17 Tips for Effective Freelance Business Planning

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Freelancing can be a tough business, regardless of in which field you are attempting to freelance. Like a regular business, there are a few dos and don’ts to keep in mind; some of these tips can make your business venture a smoother transition, and some will just make your life easier in the long run. The following list are seventeen things to avoid doing prior to starting freelancing, which will make for a much more effective business endeavor.

1. Do not set up a corporation

It will not do you any good to incorporate your business. The only thing it will realistically result in is more time spent trying to fill out extra tax forms and to maintain numerous additional records. The majority of small businesses owners are sole proprietors, and they are completely content with their increasing bank account. Speaking of which…

2. Do not open a new checking account

Oh, the heresy – the IRS tells you that it is best to maintain a separate business account, and so does your accountant. However, business accounts often come with excessive fees and no other benefits that you don’t already get with your personal account. Do not believe the myths that clients will feel you are unprofessional; in fact, they just might feel even more comfortable paying you.

3. Do not get an expensive accountant

Don’t hire the guy that says you need a separate account. Not to mention, they give you advice that you simply do not need, and they can charge well over $100 for every wasted hour. Taxes can be done at a nearby service for a third of that cost. If you honestly cannot handle the task of bookkeeping yourself, then indulge a little deeper in your own industry – hire a freelance bookkeeper for a quarter of the cost of an accountant.

4. Do not pay an attorney

In a similar vein as the accountant, you simply do not need to pay for an attorney’s advice all the time. However, do attempt to maintain good relations with one in the event that you do end up needing one, though the majority of information you may need to know can be obtained by way of books or the Internet.

5. Do not get a business license

This does not include the necessary permits and licenses you must acquire to legally present your business, so also make sure that you do not fall short on these requirements. However, unless you have a business name and intend to use your given name, chances are you will not need an actual business license. This is yet another form of wasted money and time.

6. Do not buy a logo design

Even if you endeavor to become a freelance graphic designer, you do not need to spend too much time on designing yourself a logo. Alternatively, you might wish to get cheap software to help with design in the event that you lack the necessary skill to use other programs (such as GIMP or Paint.NET), or you can simply pick a good font and use your own name for a logo. This step is often overlooked by many entrepreneurs hoping to come up with the perfect, eye-catching logo to reel folks into their business. Sometimes, it is simply not the answer.

7. Do not write a business plan

Note that this does not say “do not have a plan;” simply avoid writing a business plan. This takes much time to write and chances are great that it will chance the moment you open your doors for the first time. Essentially, it is a waste of time to do something that is not certain and will not ultimately make a difference in your endeavor. If you intend to spend your time doing something, avoid writing a business plan and learn the ways to sell yourself in its stead. After all, it is selling that you are hoping to do. You may opt to do this anyway, but know that it will constantly change.

8. Know how you make money

Discover where your core competencies lie and what you do to make your money. Be able to answer clearly and concisely what you do in less than thirty seconds. Are you selling a product or a service? When you are in the thick of things, remind yourself of your core business.

9. Get your equipment

Make sure that you can perform your job as efficiently as possible. If you know that you will need an office copier, a fax machine and several pieces of software, get those items in the beginning. It will save time trying to scrounge for them when they are absolutely necessary.

10. Get an affordable accountant

Accountants know the ins and outs of corporate tax code. They can show you how your business can get along with the government. An accountant is priceless when deciding whether you wish to create a sole partnership or a LLC.

11. What’s your name?

Come up with a name that describes what you do and catches your attention. Your name shouldn’t be hard to pronounce or spell, yet it should be unique enough to obtain the domain name. Your name should not be confusing or piggyback on another’s brand.

12. Marketing and branding

You know that people don’t immediately run through the door when you declare yourself open for business. You need to create a brand for yourself, then pursue the customers that you wish to reach. Use your friends to receive honest feedback on your ideas.

13. Create a contract

Before you set pen to paper for a client, you need to have the parameters laid down in the form of a contract. The contract will spell out the services that you are willing to do and the number of hours that you are willing to work. This is one of the most important documents in business.

14. Discover your strengths

Examine yourself before you go into business. You want to look for avenues and opportunities which play to your strengths. Examine fields that you enjoy for opportunities. If you love to talk with people rather than sending email, look around for conferences and networking opportunities.

15. Determine your hourly rate

How much money do you need to make per hour to continue living in your lifestyle? Find out your average monthly expenses and then divide that by the numbers of days in a month that you plan to work. Divide that further by the number of hours that you plan to work in a day. That number is a factor in determining your rates.

16. Learn to track your time

Hours can pass while you are staring at a computer screen. Realize that all of your work is a learning process. You might believe that a job will take a couple of hours, but sometimes it can take the entire day. Track the time that you spend on your work so that you can adjust your prices and bill accordingly.

17. Run the numbers

If you are an article writer, how long does it take to write your standard article? How long does it take you to rewrite an article? Have a realistic idea of how much you can do in a day. How much do you need to make in a day? Know your capabilities to form realistic expectations.

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Comments

  1. Nomeni says

    That are some pretty good tips, but I don’t understand this
    point.
    3. Do not get an accountant
    and on point 10 says.
    10 Get an accountant.
    -_- so what is it?

    • says

      @Nomeni, He says don’t get an expensive accountant. If you are pulling in any type of legitimate revenue you should have a Tax accountant at the very least! I totally disagree with not getting a business checking account, its not safe or smart to not have one. Your business account could be as simple as a personal free checking account…its smart to keep it separate for many reasons. Also if you are doing work with potential liability issues an LLC is a really REALLY smart idea. Unless you don’t care about your credit.

      I’d say that most of his advice is good but the financial advice is questionable… This isn’t uncommon for artistic types because Accounting and Art rarely get along well. Finally if any contract is substantial you should talk to a lawyer to make you are covered. I have a line in my head currently for contracts I would consider large enough to clear through lawyers. This is in spite of the fact that I am doing almost 100% bartering of services right now.

  2. says

    It would be nice if you really drove the point harder that your recommendations are for FREELANCE work. Because frankly, just about everything you’ve written is backwards. You’ll probably receive a 1099 and their are limits on the revenue before tax is due. Even freelancers have tax obligations and maintaining accurate records essential. And, if you had consulted a lawyer and CPA you would have learned the benefits of protecting your personal assets from the business by incorporating your business.

  3. James Adams says

    Hi there, thanks for taking a look at the article.

    Nomeni-I apologise if my points were unclear! I guess I was a bit too vague, but what I meant is that it’s wise to not have an overly expensive accountant helping you out, and you could easily find cheaper services elsewhere. An accountant CAN be valuable however, so it’s always something to consider as their expertise really can come in handy.

  4. says

    As a graphic design, #6 makes me sad. :(

    But seriously, a logo is a large part of #12: Marketing and Branding. Can you do without? Sure. But a consistent and clean, professional looking logo communicates a level of competence and implied superiority that is otherwise exhausting to convey. But this is butcher here trying to sell you a steak, so you can take my opinion with a grain of salt.

    #2 is pretty timely. I had just got my business license (the #5 thing you say not to do but in Ontario to get a “Master Business License” for a Sole Proprietorship online costs $60 and takes less than 10 minutes), and I was unsure whether I should open a separate bank account for my business but I think I probably won’t. If anything I might just add a savings account to my current chequing account and just use that to separate my monies. The one thing I’m unsure about is now that I have a business license, can I show that to my bank and cash cheques made out to my business. I’ve had issues in the past where I couldn’t cash a cheque because it was to a business (my business, “Ulrich Design”) that didn’t actually exist. Can you spread any light on this?

    Great article. I’ve bookmarked it and plan to come back from time to time. Thanks! :)

  5. says

    Um. What? Some of these later ideas are valid, but most of the first ones go against everything I believe you should do to set yourself up to win.

    I’ve got a series of articles about starting your own business that disagree with many of your points here: http://aptdesignonline.com/young-business-part-1

    These seem like ideas for someone who wants to do freelancing on the side and not ever grow or make a full living off of it. Which, it looks like the author is doing here – writing a few design articles while selling print cartridges.

    • says

      @Brad,
      Point well taken. I agree with you entirely. The filtering process was a little flawed in this instance and we’re working to make sure an article of this caliber never slips through the cracks again.

      • Amanda says

        @Preston D Lee, I would really love to see you write a re-do of this advice fromyour perspective taking into account this article. I would be interested to hear the advice someone who has been immensely successful in the design industry has to offer. I think since sometimes it is hard to balance being an artist and also a business owner and advice that speaks to both is always great.

  6. says

    I have to agree with some of the comments made here……some of the points….mmmm…well, lets just say they don’t apply for everyone. Point 1-7 only apply for certain business. For example, if you are a freelance designer, your logo design is very important because it shows what you can do. So, if you have a boring normal logo…guess what? How can a client count on you to create something good for them?

    Anyway, the point is….there are some great tips in this article, its up to us to take the ones that apply to us.

  7. says

    Warning, warning, warning.
    To those who didn’t catch the mistakes. You must do the following to be a reputable selfsustaining business.

    1. Separate your personal & business I.D. & money.

    2. Business license.

    3. Know your zoning, you may be able to start from your home.

    4. You ARE the professional, do your own PROFESSIONAL grade business I.D. (Logo, card, letterhead, envelope, possible packaging look, Obviously only Pantone colors)

    5. Yes do a business plan. I did 20 years in the U.S. Navy & those that fail to plan plan to fail. Make your roadmap & monitor the journey with updates.

    6. I’m spoiled, as my wife is capable of doing my finances, but if you don’t know someone it’s worth the cost.

    7. If you are capable of going Gov’t contractor, like me, the there are other concerns to know. If invited, I can write about that.

    It seems the person that wrote the article we are responding to was either, lucky & didn’t run into the needs, was intentionally attempting to thin the herd & get rif of competition on technicalities, or by the looks of the article was NOT that smart & truly believed the BAD gouge that was being put out.

    Charles R. Williamson Jr.
    EW1(SW/MTS) USN(Ret.)
    AF&AM (Warwick Lodge #336)

    CR.DESIGN.Solutions@gmail.com

  8. Lisa Reed says

    After 30 years of freelancing, I believe these tips are on-target. Since freelancing usually deals with creative services and products, there is the potential for many variables, creating situations requiring counterintuitive management. In defense of this savvy article, I would like to make the following comments:
    #1. Liability is usually not a concern, especially if your understanding with the client is sound #13.
    #2. If you are people first and business second, most will write the checks to you. It doesn’t matter how they are processed at the bank if you have your recordkeeping set up right at home. Of course, financial instruments are being reinvented with technology.
    #3. An accountant is different from a bookkeeper. The difference is determined by the volume and complexity of the “business” you are conducting. Most freelancers should learn to do their own bookkeeping first and then hand it off to a bookkeeper if things really pick up. At the end of the year that bookkeeping can be handed off to a tax preparer (who may or may not be an accountant for higher end businesses.)
    #4. Educate yourself on copyrights, business documents and anything else related to your business. Once established, there really isn’t much legal trouble a one person, sole proprietorship can get into.
    #5. Agree with this. It can be as simple as registering for a DBA. Again, if you are providing services, it is different from running a business with inventory, employees, office/manufacturing buildings etc.
    #6 I think he means, do not depend on a flashy logo to generate your reputation. The clients are interested in the product/service you provide for them. Most designers will not be able to resist creating one for themselves though; might as well have one to plug into documents and packaging if you feel like it.
    #7. A business plan is usually constructed to present to a bank to ask for loans. This is not what you want. You want a “services” plan including a place to put ideas for marketing and financial strategies; paragraphs to use for press releases, gallery brochures or articles etc. All this will be creative and not in the same spirit as a business seeking capital support. This is more for yourself.
    #8. Plug this into your “business plan” section on finances. This won’t necessarily list potential ways of generating revenue, but also ways you have been able to generate revenue. This will not be used to ask for funding from a bank, but to help you remember where you can find clients and cash. Don’t forget to count all forms of resources including bartering, skimping, paring down etc. (#9)
    #10 An affordable accountant is you, a bookkeeper if necessary, and a tax preparer. Think shoestring business to support doing what you love (and are strong at.)

    #11. Google your name. If thousands of people with the same name come up, you better be pretty good at SEO. You’re and artist, you can afford a unique name.
    #12. Here is where you may want to spend some money on a pro. It is sometimes awkward to sell yourself.
    #13. Start with a gentleman’s agreement approach, but know your bottom line financially. Structure your interactions to be a simple as possible. No one is going to deal with “small print” these days. Hey, you’re a designer, making things simple is what you’re hired to do.
    #14. Your strengths are usually your labors of love.
    #15/16/17 I disagree with these: when selling anything start first with what the market is likely to bear; then figure out how you can supply it at a lower cost, thereby realizing a profit. Be a professional, and know how to whip stuff off. Have an inventory of ideas you can use in a flash, keeping your time and aggravation to a minimum (you may have to keep a day job along with this.)
    Of course the nice thing about a freelance business is that you can do the business part creatively as well.

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