Write a business plan and track it

How do you know of you’re being successful in business?

Kaplan and Norton, in their seminal business book The Balanced Scorecard [Affiliate Link], said that:

…organisations are operating in complex environments so an accurate understanding of their goals and the methods for attaining those goals is vital.

In other words, in order to be successful you have to measure your current position, set goals and then track your performance against those goals. The trouble is that most journalists simply don’t have experience in writing a plan like this and managing our work to the plan. However, it’s not actually that difficult to write and work to.

Also, if you have a written plan and track your progress, when you need to go to the bank for a funding injection to expand your business, you’ll have documentary proof of your ability to successfully run a business.

Disclaimer: I’m not an accountant or financial planner. The views here are my opinions and you should consult with your own accountant or accredited financial specialist for specific advice.

Financials

As a journalist, it’s important to know what sorts of goals to set. The obvious place to start is money. You probably have a good idea of your annual or monthly income and you should know what your average monthly expenses are. If you don’t know those yet, grab your last few bank statements and make a list of income and expenses.

Once you’ve decided on those goals write them down. I suggest that you put them in two places. Firstly, in document where you detail all the elements of your business plan. There, you can document the detail of what you’re aiming for. Secondly, one the whiteboard or noticeboard you have on your office wall. When it’s in front of you all the time you’ll stay focussed on the goal. If you’re like me, you’ll even feel a little guilty when you don’t hit the target.

On the expenses side of the ledger, you should aim to minimise your spending – particularly when you first get started. It might be exciting to see some money rolling in when you start out but you need to make sure you keep money aside for operating expenses and taxes. In Australia, a rule of thumb is to put aside a third of all income for taxes.

Now, work out how much  money you’d like to earn. I suggest that you work on monthly goals set three target levels.

  • Level 1: What you need to get by with a little bit of headroom.
  • Level 2: What you need plus a generous margin of around 30% so that you can build reserves for the quieter months.
  • Level 3: The BHAG – big, hairy, audacious goal. Something like double the income level you need.

Clients

In order to make some money you need clients. Every freelancer knows that you’re only a phone call or email away from losing a client. When I started out, I managed to land a semi-regular gig writing for a major daily newspaper. However, after about three months the editor who was commissioning my work went freelance. All that work I’d been getting suddenly dried up. Fortunately, I had enough other work to keep me afloat.

Set a goal to increase the number of clients you have so that if any one client drops you it won’t mean financial ruin. In other words – don’t put all your earning eggs in one basket.

Look at how many active clients you have at the moment. Set a goal to add new clients regularly and try to diversify the sorts of clients you have so that if one sector of clients quietens down, another may increase to cover. For example, during the recent global financial crisis, many magazines and newspapers around the world, that paid flat rates for stories, closed their doors. However, that opened the door with online publications that paid writers based on the site traffic they generated.

Also, for good writers, there’s always some corporate writing around. These are great clients as they tend to pay for the value you add rather than the number of words you write. And they rarely shy away from rates publishers would never pay. Whenever I work for a corporate client I end up wishing I charged a little more as they’ve never flinched at rates like $120AUD per hour.

Time

How much time do you put into developing your business and marketing yourself? How are you going to get those clients unless you dedicate time and energy. Set a goal to spend a specific part of every week to develop new skills and to market your business.

Writing the plan

A quick Google search for “how to write a business plan” will bring up thousands of different templates. All have a set of common elements.

  • Executive Summary: This is the highlight package of the plan. If a reader hasn’t the time to review the detail of your plan, the Executive Summary will provide them with enough information to get a good overview of your business. Although this the first item in the document, it’s probably the last part you’ll write.
  • Summary of your Business: This is simply a list of the products and services you’ll be selling. It should also document what it is that makes your business different to all the other ones like it. As a freelancer – what will you bring to your clients that your competition can;t or doesn’t?
  • Start-up Financials: If you’re just starting out, making a list of your starting expenses is important. This might include the cost of setting up an office (furniture, computer, phones, etc), business establishment expenses (registration of your business name, professional services for getting you organised with the tax department) and whatever else you need.
  • Projected cash flow: What is projected income? This should be mapped out month-by-month for a year and take into account seasonal slowdowns (it’s doubtful that your January income will be as great as December or February for example), clients that work quarterly rather than monthly publications and so forth.
  • Projected expenses: What will you have to spend money on each month. This will allow you, with the projected cash flow to estimate your profit and loss (P and L in accountant-speak).
  • Goals: Write down your business’s goals and set milestones to achieving those goals. For example, if you plan to gain six new clients for the year and increase your monthly profit by 25% by the end of the year, it’s unlikely that you’ll achieve all that in a week. Set some achievable milestones along the way like “Spend two hours per week contacting potential new clients” or “Reduce monthly expenses by using the train instead of driving”.

So, that’s a start. Once you’ve written down what you expect to achieve and set some milestones along the way you’ll be well on the way to knowing if you’re succeeding as a freelancer. And if you’re not – having a plan that you’re measuring yourself against will help you work out what you need to do to nail the BHAG!

Have you created a plan for your business? Is there something you think should be added to this plan? Share your thoughts in the comments.

So you want to be a journalist

Many people I know think I’m the luckiest guy around. I have an enjoyable job, get to play with cool gadgets, work from home a lot of the time and get to travel from time to time.

The respected journalist Jerry Pournelle (one of the writers who inspired me to write about tech) wrote a long piece on his blog (that started in the days before the word “blog” existed!) about how to get his job.

The essay starts with this caution

it’s easy to be an author, whether of fiction or nonfiction, and it’s a pleasant profession. Fiction authors go about making speeches and signing books. Computer authors go to computer shows and then come home to open boxes of new equipment and software, and play with the new stuff until they tire of it. It’s nice work if you can get it.

The problem is that no one pays you to be an author.

So, how do you become a journalist? It’s a hard road requiring skill, opportunity and courage but it is possible to make a living from words.

For me, it started with me writing for free for newsletters and user group communities. I also had the benefit of working in a job where I had to write a lot of documentation. That was great training as it forced me to write with clarity.

After a while, Jason Dunn was looking contributors to contribute product reviews to PocketPC Thoughts. At the time, it was a great way for me to work within an editorial team and to get some exposure. That brings me one of the few bits of advice I think I can offer to people trying to get into professional (my definition of professional means “paid”) writing.

Write a lot, make it public and learn from the comments and criticism.

Part or writing for that community involved getting to know lots of people and receiving their feedback. It also gave me confidence in my work and that, in turn, gave me confidence to approach editors and offer my services. Also, it turned out that one of the people who was Jenneth Orantia – a well known member of the mobile device community and a freelance contributor to a local magazine, APC.

When Jenneth needed someone to fill in for her when she was going overseas she asked me if I was free and put me in contact with the editor, David Flynn (the founder and editor of Australian Business Traveller). I wrote that first story – a product review of a couple of iPaq PDAs – and was fortunate that David was willing to take the time to teach me a few things. One of the pieces of advice he gave, and I think is worth passing on is:

The reader of your story may have spent their $10 buying the mag just for your article. Make sure they think it was worth the money.

Even though David wasn’t the editor for much longer, the relationship with the publication remained and I wrote for the magazine regularly for another three years or so. That ongoing role lead me to two other significant elements to my career as a writer. Firstly, it gave me the confidence to pitch my work to other editors as I now had a track record of delivering content that was on time and met the editor’s brief. Secondly, it opened the door to meeting other journalists and that has led me to an extensive professional network.

What’s interesting about the Australian tech media industry is that while we all compete for stories and to be first with a story we also share resources like contacts, we pass work to each other when we’re overloaded. So we’re cooperative and competitive.

My last piece of advice for the aspiring freelancer is that your primary job is to make your editor’s life easy. That means delivering your work on time and on the brief. Sometimes it will mean working to shorter than usual deadlines as you might choose to accept work that was planned for in-house writers but couldn’t be done for some reason. And, if an editor asks you to do a job and you can’t  – don’t just say no straight away. See if you can find someone else who can do it and refer the editor  to that other writer. That way you’re still solving the editor’s problem.

One last thing – self-employed writers often call themselves freelance journalists. I’ve come to the realisation over the last few months since I went 100% self-employed that the term freelance journalist is not an accurate description of what I do.

I’m actually a small business that sells the ability to take ideas and complex concepts and present them to an audience. Being a self employed freelancer means that you need to learn some basic business operations. You’ll need to get a business person’s understanding of maintaining your accounts, some basic marketing skills and great time management skills. Staff writers usually have all of this done for them. Freelancers need to do all of those things or make enough money to pay someone to do them.

Of course, a more cynical view is beautifully captured in this video.