Business planning folder: Business models for freelancers

Choose a Business Model and Make a Plan for Your Freelancing Business

When I was about 22 years old, I went to the dentist after several years of having no dental insurance only to find out I had five cavities. I was truly ashamed of myself and vowed to start taking my dental hygiene more seriously. I already brushed my teeth in the morning and at night, so I started bringing my toothbrush in to work to brush on my dinner break. My co-workers thought it was weird, but I was super proud of myself for being so responsible.

After six months of extreme tooth brushing, I went back for another checkup and was utterly devastated to find out I had ANOTHER cavity. I was shocked.

“How is this possible?” I asked my dentist.

“When is the last time you flossed?” he shot back quickly.

“Er…” I stammered.

“How much soda do you drink?” the grilling continued.

“Um, not a lot,” I lied.

After an uncomfortable interrogation session with my dentist, it became clear why I had more teeth with cavities than teeth without. I was flossing my teeth about as often as I was paying my cable bill. Even worse, I was drinking about a liter of Coca-Cola Classic a day. What can I say, I needed the sugar to get me through second shift!

So what does my embarrassing dental hygiene have to do with freelancing? Well, I’ll tell you.

All too often when a freelancer isn’t make enough money, they turn to the internet or family or friends or a guru to give them a solution. And most of the time, the solution people come back with is “just raise your prices!”

Sometimes raising your prices IS the solution. But more often when your business is suffering, there are other underlying problems that need to be addressed before you can make more money and truly be successful.

Maybe your flossing is the fact that you haven’t paid your taxes or reconciled your books in a year. Maybe your sugary beverage is spending half the day toggling between social media accounts to see how many people liked your latest post.

Diagnosing your business problems isn’t always easy, especially as a solopreneur. Sometimes your ego protects you from identifying and admitting your weaknesses. And other times, the opposite is true. You don’t recognize your true gifts—the things that come easy to you—because you assume everyone has those same strengths. It’s hard to fairly assess your own situation.

We highly recommend workshopping your problems with partners, your freelancer community, business coaches and mentors. But sometimes, the solution to your problems can be found just by re-assessing your business plan.

Oh wait, what’s that? You don’t have a business plan?

Gasp! The horror! The shame!

Just kidding, most freelancers don’t have a business plan.

Business plans are absolutely essential for people who are applying for loans or who need to entice investors. Those folks need a solid business plan in place to prove they have done some serious homework in order to get others to give them money.

But if you’re “bootstrapping” your business like most of us, you may very well be able to get by just fine without a plan.

The key phrase here is “just fine.”

The problem with operating a business without a proper plan in place is you’re more likely to suffer from “shiny object syndrome.” Without a business plan, you’ll chase ideas around like a cat in a room full of laser pointers without fully thinking anything through or knowing where to start.

Freelancers tend to be “idea people,” and by nature, they are both ambitious and creative. As time passes, you’ll think of other services or products you could sell or even other businesses you could start. You’ll get excited about a new trend or new tool and take action without taking the time to analyze how this new idea fits into your current business and if it is really the best use of your time and resources. You’ll start straying from your core products and services and spread yourself and your resources too thin. And eventually you’ll find yourself with either an unwieldy business where you’re not doing any one thing really well or multiple businesses that aren’t as profitable as they could be.

This is a classic freelancer problem. And it really boils down to a lack of focus.

Following a business plan—or a business model—is the antidote to shiny object syndrome. Without a plan, your business is just a random set of ideas and actions. And this will never be as profitable or effective as a business that starts with a plan.

A business plan forces you to come up with—and write down—your goals, your tactics and your blueprint of how you will actually make money. And it holds you accountable and keeps you focused.

I believe every business could use a plan, but, of course, not every freelancer wants to write a 40-page document. Who has the time? That’s why I’m such a big fan of the Business Model Canvas. It’s a quick and dirty business plan to help focus your business goals into a manageable, itty bitty business plan.

The Business Model Canvas is a lean startup technique for developing a new business or revamping an existing business model. The Business Model Canvas was created by Alexander Osterwalder of Strategyzer.

Because it is limited in space, you are forced to focus up (and disregard some of the dozens of ideas floating around in your head). It will give you a high-level overview of your business. What are you selling? Who are you selling it to? How much does it cost to offer those products and services? And how will you make money?

The best part is even though it takes less than an hour to fill out, in many ways it’s more valuable than a full business plan. You can hang it on your wall to reference it regularly. You can show it to a friend, partner, client or potential investor, and they can quickly understand what makes your business tick. And you can create a business model for all of your amazing ideas before you jump in the deep end. Because it is so compact, you can easily compare models to determine what seems more feasible, profitable or enjoyable (just look in the Key Activities section to see how you’ll be spending your time to determine what business idea is more fun!)

Freelancing without a plan is like parachuting naked. It might feel amazing and fancy free at first, but eventually your balls (or other loose skin) will stretch so far they slap you in the face. And no one wants that.

Now, before you dive into your own business planning, read up on some of the most common types of Business Models used by company’s you’ve heard of. You will better understand how just by having a different business model you can totally disrupt an industry when you are selling essentially the exact same products or services as everyone else. For example, Netflix was selling movies—nothing new there. It was their subscription business model that was so different and so much more appealing and profitable that they essentially put Blockbuster out of business. Same services and products. Different model.

The same thing goes for your freelancing business. All too often, freelancers quit their job without a plan and go straight to oDesk or Upwork to start scrounging for clients. A few months in, they are wondering why it’s so hard to find work and they haven’t made any money.

The reason is they haven’t thought through their business plan or found a model that works for them. You might even feel like quitting and going back to work for someone else, but you probably just need to take some time to establish a plan and find a business model that works for you.

Read more: 16 Business Models for Freelancers & Creatives

 

 

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