Business plans, setting goals and getting things done

Setting a business plan sounds smart. Perhaps it’s not.

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.

Who is your customer – really?

Knowing who the decision makers are is an important part of business. You need to know who will be signing your contracts when you’re negotiating with a new client.

When you’re making your first deals it’s easy to get excited when you get a nibble. But is the person you’re negotiating with really your customer. Is the person you’re talking to really going to make the decision to hire you?

My friend Valerie recently told the story of her interaction with a real estate agent.

So when I walked up to the 10th inspection (this time with partner), I was ready for the usual drill. The real estate agent looked about 23 years old, was well groomed (they all are), and had his clipboard at the ready. He smiled as we approached and lifted his pen, ready to take down our details. As I opened my mouth to tell the real estate agent (we’ll call him Jason) my name, he held his hand out to my partner, introduced himself and asked my partner his name.

Well, that’s ok. I don’t mind coming second in the introduction stakes. There’s no hierarchy here. After all, he can’t shake both our hands at the same time.

So I waited

And waited

The mistake the real estate agent made was that he thought the man was the decision maker in this transaction. In real estate, it’s often the woman who is more influential in the transaction.

When we meet with a client it’s important to understand who were are actually dealing with. Is the person we’re talking with going to be able to seal the deal and, importantly, authorise our invoices for payment.

At the first meeting, it’s important to know who you’re really talking to. The trick is to learn that without being too pushy. After all, the person you’re talking to might not be a decision maker but could be influential. Asking questions about the process for getting the contract is a good way of finding out who will make the decisions without insulting the person you’re speaking with.

Also, do some research. It’s amazing what you can learn from company websites. Many companies make available their tendering processes. It’s worth checking this so that you understand how the potential client makes decisions.

How do you know if you’re negotiating with the right person? What are your tips for making sure you negotiate with the right person? Let me know in the comments.

Don’t work for nothing – no matter what

Here’s a quote from Australia’s richest person, Frank Lowy.

“I don’t work for nothing. I’m entitled to get paid.”

If making money is one of your working goals, then I think Lowy’s advice is worth remembering. Clearly, giving freebies isn’t a path to financial independence. When you work for free (volunteer, charitable work is the obvious exception), you’re telling the world what the value of your work is.

(Quote source: The Age, 1 January 2011 – Australia’s Year in Quotes, Image source: SydWalker.info)