Do You Need a Business Plan?

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The short answer according to Rachel Lawley: yes. (See previous post for more details on Lawley.)

A good business plan will help you identify in detail the goals, purpose and strategies for your company.

“A business plan is the medium that forces current and prospective business owners to truly question their business, what and who will affect it, and what and who it will have an effect on,” she said.

As for the freelancer, consultant and contract employee, Lawley said you don’t necessarily need a complete business plan, but they are useful.

“Consider this, would you work for a company where they didn’t provide you with a description of your job, or offer you regular performance reviews?” she said.

Lawley added that creating a solid business plan early on will give you a solid foundation, so you can have confidence in your goals and in yourself.

“You can continue to adjust your plan, based on how your services or clients develop,” she said. “But it’s important to have that plan, to have a mission to stay focused on. Otherwise, you might find yourself accepting clients who need work that you know how to do, but hate doing, just for the money. That works short-term, but it diverts your attention away from your real goals.”

A business plan is necessary if you need investors or a business partner. This eliminates confusion and ensures you and your team are working in unison.

“When the company is still fresh and ideas are flying around, sit down with your partner (maybe with a mediator sometimes) and put ‘pen to paper’ about what your goals are, who you want your clients to be, where you want to be in a year, two years, five years,” Lawley said.

But the bottom line is, there is no best time to create a business plan.

“If you can draft it while the company is still in the idea stages, that’s perfect,” Lawley said. “But it isn’t always that simple. Maybe you start out casual, either solo or with a business partner. But by the end of the first six months to a year, you should write your plan, before you have any misunderstandings, and especially before you miss out on any great opportunities.”

For freelancers, the best time might just be when your business develops and takes on a new purpose.

As you well know, Time is Money

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How do you determine what your time is worth? How about your expertise? Knowledge? Advice? We all give our advice and suggestions to friends and family for free. Is there a right time to stop this practice (maybe not for your family, but friends and friends of friends)?

Kate Ottavio has not one, but two great posts on the topic at PR Breakfast Club: Give it away… For Free! and Bring on the money! Working for free… (both excellent reads).

She makes an excellent point that “one will be asking us for our advice when we‘re out of a job or have closed shop.” Which is true.

I think there comes a time in every professional’s life where they want to make money and when your time becomes even more valuable.

If you aren’t comfortable quoting your friend your hourly rate, see if there is something you can barter for. Maybe your friend is an excellent web page designer and you are a great copy editor. Offer to edit his next term paper in exchange for helping you with your website. There is always something.

I know I’ve said it before, but don’t sell yourself short either. Make your projects worth your time and don’t be afraid to say no when the project isn’t worth your time. Obviously, try to leave the door open in case that changes, but don’t just accept a project to accept it or because you think there isn’t anything better out there. There will be.

Dollars and Cents

Money. Just think about it for a moment. It’s practically a basic necessity. The thought of it can stir an abundance of emotions or even start an argument.

Now, think about what you’re worth monetarily. Your time. Your expertise. Your knowledge. You. Can you put a price on that? For those of us who freelance, moonlight, help friends, etc. the answer is yes, I have to put a dollar amount on myself and time every day.

Everyone is looking for a magic number. Ask for too much you risk offending and scaring away the potential client. Ask for too little and you’re selling yourself and your skills short. A quick Google search reveals tons of formulas you can use to calculate what you should charge. The truth is there is no magic number. What is right for you might not easily fit into a formula. How do you choose? Is it really just a trial and error? I and lots of other smart people who have written about this think the answer is no.

Research your particular area. Your community. What are others charging? Individuals and agencies. Choose whether you are going to bill hourly or per project. However, don’t forget that if you choose by project you may spend more time than you originally thought you would. Decide what you’re going to offer and break it down. Don’t sell yourself short. You work hard and provide the best results you can. The bottom line is everyone has to earn money. To earn money takes time and your time is valuable!

Now for a full disclaimer, I’ve not listened to this advice and am kicking myself for it. The kicks, plus knowing that I will never be able to get my full worth from this client in the future (should there be a future) sucks. I’ve learned the hard way. I hope you don’t have to.