Only Those Who Have Money Can Borrow Money

Here is a typical story: A passionate would-be entrepreneur launches a venture, often with the romantic and exciting intention of bootstrapping the finances.  But realistically, bootstrapping is not the correct description of the financial plan.  The term that applies here is under-capitalized.  The idea may have been realistic,  but before our intrepid entrepreneur could get traction with the concept, the money ran out.  The only thing remaining was debt.

Our hero would like to start over, since valuable lessons were learned and baked into business plan and model 2.0.  However, start-up capital that was not requested in the first go-round must be sought now, because the realization that there will be no success without adequate funding is now apparent.  What can be done to give our story a happy ending in a world where it takes money to make money? Let’s take a look at some possible funding options, some common and others less so.

Friends and family financing

Besides your own bank account, the most obvious place to look for start-up capital is with friends and family, that is, if you have a very good idea of whom you can do business with and those relatives or frenemies who must be avoided.  Many business ventures are funded in this way.

If you choose to borrow from family and friends, put into writing the loan amount, terms and repayment schedule and agree only to what you are certain you can uphold.  According to CircleLending’s Business Private Loan Index, the average current interest rate on business loans made by family members and friends is 7.6%.  Do everything possible to preserve relationships and not let money divide you.  The last thing you want are tense holidays (there are more than enough ways for that to occur as it is).

Micro-lenders and web-based lenders

There are several non-bank lenders found only online that offer micro-loans to small entrepreneurs.  The loan amounts are usually between $5000 – $25,000 and these outfits can be excellent sources of start-up and expansion capital for entrepreneurs with debt and /or limited resources.  There is sometimes a potentially very useful credit repair feature available through certain of these lenders when loan repayments are reported to credit bureaus.  On-time payments will raise your credit score, improve your credit rating and lower your future interest rates.

Here are sites to visit, including the Small Business Association’s Micro-loan Program:  http://prosper.com   http://www.zopa.com   http://www.accion.com https://www.sba.gov/loans-grants/see-what-sba-offers/sba-loan-programs/microloan-program

There may as well be small not-for-profit organizations that are micro-lenders in your state, but they may not be found online.  To obtain contact information on these loan source possibilities, please visit  www.microenterpriseworks.org

CircleLending data demonstrated clearly that comparison shopping is a must-do.  The loan interest rate at Accion was 12%, while the rate at Prosper was more than 20%, for those with poor credit.

In 2016, the National Small Business Association found that 73% of small businesses used some type of funding to launch a venture, expand a business, purchase inventory or equipment, or strengthen the company’s financial foundation.  The 2012 U.S. Census Bureau Survey of Business Owners found that 57% of start-ups launched the venture with personal savings; 8 % used personal credit cards; 6% used other personal assets (retirement account?); and 3% used a home equity loan. Only 8% used a bank loan.

While it is possible for individuals who are in tight financial constraints to obtain bank loan financing and business credit cards as noted above, interest rates are high.  More than that, even those who might qualify for bank loans are not going there.  You want to put your money not into interest payments, but rather into building your venture into a successful enterprise and paying off debts, in that way positioning yourself to save and invest capital and build for yourself a strong financial future.

Thanks for reading,

Kim

Triple Dollar Signs, Andy Warhol (1982)   Christie’s Images, Ltd.

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Business Forecasting Helps You Make Money

Summer 2017 will officially arrive on June 21 and the warm temperatures promise to seduce us with sunshine and flowers. Summer is the primary vacation season and many businesses slow down with its arrival , with the exception of tourist industry service providers and wedding planners and their usual sub-contractors: caterers, florists, photographers, DJs and videographers, many of whom are Freelancers.  The rest of us, however, have to get creative and try to maintain our discipline and resolve as the heat and humidity conspire against ambition.  This lovely time of year can present a real financial challenge for Freelancers.  How can we remain productive and scare up some billable hours? Summer is the ideal time to devote attention to positioning  your venture to make money in the fourth quarter and beyond.

I suggest that you conduct business forecasting at your organization this summer. Business forecasting is the cornerstone of business planning and business planning is the foundation of enabling business profitability.  Forecasting helps business owners and Freelancers to objectively examine the monetary value of each revenue stream that the venture generates, so that it becomes very clear which lines of business are making money and the amount of profitability of each line.  Forecasting shows you where you should devote your resources and in that way generate increased billable hours, revenues and profits.

Forecasting in your Freelance venture is crucial: client work, teaching assignments, writing assignments, subcontracting work for other Freelancers and maybe even an under-the-radar odd job along the way to fatten the coffers are among the business activities in which we engage to maintain cash-flow.  It’s very useful to know which of these lines of business is worth more attention and those that you may want to drop, since the returns are meager.

Let’s face reality—we B2B Freelance service providers often don’t know when our next client will come along, or what s/he will want to spend on services when that happens.  It’s so easy to wind up scrambling from new client to new client without getting much repeat business, or adequate control over our earning capacity. That’s why it’s vital that we:

  1. Identify where the earning potential really is (and it might not be client work)
  2. Create strategies and action plans that promote successful participation in those of your business activities that are the most profitable

There are thousands of Freelancers who make their real money not from client work, which can be both scarce and erratic, but on other related business lines.  For hiilucky Freelancers who have national renown, that could be book sales, paid speaking engagements and paid writing assignments.  For others, it’s their coaching business that is the real profit engine.  In such cases, the client work is necessary to lend credibility and enable access to the other, much more profitable, activities.

So how does one conduct business forecasting? If you use Intuit QuickBooks software, you can build a model on that system.  If you have at least three or four years’ of client data in QuickBooks, you will receive much valuable, actionable information about your business, including:

  • Profitability and profit margins
  • Average revenue /client
  • Average billable hours /client

If you keep your financial data on Excel, review the past five years’ of invoices (or as far back as possible in a newer venture) and identify your top five or ten most lucrative revenue streams, whether that is client work or other related projects.  Invoice dates will reveal seasonal revenue generating patterns and the invoices will remind you of which of your services sells the most and which the least.  Billable hours and hourly or project fee rates should also be noted. It will take longer to generate the data, but as with QuickBooks, much valuable and actionable data can be extracted from your Excel based financials.

There are two basic methods of business forecasting, Qualitative and Quantitative. Qualitative forecasting models are based on market research and they’re most effective in predicting short-term cycles. Quantitative forecasting models are based on data and the approach is more effective than the qualitative model in predicting long-term cycles.

There are various types of quantitative forecasting approaches and for small and medium size business forecasting, the Time Series Method is most useful.  The Time Series Method uses historical financial data to predict future results.  When you go to your bank for a business loan and five years’ of your financials are requested, the loan officer is using the Time Series Method to predict whether you will be able to generate enough cash-flow and sales revenues to repay the loan on time.

Once you have your financials in hand, Step 2 of Business Forecasting is the development of a marketing plan that contains strategies and action plans that create the road map that your organization will follow as you seek to expand those business lines that generate the most revenues for you and consider dropping those that perform poorly.

When you see with irrefutable data that reveals which of your services brings home the most money, you will likely get a clearer picture of your ideal clients and the messages and marketing platforms that resonate with them.  An amended pricing strategy and/or sales distribution method may be instituted, as might tweaking of your business model.

Business forecasting reveals patterns in client activity that are often overlooked and the process allows you to anticipate demand for your services, reveals which services historically have produced the greatest sales revenues, reveals the types of clients that spend the most with you and in general, shows on what side the toast is buttered.

With objective confirmation of your best client categories and most popular services, you can concentrate on how to access those clients, including bigger budget clients within the categories and you’ll know how best to sell to them.  You will work not only hard, but also smart, to grow your client list and increase billable hours, revenues and profits and that will be the best use of your time during this glorious summer.

Thanks for reading,

Kim

Understanding Break-Even Financial Analysis

Most business owners are familiar with the big three financial control documents: the Income (Profit & Loss) Statement; Cash-Flow Statement (or projection, when used for budget planning); and Balance Sheet. Those three statements are compiled monthly, quarterly and annually. They give useful insight into the fiscal health of the company. The smart business owner consults these statements each month, teases out the story that is revealed and makes decisions accordingly.

A fourth financial document, the Break-Even Analysis, provides forecasting information. The Break-Even is used when a new product or service will be introduced, or when a capital improvement or other upgrade is scheduled to be made.  The Break-Even indicates the amount of sales revenue the product or service must generate to cover the roll-out costs associated with its introduction or acquisition and therefore, positioned to become a decision that pays off.  A Break-Even is also generated when a new business venture is launched. The Break-Even allows the business leader to predict how long losses must be sustained and how to anticipate cash-flow comditions and management in response.

Break-Even is achieved when revenues = expenses; the business is neither making nor losing money. Business expenses are of two types, Fixed and Variable. Fixed Costs are the standard monthly operating costs and they are not impacted by sales revenue generated.  Office space rent, insurance, utilities and payroll are Fixed Costs.

Variable Costs are largely tied to sales: product acquisition or manufacturing costs, inventory purchases, the cost of materials used to manufacture the products sold and all aspects of marketing and selling costs.  As sales increase, Variable Costs increase proportionately, because more product must be purchased or manufactured to be available for sale.  Total Expenses = Fixed + Variable Costs, as recorded on the Income Statement.

When calculating expenses, it is standard to determine the relationship of Variable Costs to sales revenues.  The Variable Cost amount is divided by the number of product units sold,  yielding the Variable Cost per Unit.  In other words,  Variable Costs = units sold  X  variable cost per unit.  For the purpose of calculating Break-Even,  Total Expenses = Fixed Costs + Variable Costs (expressed as units sold  X  variable cost per unit). As always, sales revenues = unit price  X  number of units sold.

The Break-Even Point is reached when

Price  X  Units Sold = (Units  Sold  X  Variable Cost/Unit) + Fixed Costs

The difference between selling price per unit and the variable cost per unit sold reveals the amount that can be applied to Fixed Costs each time a unit is sold.  Think of it this way: if monthly Fixed Costs are $2000 and the average price of your product units sold is $2, with an average Variable Cost of $1 each,  when you sell a unit, you earn $1 to apply to Fixed Costs. With monthly Fixed Costs of $2000, Break-Even is reached when the business sells 2000 units per month.

Knowing how many units must be sold each month to achieve Break-Even is essential for effective financial management of the venture.  One can also calculate Break-Even in terms of dollars that must be generated each month.  In this example, Break-Even Revenue is achieved at $4000 in monthly sales, since the sales price is $2/unit and 2000 units must be sold each month to cover expenses.

A basic knowledge of the process of business financial calculations and the ability to interpret the data generated are must-have skills for all business owners and Freelance consultants. While it is true that one’s bookkeeper or accountant will perform the Break-Even on Quickbooks by plugging in numbers derived from the Income Statement,  it is always in your best interest to understand how the calculations are made and how to make sense of what the financial documents reveal.

When it is proposed that a new product or service might be sold, which might be the development of a new workshop to propose and teach or some other intangible service, a Break-Even Analysis will indicate how many units must be sold, billable hours generated, or classes must be taught before the production costs will be re-couped and the new offering will be positioned to generate ROI.

Thanks for reading,

Kim

 

Fatal Flaws in Your Business Plan

A business plan is the blueprint, or road map, that guides aspiring entrepreneurs as they build their business venture. Business plan writing is about getting the details right as you keep in mind the big picture.  I’ve taught business plan writing since 2008.  I was invited by the program manager of an SBA-affiliated women’s business development  organization to teach a 20 week course that met once a week for three hours and students wrote their plan week by week.

A couple of years later,  I developed a six hour workshop that does not ask students to write their plan but rather, I present material that shows them the information that will be included in a good business plan: a marketing plan (including customer identification, branding and pricing), financial projections, operations processes and other elements.  We talk about how to do research and how the information discovered will help them build a successful business and if desired, attract investors as well.

When envisioning a potential business concept or writing a business plan, it is possible that unrealistic expectations or flawed thinking could influence the process.  Sometimes, one is just so excited about the great business idea that has surfaced that the adrenaline “rush” distorts clear thinking, such as the ability to see potential stumbling blocks that would require precautions to avoid.  Below are a few scenarios that entrepreneurs-in-the-making should beware.

Unrealistic expectations about the need and value of your products or services

While it is sometimes true that starting a business with yourself as the profile that represents the target customer is a smart idea, since you understand the value and availability of that product or service,  you may misinterpret the size of the market and the traction that can be achieved beyond a select group of true believers.

Insufficient information about target customers

Whether or not the target customer is modeled on you, research must be done to verify the number of potential customers who have the money and motive to do business with you,  regardless if this is a B2B or B2C enterprise in the making. You must identify the need for your products or services—what problem will you solve, what solution will you provide?

Furthermore, you must understand the buying process—who is the usual decision maker (the COO or the head of maintence?),  how will purchases be made and what is the tolerable price range? Lastly, from whom are your potential customers obtaining these products and services now? You must also identify and investigate competitors.

Vague about how to access customers

Especially in the B2B sector, access to customers is everything.  Some fields really are a closed shop. You may know who the ideal customers are,  know and describe well how your products and services fit their needs and know how to price and deliver them.  But if potential customers do not have the confidence to do business with you because you have not received an endorsement from a source that they trust, you will starve.

Overestimating cash flow

Usually, a business does not achieve desirable gross sales, and hence will not show a net profit, in its first year of operations.  Businesses that require high start-up costs especially will require a longer ramping-up period. The business plan must acknowledge the potential for negative cash flow and demonstrate how fixed and variable expenses will be met during that period.  One must know how inventory will be financed,  how payroll will be met and how the store or office rent will be paid.

When writing a business plan,  conservative financial projections are strongly advised.  Acquisition of paying customers may take longer than you expect and the size of their purchases may initially be small and infrequent.  Moreover, it is entirely possible for a venture to be profitable on paper and still suffer from cash-flow problems, because customers do not pay their bills on time.

Underestimating start-up costs

Developing a reasonable estimate of how much it will cost to get the venture up and running is essential.  If certain permits must be in hand, if certain tools or equipment are must-haves, then you must know the costs of securing all of the above.  If you’ll need to hire employees,  it’s essential that you have a good idea of the staffing needs up front (you can always hire more as customers increase).

“Magical thinking” business model

The business model is the design for how your venture will become profitable.  Well thought-out interactions between marketing, financial and operational processes will promote and sustain profitability and you must map out how these will occur. The business model describes the core fundamental actions of the venture.

The value proposition of your products or services will be described.  The resources that your enterprise will have to promote and defend the value proposition— the intellectual property that you’ve developed,  or patent rights, key relationships, or capital—will be accounted for.  Sales distribution channels will be detailed.

Getting to Plan B, a 2009 book by Randy Komisar and John Mullins, describes key business model components and advises business plan writers to segment the business model chapter into sub-headings such as:

  • The revenue model,  which describes what you’ll sell, the marketing plan and how you expect to generate revenue.
  • The operating model, which will detail where you’ll do business and how the day-to-day will function.
  • The  working capital model, meaning your cash-flow requirements.  Cash-flow means that you’ll know when money will be in hand to meet expenses like rent and payroll. It is subtly distinct from revenue.  The business can generate adequate revenue and still suffer from intermittent cash-flow problems.

Your business model keeps you organized and your priorities realistic. Matters such as quality control,  collecting accounts receivable,  inventory management and identifying strategic partners mean much more than your number of Facebook followers, for example. Best of luck to you as you work to launch your new business!

Thanks for reading,

Kim

Plans For Your Business

Whatever the health and condition of your Freelance business venture, you will at some point benefit from planning.  Business planning of any type provides a roadmap that will help you to successfully achieve your business goals.  Business planning can be instituted when sales are tanking and you need to find a way to improve billable hours.  Or you may have decided to aim for larger assignments  or roll out new services and need to figure out how to make it happen.

I’ve taught business plan writing for 7 or more years and I’ve also developed a one-day business plan writing workshop. As I see it,  the process of writing a business plan gives the writer (or the team) many opportunities to think things through and  get the magical thinking out of one’s head. The business plan shows us first,  if the dream is potentially viable and second,  how to make the dream a reality.

The plan you write will depend on what you set out to achieve.  If you’re launching a start-up that will involve significant outside investment,  then you’ll need a very detailed plan that focuses on financial projections;  marketing plans that delve into customer acquisition, the competitive landscape, the product or service launch, messaging,  sales distribution; and operational aspects such as manufacturing,  staffing and quality control.  Freelance consultants will mostly focus on marketing, in particular defining the target clients,  client acquisition; providing the right services; appropriate pricing; and the budget to pay for their marketing strategies.

Whether your plan will be used to launch a big venture and attract outside money,  or is a boutique style service provider, include the following elements in your plan.  Even if you’ll be writing what amounts to an extended marketing plan used for a one-person shop,  it will be a good exercise to include these elements, because you’ll be encouraged to think seriously and strategically about your mini-enterprise.

EXECUTIVE SUMMARY

Present the business mission statement. Include as well the date when the business was formed; key management personnel; your unique credentials or experience that make you especially suited to start and successfully run the venture; the business legal structure (LLC, Sole Proprietor, or Corporation); the products and services; one or two key competitive advantages (maybe you have a patent?); sales projections; and the amount of capital needed (if you’re looking for investors).

BUSINESS DESCRIPTION

It’s traditional to present a brief description of your industry and its outlook,  nationally and regionally. give the details of your products and services and competitive advantages. Identify whether your venture is B2B, B2C, or B2G. If you hold a patent,  detail the competitive advantages that it will convey. Have there been any technological advances that will help or hinder your business?  Divulge here.

MARKETING

The category is a big tent that encompasses sales, product or service distribution,  competitors, advertising,  social media, PR,  networking,  branding, customer acquisition and pricing. The plan written for a mall organization will essentially consist of an extended marketing plan, because for Freelance consultants,  success hinges on identifying and reaching clients who will pay as well as pricing the services advantageously.

FINANCING

Whether you’ll self-finance because you’re wealthy enough,  or the venture is small and  not especially demanding of capital investment,  you nevertheless need to know with a reasonable degree of certainty how much you’ll need to spend to carry out the plan ( that could be a new product, or the purchase of something big, or a marketing plan, for example).  If your strategy is to attract investors,  they’ll need to be convinced by your projected sales revenue figures,  because they’ll want to know when they’ll be paid back or know when to expect profits if they are made co-owners of the business.  A break-even analysis, projected income statement, projected cash-flow statement and projected balance sheet are required by those who will need significant money.

OPERATIONS

How will day-to-day business processes function?  Tell it here,  along with providing the organizational chart,  the business location,  the method of producing that which you sell (if you are,  say,  a Freelance book editor or  graphics specialist,  you produce the service yourself),  your sub-contractors (if you are a special events organizer,  who is your usual caterer, florist,  limo service, etc.?) and quality control methods.  This element is about logistics.

for more information on writing a business plan,  visit the Small Business Association website https://www.sba.gov/tools/sba-learning-center/training/how-write-business-plan

Thanks for reading,

Kim

 

 

 

 

 

 

 

 

 

 

Going Forward: Employee to Freelancer

The Freelancers Union  http://freelancersunion.org estimated that in 2013,  there were more than 53 million self-employed workers (in many permutations and degrees of earning power,  from fashion photographers,  to technical writers,  to Uber cab drivers) in the U.S.  That represents an astounding one third of the American work force participating in Freelance employment at some point during the year and it’s predicted that the number will only trend upward.

Plan to succeed  is the credo of every self-employed professional.  Effective planning requires one to first anticipate events and conditions that may be encountered and  then devise strategies that will overcome obstacles,  or at least lessen their likely impact,  and as well capitalize on expected opportunities.  Before you invest money and time on a mission to go it alone,  consider these realities.

No free tech help

Santa gave me an iPad Mini tablet for Christmas and the external key board that is part of its case quit functioning after three days.  The online advice that I hoped would help me to restart the thing was not useful.  I suppose a (time consuming) trip to the Apple Store must be made,  because I cannot ask a tech support colleague to rescue me.  At some point,  there will be a technology related glitch for every Freelancer: Power Point will embarrass you.  The printer will frustrate you.  You’ll be unable to install  your new software.

Taming home office distractions

Working from home requires real discipline and focus and potential distractions are everywhere.  Unless the call is from a client or business associate,  it may be advisable to refrain from answering calls (or emails/texts) from friends and family until lunch time or after hours.  If you have small children at home,  take them to day care or hire a nanny or other care taker to supervise their activities.

Ringing doorbells,  the television,  social media sites,  grocery shopping,  pet needs and house work can also undermine your work schedule.  If you foresee potential challenges to your ability to be productive In a home office,  then investigate co-working spaces.

Co-working arrangements can be very beneficial.  The office supplies,  meeting rooms,  A/V equipment,  coffee/tea and maybe even a co-working buddy who will provide some free tech advice will be available in the rental fee.  As an added bonus,  networking opportunities,  billable hours and camaraderie can arise from co-working colleagues.

No colleagues to commiserate with

Business owners and Freelance consultants work harder and must meet or exceed very high expectations,  every time.  It is easy to feel overwhelmed,  especially in the early days of running your venture.  At your job,  there was most likely someone who understood the nuances to talk you through things.  Now,  there is only you.

Joining a neighborhood business association,  professional association and/or your local chamber of commerce will give you numerous opportunities to meet self-employed professionals much like yourself.  Get to know a select few and create a support network for each other.

Moreover,   it is certain that you will have opportunities to receive and perhaps also lead  professional development programs that demonstrate  your expertise and leadership skills in the company of your peers.  You and your colleagues will be looking to make referrals for one another.  The time and money you invest in such organizations can pay real dividends and help you succeed as a Freelancer or business owner.

Needless to say there are other factors involved in the transition into the self-employed sector,  for example the requirement to find and purchase medical and dental insurance and set up a retirement account that works for you.  Launching even a solo freelance consultancy takes careful planning.  The more you can anticipate and prepare for,  the more successful your venture is likely to be.

Thanks for reading,

Kim

Transition: Employee to Freelancer

Happy New Year! Is your number one New Year’s resolution to establish your own entity and become a business owner or Freelance consultant? Are you planning to abandon the “safety” of a traditional job to directly market and sell your products or services to customers with money and motive to do business with you?

Going out on one’s own is a thrilling and sometimes frightening prospect. Those who take the plunge eventually discover that many resources that are casually taken for granted while working in an office are not readily available to those who step out on their own.  As you weigh your options and prepare to write your business plan,  be aware of a few changes and expenses to expect should you join the self-employed sector:

No paid days off

It is now Winter and there will be days when extreme snow fall could make it impossible to meet with a client or otherwise work.  Further,  regardless of the season,  there will be no more paid sick days,  vacation days or personal days.  In particular for those who own a small B2B or B2C venture where the business model requires you or your employees to visit a customer location (e.g., cleaning services),  or customers to visit your location (e.g., a laundromat),  snow days = no revenue days.

Establish business credit

For tax purposes,  it will be useful to open a separate business bank account and also apply for a business credit card or two.  There will be business expenses to write off and you want to make it easy to monitor spending.  Do yourself a favor and check your personal credit ASAP and correct any errors.

Financial management

Financial management will assume more than one form.  As noted above,  you’ll need to establish credit for the business,  so that you can order inventory and supplies without immediately impacting business cash flow,  for example.  Those are Accounts Payable items.  You will also need to ensure that clients pay on time,  or at all,  and that is an Accounts Receivable function.

Maintaining sufficient cash flow is crucial to the business’ survival and your own ability to keep a roof over your head,  food on the table and your car on the road. You must develop a business budget and plan for the purchase of equipment,  licensing costs (if applicable),  insurance (if applicable),  professional certifications (if applicable),  or space rental (if needed).

In addition,  you may consult with a business attorney or accountant to discuss the legal structure of your venture: Sole Proprietor,  Corporation (chapter S or C),  or Limited Liability Company.  The type of business that you’re in and your exit strategy will play a role in choosing the legal entity.

Paying for office supplies

Free scanning and photocopying will be over.  When you need to staple a few pieces of paper together,  you must buy the stapler and the staples and you’ll buy paper clips,  photocopy paper and envelopes,  too.

There will likewise be no meeting space or audiovisual equipment for you to reserve.  You’ll have to meet at the (prospective) client’s office,  or at a coffee shop or other restaurant.  Privacy might be an issue and arranging a Power Point or other visual presentation can be awkward as well.  A lap top computer or tablet are must-haves.  It will be imperative to possess the tools of your trade and to always appear as a competent and prepared professional as you develop your reputation and build your brand.

Next week,  we’ll look at more unexpected challenges that await those who choose to launch a business venture.

 Thanks for reading,

Kim

 

 

Successful People Allow Success to Happen

When you implement your fourth quarter Action Plan, be aware that there are some basic and necessary behaviors that you must adopt to create the conditions for the success of your plan.  It can be oh-so-easy to get pulled off your game by people and circumstances that make demands on your time, adversely impacting your energy levels and ability to focus as they do.

You must learn to be “healthy selfish” and strive to preserve your boundaries. Be prepared for some people to get indignant. You may even be attacked by those who feel the most entitled. It’s uncomfortable, but you’ll come to know who our friends are and are not. Consider the process a character development and leadership lesson.

Those who love and respect us give us space to do our thing. They touch base with us every once in a while. They step in to offer assistance and encouragement when we are in need. They never devolve into controlling and manipulative behavior.

I.    Just say no

If you are not able to take on a certain project or agree to a commitment, then respectfully decline. Perhaps you already have many irons in the fire and your schedule is filled. Perhaps you would rather take it easy for a while, resting and recharging your energy stores.

If a proposal doesn’t feel right, seems unorthodox or unsavory, you are not obligated to participate. Those who have vowed to sweet-talk (or arm-twist) you into this arrangement may become furious. Let them do just that. Then cut them out of your life. The last thing you need in your life are manipulators and bullies.

II.   Define boundaries

Everyone likes to be liked. We feel good when we help others and make them happy. But the price of acceptance does not hinge upon the “right” of others to violate our boundaries.  When you feel pressured or uncomfortable by a certain request, recognize that feeling as a sign that your boundaries are being violated.

Someone is attempting to “cross a line”.  Someone does not know his/her place, or role, in the relationship that the two of you are in, even if that someone is a parent or sibling. No one has a “right” to violate boundaries. Politely, but firmly and resolutely, push back and do not allow yourself to be bullied. If the violator persists, well, now you know who loves and respects you and who doesn’t. It can be a bitter lesson.

III.  Ask for it

What do you want? The sale? The assignment? Your team to work at 110% capacity? If you want it, then ask for it!

You must also be prepared to earn it, to demonstrate that you deserve the reward. If you expect your team to work at 110%, then you must work at least that hard and more. If you want the sale or the contract, then show the client why you deserve it and how hard you’ll work to earn it and then fulfill or exceed all expectations when it is awarded to you.

IV.  Release the negative

Mistakes are made and bad things sometimes happen. You may feel hurt and maybe resentful, too. Maybe you should let yourself wallow in those feelings for a while because after all, you are human.  However, you cannot allow yourself to remain stuck in the quicksand of negative feelings. Take a deep breath and then let it go as you step forward toward your vision of a successful future. You have goals and an action plan to help you reach them. Let that propel you out of the muck of resentment. Success is the best revenge.

V.   Walk, don’t run

OK so you’re on a roll, you have a timetable, you want to get things done. This is a one-page, 90-day action plan you’re working through, you say! Patience may not be considered a virtue and explaining things twice becomes an aggravation. Due diligence can happen some other time?

Stop. Breathe. Look at the big picture. Remember now, an ounce of prevention is worth many pounds of cure. Avoid cutting corners. Do not get slap-dash. Some on your pumped-up, charging team may get a bit frustrated, but make sure that your execution is accurate and that you are moving in the direction that will bring about the desired outcomes. Take the time to get buy-in of key stakeholders. You will be successful if you allow success to happen!

Thanks for reading,

Kim

Ready To Fly Freelance!

According to the Freelancers Union, 53 million Americans, 34% of the workforce, engaged in some level of Freelance work in 2014 (that includes workers like Uber drivers, who are classified as private contractors). Of that number, 45% were Freelancers who consider themselves self-employed professionals; 27% were moonlighters, doing Freelance projects in addition to their primary employment; and 18% were considered “diversified” workers, who cobbled together three or more revenue raising activities to support themselves.

Businesses large and small continue to eliminate traditional full-time employment and push American workers into figuring out how to support themselves independently. Some workers have an entrepreneurial mindset and an independent spirit and would strike out on their own regardless. Maybe that is you? Whatever the circumstances, the time may be right for you to plan to work for yourself. Here are some signifiers:

You are confident You’ve honed a set of skills over the years that you are certain others will pay you to provide to them. You have access to potential clients who are familiar with you and your work and you are fairly certain that you can build a successful organization that will yield an income that will allow you to pay your bills and maybe even exceed your current salary.

You have a very good professional network and colleagues who will make referrals for you (and you will be able to return the favors and make referrals as well). You believe in yourself and your abilities and you are not afraid to step out and go it alone.

You are self-motivated You want to be independently employed, the captain of your own ship. You are a self-disciplined leader who is comfortable working alone or in a team. You are able to meet deadlines and enjoy meeting and especially exceeding expectations.

You cannot get a better job The new economy is unkind to so many. Middle-class jobs have been disappearing since the late 1980s as a result of computer technology, globalization, the off-shoring of labor and most of all, unprecedented corporate greed that has driven down wages, restricted merit raises for the vast majority and made billionaires of the 1%.

Age, race and gender discrimination are real and well-documented. The pervasive use of “search committees” that control the hire of even administrative assistants, whose members apparently aim to hire minimally competent functionaries who are incapable of out-shining the committee members, effectively block the employment of many talented workers.

Regardless of your skill set and experience, work ethic and track record of working collaboratively, you may not be able to get either a promotion or a new job anywhere. Breaking into a new field with “transferable” skills is usually limited to either the enormously well-connected or the very fortunate.

You’re a good salesperson  Freelancers and business owners are salespeople, first and foremost. Devising and implementing a marketing plan (and financial and operations plans as well) requires that you promote your venture in ways that will put you on the radar screens of potential clients and referral sources. Whether you are an introvert or extrovert, you must effectively talk up your business, in particular to those with money and motive to do business with you.

You have money saved You’ve been able to save 6 months + wages that will float you as you bring in projects and rack up billable hours. To further cushion your Freelance experience, you would be wise to identify and pursue other revenue streams, better known as flexible part-time employment. Teaching is a popular sideline for consultants, but do not be embarrassed to consider taking a low-level job that will not bring you into contact with potential clients. You just want to discreetly make money and also have time to pursue your real work.

Flexibility matters You may have aging parents who need your help; you are the parent of school-age children; or you prefer to work intermittently (or all three). Being saddled with the ongoing requirements of a 40 hour + job may not blend well with your personal obligations.

If you think that you have a marketable skill, arrange to let potential customers know and try to get hired for a few projects while you still have traditional employment. The strategy also applies to those who are retired or about to retire. Join the 27% of Freelancers who moonlight and beta test your business concept. You could be pleasantly surprised by how much you enjoy running your own empire!

Thanks for reading,

Kim

The WHY of Business Planning

Full disclosure, I’ve taught business plan writing in both a short-form 6 hour workshop and a long-form 18 week class, where each session was 3 hours. Previous to that, I was skeptical of formal business plans. I was under the impression that all business plans had to be 40+ pages in length and that every element of the standard template had to be populated. Now I know better.

In my defense, if you were launching a business that would have a physical location, would hire employees, manufacture products and most of all, require that you ask a bank for money then yes, absolutely, I would have encouraged you to write a business plan. But for those who would operate as a Freelancer who do maybe PR or graphic design, then my feeling was (and still is), that your business planning must center on figuring out how you’ll get clients. A comprehensive marketing plan is the document of choice and that would include a sales and pricing strategy as well.

Business owners have been known to build successful ventures without writing down a single word. Their businesses are typically small and self-financed, maybe with some additional backing from friends and family. Particularly if the operator has already run a business, even one that failed, it is possible to learn valuable lessons to apply to a new venture. Business plans are time-consuming to write. Some will say, just learn by doing. Why not create business strategies on an as-needed basis and test them in combat?

A study of 11,046 companies published in 2010 found that planning resulted in improved business performance of existing companies even more than that of start-ups. It was hypothesized that leaders of existing businesses knew their customers and the business environment more thoroughly than those at start-up companies. Leaders of existing ventures had more information, so there were fewer faulty assumptions born of inexperience.

Another study found that while many businesses can succeed without significant planning, leaders who plan, run businesses that grow 30%  faster and are overall more profitable than those that don’t. The link between business planning and growth was reinforced by yet another study that found that 71% of fast-growing companies, that is, companies that showed a 90% + growth is sales over a 12 month period, were led by a team that planned. Creating marketing and sales strategies, setting sales goals and creating budgets made the difference.  So did defining client needs and the company’s value proposition.

As you may have guessed, a business is less likely to fail if there is a plan in place. A study of 223 companies demonstrated that business planning could not guarantee business success, but rather decreased the occurrence of business failure.

Realize that plans are not etched in stone, but are intended to be guidelines that should be adjusted as necessary.  Identify key metrics and track your company performance to learn if your assumptions stand up to your business environment. If client needs are changing, then observation of your metrics will cause you to respond and pivot and keep your products and services relevant in the marketplace.

A credible start-up business plan, or existing business strategic (long-term) or operating ( one year) plan, need not be long and elaborate. Keeping it lean and focusing on client needs, defining your value proposition and business model, spelling out goals and the strategies that will get you there and identifying metrics that demonstrate either success or the need for adjustments will do your business a world of good.

Start-up entrepreneurs were reported to be 152% more likely to actually start their businesses when they took the time to develop a credible business plan. If you want to make your dream come true, research and write down how you intend to do it.

Determine precisely how you will obtain customers. An operations component will make you consider carefully how you will obtain, produce and deliver the products or services you plan to sell. Devise a marketing and sales strategy before you approach prospects, so that you will know what to say to those who would become customers. Finally, acknowledge the amount of money that will be required to open the doors and keep them open as you build your business by developing a realistic financial plan for your enterprise.

Thanks for reading,

Kim