Does the curve of your monthly sales look similar to the picture above? Welcome to the world of freelancers! I regularly try to forecast the profitability of the upcoming month with a sales plan. However, the conscientiously prepared Excel document for financial planning is just as meaningful as a deep look into the crystal ball. The reason: For many freelancers, new customers and jobs often come only at very irregular intervals. Sales planning is therefore for some of us a calculation with many variables. As a freelancer, I have now created a number of options that make my sales more predictable and thus enable more accurate forecasts. In this article I would like to show you how I did it.
Fluctuating sales are usually inseparably linked to a freelance job. A fixed monthly income is only available in an employment relationship. However, as a freelancer I would like to be able to estimate sales for the new financial year at least to some extent. That gives me a feeling of security. Furthermore, such forecasts are also relevant for business plans, credit institutions or the artists’ social security fund. For a better turnover planning I have therefore developed the following three strategies:
Strategy 1: Acquire recurring orders in a targeted manner
One-off orders are nice and can secure liquidity for several months at a stroke. Recurring orders, on the other hand, provide for a much more meaningful turnover planning. When looking for recurring projects, a certain amount of creativity is required, depending on the freelance activity.
Doctors make regular appointments, e.g. for preventive medical check-ups, and can therefore plan some of their sales more effectively. Since each of us has to submit a tax return on a regular basis, tax advisors can also plan their sales comparatively well. This is more difficult as a designer, programmer or copywriter. That’s why I actively searched for projects that have to be worked on regularly. A good possibility is, for example, the design of monthly newsletters or annual reports.
Strategy 2: Building an online business
Animated by the bestseller “The 4 Hours Week“* by Tim Ferris I recognized the possibilities of digital products. I.e. you create a digital product e.g. an e-book, graphic templates, music compositions or similar and offer them for sale on the internet. As a designer it is obvious to offer graphics for sale. My online business is now relatively well developed. On various marketplaces, including Iconfinder, NounProject and Creative Market, I offer over 7,500 icons/icons for sale. The formula is quite simple: More icons = more sales. Payment is made monthly. Planning sales is much easier with an online business. Think what you could offer!
Strategy 3: Revenue planning through interest and compound interest
Now you are probably asking yourself what this strategy has to do with freelance work and sales planning. Quite a lot, I think.
Let’s assume you’ve completed a larger assignment. The client transfers 10,000 EUR to your account. Your account is already full, your financial reserves are easily sufficient for several months. Now you can park the amount on the current account at almost 0% interest or invest it in more attractive investments.
With an interest rate of 3.5% you would have almost 30 EUR additional income from capital gains per month. 3.5% is available for corporate bonds or dividends on shares, for example.
If you invest this amount at 3.5% over 10 years, the compound interest effect also works for you. Instead of 3,500 EUR (3.5 x 10 years) you will receive 4,106 EUR in interest income over 10 years. That can be the volume of a well paid order.
Back to sales planning. Depending on the level of interest and the amount of money invested, investment income can make up a good part of the annual turnover. As a rule, you can plan investment income very well.
By the way: You can see how well interest works on the page http://pennystocks.la/warren-buffett. There you can enter your annual salary and see how long it takes investor legend Warren Buffet to earn your annual income.
Of course I still like to work on one-off orders. However, with the focus on recurring orders, the development of an online business and the use of the compound interest effect, I have created a solid basic income. This part of the income can be predicted very well. This is my strategy for better sales planning. What tips do you have?