detail in the next chapter.
Leasing versus Buying
When it comes to any high-investment equipment you might need, leasing is a well-known method of improving your cash flow by paying a far smaller amount per month over the life of the lease.
Although the end result is that you pay more for the equipment than if you bought it outright, the benefits of having more cash on hand can be an excellent comprom ise. You’ll often be surprised at the small difference in final figures, and realize the benefit of being able to hand the equipment back or upgrade it at the end of the lease term.
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