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December 16, 2020

Year-End Review: How to Audit Your Freelance Business

Jenni Gritters

7 questions freelancers should ask themselves at the end of each year.

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It’s December, which is an ideal time to think about what’s working in your freelance business, and what you might want to do differently next year. Carve out a day or two to take yourself on a “CEO retreat,” to get out of your daily routine. It’s tough to see the forest when you’re lost in the trees and if you want to do a proper business audit, you need to get some perspective.

Then, consider these questions:

 

  • How much did you make this year?

First, take stock of how much you made this year. If you haven’t been tracking this monthly, gather up your invoices or check your bank statement. What is your total income number, before taxes and expenses?

If you’ve kept track of your expenses, subtract those from your total income number, then take 30% out of the number to account for taxes. The result is your net income.

Once you have this number, reflect on what it means for you. How much did you want to make this year? Were you able to pay your monthly bills and put some money into savings, too? Do you need to change your financial goals in the coming year, or change your client set up to help you meet your original goal?

 

  • How many hours did you work (on average) each week?

If you haven’t been keeping track of your hours, it’s a great idea to start. (Try Toggl or item #2 on our best tech for freelancers list!) Even tracking for a month will give you a sense for how much you’re working, and how much time you spend on different kinds of tasks. But if you don’t know the exact number, think through a proper estimate. How many hours did you spend working during a typical day? What about during a typical week? Did you take vacation?

You can use this number to see how much you made, on average, per hour. For example, if you made $50,000 this year, that averages out to $4,166 per month, or about $1,000 per week. If you worked for 40 hours on average each week, you made about $26 per hour, before taxes and expenses.

Again, how does that hourly rate stack up with what you wanted to make this year? And did the hourly schedule work for you? If not, make note of what you think could work better.

 

  • Make a list of the clients you worked with. Who felt like a good fit, and who didn’t?

Check that invoice stack and write down a list of clients. Next to each client, make note of the experience. Do you want to keep working with them next year, or do you want to fire them? Use your gut to make these notes; don’t think too hard. If you love working with a client and they pay well, that’s a huge win. Keep them on your roster. If you get rid of old clients, are there new potential ones you’d like to reach out.

 

  • What were your biggest wins?

As you look back on your past year, consider your biggest wins. This could mean specific projects, or clients, or positive outcomes for your workflow. Make a list! Circle the top three.

 

  • What struggles did you encounter this year?

In contrast, write down the things that didn’t work as well this year. What roadblocks did you face? What problems did you encounter? What do you want to avoid in the coming year?

Next to each of these struggles, write down a pragmatic solution. For example, if you have a client who is always paying you late, the solution could be to renegotiate a contract with better payment terms, or to have a conversation with your manager, or to fire that client. If you hate working early mornings, the solution could be to block off that time slot and tell your clients you aren’t available then.

 

  • What goals did you set at the beginning of this year, and did you meet them?

Did you set goals at the beginning of 2020? Chances are, those goals changed a lot over the course of the year, given all of the challenges that came our way with the COVID-19 pandemic. But write down your goals anyway, and consider how you met those goals, if you did. If you didn’t meet those goals, no judgement — it’s been a crazy year! — but make a few notes about what got in the way.

 

  • What do you want to accomplish in the upcoming year?

As you consider last year’s goals and wins, think about what you want to take with you. Set a few specific goals, like building a certain skill, or meeting a financial monthly goal, or investing in coaching.

It can also help to set a theme word for the coming year that explains how you want to work, like “stability” or “efficiency” or “quality.” Write these goal thoughts down and put them in a place where you can see them daily.

 


 

Want more pro tips and advice to up your freelance game?

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Written by

Jenni Gritters

Jenni Gritters is a freelance writer and editor based in Seattle. She’s written for the New York Times, the Guardian, Outside magazine, and many other places, and co-hosts the freelance business podcast, The Writers’ Co-op. Read more about her work: http://jennigritters.com/

Banking Designed for Freelancers

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