Everyday Cool Tips: From Business Plan to Business Planning

Thursday, August 16, 2012

From Business Plan to Business Planning

As freelancers, we usually find ourselves neck deep in paperwork: invoices, project proposals for prospective clients, spreadsheets of to-do lists, and tax forms. The problem is that as we get buried under all this paperwork and try to wrestle all the administrative matters while juggling actual work, we often forget the one important document: our business plan.

From Business Plan to Business Planning

You might think that your business plan is just the document you draw up at the beginning when you’re launching your freelance career. But the truth is this: your business plan is a living, breathing document. When was the last time you updated it?

Consider this new-and-improved version of your business plan as your business planning document. This business plan is a little different.

You’re probably familiar with your financial documents: profit/loss statements, balance sheets, and cash-flow reports. Whether or not you produce these yourself or hire an accountant to produce them, it’s important to understand that these documents are only snapshots in time.

While they are critical for any freelance business, they don’t really provide the information on what you should be doing. In other words, they force you to look backwards not forwards. A cash-flow report won’t prod you in any meaningful way to make key strategic decisions.

Many business books suggest analyzing reams of data and financial information. The problem is that all this data can be overwhelming for the average freelancer or small shop. The goal is to come up with a more user-friendly document: a plan that fits on 1-2 pages and can give you, at a glance, the important information that can help you make the critical business decisions.

One Page Business Planning Document

Here are key sections to this one-page business plan:

Mission: At the bottom of the page, summarize your mission as a business and your personal vision. You may have a broad mandate, but don’t forget that you’re constantly evolving as a freelancer.

What type of clients would you like to attract more of? What type of projects do you enjoy? Over time, you may find yourself moving toward a particular niche. For example, if you’re an editor, you may find that you enjoy editing academic papers over commercial copy. Reflect this in your updated mission statement.
Success factors: Above your mission, indicate the “success factors” in your business. For example, “Learn Adobe InDesign”, “Develop contacts at the chamber of commerce”, or “Hire a managing editor”. In a column next to each success factor indicate the actual (where you are now on this factors) and target (where you want to be). The last column should be the actions you’ve taken.
Sources of revenue: The next section above your success factors should be your “sources of revenue.” For each one indicate the actual and target.
Financial information: Finally, put those financial snapshots to work. In the final section at the top of your one-page plan, indicate your revenues, profits, and cash reserves. Indicate the actuals and your year-end goals.

This is your living document. Update it on a quarterly basis and mull it over every month to identify what needs work and monitor actions taken and their results. Hopefully, this approach lets you map out what’s working and what’s not in a more consistent way.