A business plan is a document that you create, either by yourself or with help from others. It lays out all of the goals that you have for your freelance business for the next three to five years. Those goals include your financial projections. But, in addition to writing down your goals, your business plan is also meant to serve as an outline for how you intend on achieving those goals.
Starting your business without a plan would be a lot like going on a long road trip without a navigation app and road map. It’s just not smart. And you could end up lost along the way.
Below is some information on why a business plan is so important, and we’ve also provided some easy steps that you can follow when you are ready to write one. Bear in mind that, although we’ve made every effort to ensure that this information is accurate and up-to-date, it doesn’t constitute legal advice and shouldn’t be considered a substitute for legal advice. Always consult with your attorney if you have any questions regarding your business.
- The Benefits of Having a Business Plan in Place
- The Contents of a Business Plan
- How to Write Your Business Plan
- Get Extra Help with Planning Your Business
- Don’t Neglect the Importance of a Business Plan
The simple act of writing a great business plan can increase your odds of success as a freelancer. It’s true!
Your business plan can help you:
- Determine whether, and when, your business will become profitable
- Estimate your startup costs and how much money you’ll need to borrow and/or obtain from investors
- Estimate the revenue you expect to earn during the first three to five years
- Devise effective marketing strategies
- Identify competitors
- Anticipate potential problems
Sounds pretty good, right? See how important this plan really is?
Pro tip: If you need to raise money from investors, or you just want to get a bank loan, having a detailed, formal business plan is going to be a must. That’s because you have to show investors your plan in order to convince them that your business is worth their investment. Convincing them to give you their money is certainly tough, but a business plan can be an invaluable tool that could help you succeed.
Pro tip 2: Not aiming to raise outside funding? Then you might still need a formal business plan, but it can be a much shorter mini-plan, which is also referred to as a lean startup plan. Basically, even if you never show your plan to anyone, it will still help you by forcing you to think objectively about your goals and how you’ll achieve them.
Now that you know a few of the reasons why you need a business plan, it’s time to cover what goes into it. Basically, there’s no single best way to write your plan, but most plans will contain the following:
The most important section of your plan!
Here’s the truth: many people will only read this summary and nothing else.
Your executive summary should be no more than one page long. It’s the written equivalent of the elevator pitch for your business. Make it interesting, and be concise!
To break it all down, your first paragraph should introduce your business, including your business name, a description of the products and/or services you plan to sell, and how your business will meet the needs of clients/customers.
Additional paragraphs should summarize the key points about your business that are covered in greater detail in other sections of your plan. This would include projected sales and profits, profitability, and keys to success. Also, if you have a mission statement, include it here.
Tip: Even though this will be the first thing in your business plan, it’s often best to write it last.
Description of Business
This is a high-level narrative overview of your business. What does that mean? Well, the goal here is to show that selling your product or service can definitely be a viable business opportunity. After all, a lot of people have what seem like good business ideas, but those ideas just don’t translate into reality and they end up failing. You need to prove that your idea can be turned into an actual business that will survive.
Here’s what you should briefly cover in this section:
- The owner(s) of the business
- The legal organization of the business (sole proprietorship, LLC, S corporation, corporation)
- The location of the business (if you haven’t chosen one yet, list the criteria for choosing a location)
- The target clients or customers for the business
- The background or experience that will help your business succeed
Remember, these topics will be covered in greater detail in subsequent sections of your plan, so you don’t have to go into too many specifics just yet.
Management and Organization
In this section, you’ll cover the following:
- How your business is legally organized
- Who’s working in this business (is it just you, or do you have independent contractors or employees to help?)
- Your qualifications to successfully operate your business
- The qualifications of any other members of your team
Here’s where you should:
- Define your target market of consumers
- Project your market share
- Identify any direct or indirect competitors
- Discuss how you’ll price your products or services
- Identify communications, sales, and distribution channels
In this section, you’ll show how you intend to market your products or services. Be sure to explain the following:
- The types of sales efforts you’ll try, such as advertising, direct mail, and social media
- How you’ll set your marketing budget
- How you’ll track the results of your efforts
- How you’ll set sales targets and the deadlines for meeting those targets
This is the section that will discuss when your business will end up earning a profit. Remember, a lot of businesses don’t make profits right away because of all of the upfront costs.
Key elements for this section of your plan include:
- Startup costs (This is how much money it will cost to launch your business, so consider listing a range of numbers for the funds you need.)
- Projected monthly profit and loss for the first 12 months
- Projected quarterly cash flow for the first three years
- Projected balance sheet at startup, as well as at the end of each year for three years
- Break-even analysis
Ah, you’ve finally reached the end of your business plan! This is the final section that you’ll need to create.
Basically, the appendix will contain detailed financial information that is too lengthy to include within the main body of your plan. For example, you might include a more detailed list of your startup expenses.
Word of advice: don’t write up a generic cookie cutter plan! Tailor your detailed plan to your particular business and its needs.
Before creating your plan, take a look at a few plans for other businesses that are similar to yours. There are numerous examples of complete business plans available online. To get started, check out this site.
Once you have a better idea of what you want your plan to look like, there are a few ways to make the process of creating your business plan easier.
1. Find Business Plan Templates
One of the most affordable ways to write a business plan is by finding one of the hundreds of free business plan templates online. There are even templates that are designed for specific businesses and industries.
The right template will provide you with a format that you can follow, so it’s a matter of merely filling in the blanks. And the best ones will even include detailed instructions to further guide you. Super simple!
Check out the following sources of free business plan templates if this is the route you wish to take:
- The Small Business Administration has a free online business plan template. It’s called the Business Plan Tool.
- SCORE is a nonprofit business mentorship program. They’ve created business planning templates for startups and established businesses. You can even find mentors to give you advice on the planning process.
- Browse the Microsoft Office website for free business plan templates.
- Visit BPlans.com, where you can find commercial business plan software and a free downloadable business plan template.
- Visit BizGym.com, which also provides commercial software, to find a free business plan template.
2. Use Business Plan Software
Using commercial business plan software is a great way to put together your plan. It will cost more than templates, which are often free, but the right software can be easy to use and it can give you even better results.
The best software will have plenty of features to guide you through the process and show you how to create the ideal plan for your business. Video tutorials, easy chart creation, and financial forecasting are a few examples of these features.
You can even find software that will compare your financials with other businesses in your industry in order to see how you stack up against your competitors. Now, that’s a nice touch!
There are a lot of software options available, but we recommend checking out these to get started:
Note: Subscription services are also an option, with a great example being GoSmallBiz. These often offer a variety of tools that include business plan software, website construction, document creation, and more.
3. Use Professional Business Plan Writing Services
Don’t want to write your business plan yourself? Then you can hire a pro to do it for you!
Depending upon the person you hire, this service could cost as little as a few hundred dollars, so it can be a great investment. After all, leaving the hard work up to a professional means you can rest assured the job will be done right.
To find business plan writing services, you can perform a simple search online. You might be surprised by all of the options you discover!
4. Use Books
Finally, you can find books that have been written by business pros for startups and freelancers.
Within books about business plans, you can find detailed tips and advice on how to create your plan for your particular business. A great example is How to Write a Business Plan by Mike P. McKeever.
Bonus: you can always refer back to these valuable resources at any time.
Launching a new business can be a daunting process. As excited as you might be to get started, there are a lot of steps that you need to take and a lot of details that you need to cover before you can officially start working and promoting yourself. That’s where Hyke comes in.
When you sign up for an account with Hyke, we’ll help you with every aspect of getting your business going, from choosing the right legal entity for your company, to filing important documents on time. We’ll even provide you with a dashboard that you can use to track business details, including income and expenses, so you can compare what’s happening with what you’ve written in your business plan. So easy!
Crafting a well-written business plan is just one of many requirements that come with establishing a freelance business that will thrive. If you struggle with this, rest assured that there are plenty of resources and experts that you can turn to for assistance and guidance. And, once your plan is in place, you’ll be able to refer to it, tweak it, and use it as your map to long-term success.
Stephen has dedicated his career as an attorney and author to writing useful, authoritative and recognized guides on taxes and business law for small businesses, entrepreneurs, independent contractors, and freelancers. He is the author of over 20 books and hundreds of articles and has been quoted in The New York Times, Wall Street Journal, Chicago Tribune, and many other publications. Among his books are Deduct It! Lower Your Small Business Taxes, Working with Independent Contractors, and Working for Yourself: Law and Taxes for Independent Contractors, Freelancers & Consultants.