You probably have a good idea of what you want to achieve by working for yourself. So why create a self-employed business plan? It might seem like an unnecessary luxury, especially if you’re aiming for a sustainable income rather than taking over your industry. But the process and end result can help you spot potential obstacles, and increase the chances of achieving your goals.
If you’re creating a business plan to raise funds from banks or investors, then you’ll need to follow a formal structure and include a good level of detail. But you don’t need to be quite so rigid if it’s just for you to use. And putting your plans down on paper doesn’t mean that you can’t adapt or change them in the future.
- The benefits of creating a self-employed business plan
- What to include in a business plan
- Business summary
- Target audience
- Services or products you offer
- Market and competitor analysis
- Marketing and client acquisition
- Goals, milestones and timelines
- Plan for problems in advance
- Reviewing and updating your business plan
The benefits of creating a self-employed business plan
One of the main elements of any business plan is establishing targets for yourself. Without anything to aim at or timescales to meet, it can be easy to put things off if you're not accountable to anyone else.
Working out when your business will become profitable, and what it will take to reach a desired income level, will help you understand how many clients you might need, the rates you will want to charge, and how many hours each week need to be billed at a minimum.
And while there’s no penalty for missing those targets, you’ll know in advance if you might need to cut back on spending or push harder to make up any shortfall. The flip side is that beating your numbers can allow you to save extra revenue, re-invest in your business, or just take some extra time off.
When you’re writing a business plan, it also helps you to see things from the perspective of a customer. Why would someone choose you rather than going to a competitor? How can you encourage people to stick with you in the future? And how are you going to market yourself to new clients, especially if you need to quickly increase your income?
If you discover there’s no real unique selling point to your business, you’ll have time to adapt and work on your idea before investing any money, or relying on it for your sole income. And by identifying any potential obstacles, you can develop solutions and alternatives before they become a problem.
One of the big challenges when you’re freelancing or self-employed is knowing when it’s better to say no to opportunities. Having a business plan allows you to prioritise tasks and projects that help towards your goals, and gives you the confidence and reassurance to turn down anything that will take time and money away from your objectives.
- Setting defined targets gives you something clear to work towards.
- You’ll know in advance when you’re meeting your financial objectives or not. And be able to take action before it becomes an issue.
- Business plans help you analyse your business, and competitors, from an external perspective. And whether clients are likely to choose you, or not.
- A clear focus helps you identify which opportunities are relevant to your goals, and when it might be better to politely decline.
What to include in a business plan?
IPSE members can save time by using our helpful business plan template, which is just one of the useful resources for the self-employed in our library. But whether you’re filling in a prepared document or just jotting things down in a notepad, there are some key areas to think about.
You might not have all the answers when you’re getting started, and that’s OK. Going through the business plan process will identify where you might benefit from further research and advice, or uncover strengths you hadn’t realised until now. And any business plan should be an evolving document that you revisit on a regular basis to assess what’s worked and where changes might be needed.
- Business Summary and Purpose: This is a short equivalent of an elevator pitch, describing your business and key points (sales, profitability and routes to success) in a quick explanation.
Also known as an executive summary, it should be one page or less, and assume that in many cases people won’t read anything else. So make sure you include what you want to achieve, and why, as part of the story of your business to hook potential readers.
- Your target audience or clients: Who is going to buy your products or services? And why are they going to choose you? Understanding your target market means you can tailor your business more to their needs, rather than trying to just be available to anyone and everyone.
Details include their geographical location, age, gender, industry, company position etc.
- The services or products you offer: The key to success is finding the right combination between the skills or products you can provide, and what your customers need or want.
Describing the services you can offer will help identify which are most relevant and in-demand, and what might turn out to be unnecessary or unprofitable.
This can help to make your business more focused, give you the chance to outsource areas you have no desire to cover, and see if there are areas where you may need to develop your skills.
- Market and competitor analysis: Your competition aren’t businesses who simply sell similar products or services, they’re the ones who solve the same problems for clients and customers.
Identifying your closest competitors and the overall state of the market will help you understand which services are most common, what typical prices and fees may be, and how they’ve marketed their brand. Which allows you to highlight where you’re different or offer better value.
- Marketing and Client Acquisition: Whether you’re starting out from scratch or with projects and sales to friends and family, it’s important to plan how you’ll attract and retain new business.
Whatever tactics you choose should be appropriate for your target audience, whether you plan to use SEO, Social Media, Paid Advertising, Referrals or any other method. And you need to budget the time and resources to maintain a consistent pipeline of work, without getting distracted or diluting your efforts by trying to market yourself everywhere at once.
- Goals, milestones and timelines: You already know you need targets to aim for, and setting milestones will help you track your progress towards them. It may be to secure a set number of client projects, double your income, or to maintain your current finances with more flexibility and time off.
Your goals are entirely personal and individual. But you then need to outline realistic ways to achieve them.
- Finances: Being realistic about your financial planning will let you set achievable goals and marketing tactics. You need to account for current and future income and expenses to ensure you’re not caught out by a sudden cost, especially when you’re starting up. And it means you can build up a rainy day fund, set aside income for pensions and retirement, or plan for expansion in the future. You can find more information on why budgeting is important when you’re self-employed, along with useful tools to make it easier.
Plan for problems in advance
Even the most well-prepared self-employed businesses can face unexpected problems. The unpredictability of working for yourself is part of the appeal for many, but changes in the global or national economy, an accident or illness, or the sudden loss of a major client can be hugely challenging for many people.
Use your business plan to account for issues which might crop up. For example, you might want to build up a network of trusted freelancers who could subcontract and cover client commitments if you’re suddenly unavailable, alongside the illness and injury cover included in IPSE Plus membership.
If demand for your core products or services suddenly drops, do you have additional income streams you could use to cushion the blow? Or a list of advertising and marketing options which could be rolled out to increase enquiries at short notice?
Equipment failures can be a minor hassle when you’ve got adequate data and hardware backups available. Or potentially business ending, if it means you lose everything due to a failed hard drive or lost laptop.
And it also allows you to research the support and resources available to help during difficult times, whether that’s saving money as a freelancer, managing personal debt when you’re self-employed, or maintaining your physical and mental wellbeing. Knowing that there’s help available is a massive boost if you’re struggling, especially if you’re working largely alone.
Reviewing and updating your business plan
It’s incredibly useful to set out a business plan when you first become self-employed, but it’s even more valuable if you regularly review and update it.
Your goals may change over time, which means your existing strategy and tactics will continue moving you in the wrong direction. Or your industry may have undergone significant transformation, even in the space of six or 12 months. A new competitor or technology may have launched, demand may have switched to a new product or service, or your audience may have moved to a different platform.
Your initial business plan isn’t set in stone. It’s simply to provide an initial direction for you to follow, ways to measure your journey, and methods for avoiding potential obstacles. Setting out your financial goals, marketing tactics and budgets lets you see clearly whether you’re making the right amount of progress on a monthly, weekly or even daily basis. Instead of restricting you, this should give you more time to change things that aren’t working.
If you’re just starting out or considering working for yourself, we have a dedicated advice section for those new to self-employment. Along with the IPSE Incubator for those in the early stages of their career, and included for free within IPSE membership for a limited time.
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