Writing a business plan as a freelancer: only what you actually need

When you genuinely need one

For yourself a plan is always useful, but in three situations a third party asks for one and the format matters. The first is financing: a bank or lender mainly judges how well you substantiate your revenue expectation. The second is municipal support, for instance from social assistance or through the UWV when starting from unemployment benefit; there an external adviser assesses whether your business is viable. The third is a residence permit for self-employment, where the plan forms part of a points system.

In all three cases the same holds: the assessor skims the text and studies the figures. So invest your time in the budgets and in substantiating why that revenue is realistic, not in fine sentences about your passion.

The eight components

A complete plan need not be long. These eight blocks cover everything a bank, a municipality or you yourself need, and each may well be half a page.

1. Who you are: your experience, qualifications and why you in particular can do this work.
2. What you offer: your service or product, concrete enough for an outsider to grasp.
3. For whom: your target group, with an estimate of how many clients it contains in your region.
4. The market: your three main competitors, their rates and how you differ.
5. How you win clients: the channels you use and roughly what a client costs you.
6. Your hourly rate or prices, with the reasoning beneath.
7. The legal side: your legal form, your terms and conditions and any permits.
8. The figures: investment, operating and private budgets, plus your monthly liquidity.

The three budgets that really matter

The investment budget lists what you need to start: tools, equipment, a laptop, stock, a possible van and the first months of working capital. Add what you contribute yourself and what must be financed. Note the difference between capitalising and deducting at once: large purchases lower your profit only over several years, while you need the money immediately.

The operating budget is your expected annual profit: revenue less purchases, less fixed costs, less depreciation. The private budget underneath is the part starters skip and assessors read first: what you need per month to live on, including rent or housing costs, groceries, health premium and a reserve for tax. Only when your operating budget covers that private budget is your plan viable.

Where plans go wrong

Four mistakes recur in almost every starter plan. The first is using amounts including VAT: VAT is not revenue, it belongs to the tax authorities, see how much to set aside. The second is assuming you are fully booked from month one; count on a run-up of three to six months. The third is forgetting non-billable time, as in the example above. The fourth is the tax pot: profit is not income, since income tax and the health insurance contribution still come off.

So make your plan in two versions: a realistic one and a gloomy one in which revenue falls thirty percent short. If you can still pay your fixed costs in that gloomy scenario, you have a plan. If not, you know exactly how much buffer you need before starting. Finally, add one sentence about when you will revisit it, after the first quarter for instance; a plan you never reopen was an exercise rather than an instrument.

Frequently asked questions