As a serious freelancer or contractor, you’ll need to make clear and consistent progressive changes to your business plan as you grow. Thinking ahead isn’t always the hard part, though. What’s really tricky is counting up the costs. Every adjustment you make, be it minor or major, needs to be financially accounted for before you take action.
Here we take a look at the price of putting together a freelancer or contractor business plan, and the types of things you need to consider before you make any decisions.
Understand and accept the price of doing business
In order to maximise your earnings, you’ll need to make investments across the board – which is why profit and income should never be regarded as the same thing. “You gotta spend money to make money,” the old saying goes, and when you take into account the fees for networking groups, annual subscriptions for software, and payments for online tools, it’s hard to disagree.
Understand that doing great business and offering the best possible service to clients involves spending some decent cash along the way. It’s simply the price of doing business – and these fees need to be factored into your business plan from day one.
Give yourself holiday/sick days
It can be tempting to battle on like a superhero in the face of the flu, but let’s face it, you’re not going to deliver a top-notch service when you’re ill. A lot of freelancers and contractors are terrified to take sick days or holiday time because they fear they’ll miss out on a wage, but if you factor estimated absence days into your business plan, you’ll be financially covered in either scenario.
If you end up taking less time off than you initially planned, or you managed to stay free of illness for the whole year, you’ll be left with extra money which can be used towards a trip abroad next time instead. Win-win.
Keep calm with client management
When you’re making plans to expand, be sure you have enough long-term, well-paying clients tied into contracts. If you move too quickly you risk falling behind on finances, and then backing yourself into a corner as you’re forced to say yes to every possible lead. This inevitably creates an overstuffed schedule full of lower-paying clients, meaning you have no time left to continue your expansion plans anyway.
Draw up a realistic and achievable income goal based on your current crop of clients, and then add 25% to this figure to account for any dry spells that might happen at some point during the financial year.
As you continue to gain a reputation in your industry as a freelancer or contractor, you need to begin thinking of yourself as a small business rather than a lone wolf. And every small business must have a financially structured business plan. There’s a lot to consider along the way, and Bright Ideas Accountancy can explain and handle everything for you. Give us a call on 01061 451 3940 or email info@biaccountancy.com to find out more.
