When you’re planning to make the change to being your own boss it’s tempting to spend a lot of time working out how to make the shift without actually making the shift. There’s a name for that – paralysis by analysis. I thought long and hard about making the change last year. I was coming off a 10 year stint at the same company and really needed to find something new to do. After close to 20 years working for other people I figured that I could either try going solo or die wondering.
A post at Freelance Folder talks about how freelancers don’t need Business Plans. I’ve never seen a business plan that bore any resemblance to reality. It’s typically a mix between guesswork and telling someone (usually a bank manager) what they want to hear. I prefer a different approach.
1. Set some financial goals
I suggest that you need to set three different types of goals; a break even goal (what you need to survive), a comfort goal (what you need to have some fun) and the BHAG – a big hairy audacious goal. This is the one that lets you take an overseas holiday with the family or buy a nice car or indulge in some other luxury item.
Set the goals and write them somewhere you can see them. I have them on my whiteboard.
2. Work out how much you need to earn per day to hit the financial goal
If you need to earn $104,000 per year to reach a goal you might think that’s $2000 per week or $400 per day. You’d be wrong. In Australia, full time employees are entitled to 10 paid sick days per year and four weeks of annual leave. So, instead of having 52 weeks to make your money, you have 46.
That means you need $2260 per week or $450 per day.
3. Try not to start out with no money or clients
This is the tough one. If you’ve been working full-time, there’s not much chance that you’ll have full client roster that can pay all your bills on day one. That means you’ll either need a partner who can cover the bills or some money in the bank. While you might not be able to plan what will happen to your business in the first few months, you should at least plan to be able to eat.
4. Don’t blindly accept every job that comes your way
This is one of the tough ones. It might be tempting to accept every job that comes your way no matter how much it pays. Remember your daily earning goals and work to them. If a $200 job comes in and it’s going to take three days – you’ll want to consider whether it really worth accepting. By accepting low value jobs you’ll establish yourself as a low value product. However, if the $200 job comes in and you can do it in a couple of hours then that might be a good option.
Remember – while your clients will measure your value in words or images, you need to charge yourself out by your time.
How do you plan? Let me know in your comments.