Managing a freelance business is difficult, even under the best conditions. Tough clients, late payments and sudden changes in the work pipeline can make generating predictable income impossible. I should know: I’ve wrestled with the variability of freelance life for almost 14 years.
Last year, I built a massive spreadsheet to function as my business management and forecasting tool — and it’s finally helping me take control.
Don’t Forget to Forecast
Much as I’d love to credit foresight and superior business management skills for my decision to build the spreadsheet, it was neither. To be honest, it wasn’t even my idea — it was a suggestion from my wife, born from a need to solve cash flow problems. I’d signed some big clients (which we needed) who were paying erratically (which we didn’t need). With the spreadsheet, we could better track what we were getting paid and when. At least, that was the operating theory at the time.
That July, I opened Google Sheets and started building. The first edition of the spreadsheet included 12 “sheets” to represent the months of the year, mainly designed for tracking daily billings and payment dates. I’ve since added details useful for setting goals. Here’s everything I track in the spreadsheet, and how it helps with the business management process:
- Daily revenue. We’re all human, and we all like to see progress. So, in the spreadsheet, I list every client across the top and mark amounts I’ve earned from each for every single day I work. For fixed-fee writing, I’ll enter a total; if it’s an hourly project, I input the hours and use a formula to populate the amount earned and calculate daily totals. It’s motivating — and, frankly, a little relieving — to end a day and see a big number pop up in that field.
- Revenue by client. Add the results of every populated revenue cell under each client, and you get a monthly total of revenue by client. To be clear, that doesn’t reflect how much those clients paid me — only the cash value of the work I completed for them during the month.
- Payments by date and by client. Since cash flow was our top issue, I added two tables to better track our financial performance. First, I included a table where I marked payments received, also noting the date, the client and the amount. Next to that, I included a summary table that uses the SUMIF function to total aggregate and total payments from clients, since a few pay multiple times per month.
- Billing vs. actual for the month and year-to-date. Perhaps the most useful additions to the spreadsheet are the summary cells that show amounts billed, paid and the variance between the month I’m working in and the year-to-date (you can watch the following tutorial to learn how to add totals from different sheets). The greater the disparity, the more likely it is we’re either sitting on a surplus or facing a shortfall.
Plan for Big Growth
So, how are we doing? October income was up 40.72 percent year-over-year, continuing a trend we’ve seen all year.
Keeping score helps motivate me to put up better numbers. Shortfalls still happen, but cash flows more freely than it used to, and better visibility has sparked ideas for motivating our most lucrative clients to pay faster. I’ve experienced the most success with FedEx; giving clients everything they need to send you a check overnight is an easy sell (especially if you’re willing to foot the bill).
Therein lies the greatest lesson I’ve learned from this process: For as much as you’ll be challenged creatively in your everyday work, sometimes it’s the way you manage your freelance business that counts most.