Description of Your Business
Start by expanding and refining the description of your business you wrote in part one. Break it into smaller parts such as:
- Type of business (print design, Web design, logo design, newsletter publishing, self-publishing...)
Be specific. If your business will specialize in a certain area such as logos or newsletters, say so. If the business is more general in nature, spell it out. - Clients (local, national, international, individuals, businesses, government, schools, non-profits, specific industries)
Describe your expected typical clients. If you plan to target a specific industry or type of individual, say so. Who will buy what you're selling? - Competition (Identify your major competitors either in general or specifically)
Use the yellow pages and the Internet to find businesses that are providing the same services and targeting the same clients as your business. List the similarities and differences between their business and yours. List your strengths and weaknesses and what you perceive theirs to be.
Financial Projection
In part one you may have just guessed at how much money you wanted to make and what your expenses might be but now you need to start using more real numbers. Part of doing the financial calculations involves knowing how much money you're going to make. A part of that will involve setting a price on your work or your time — perhaps one of the hardest aspects of starting a DTP business.
Something to keep in mind when setting prices — it's not simply a matter of saying "How much do I charge to design a business card?" or "What's a good hourly rate for desktop publishing?" If you have a business plan you'll work through the calculations and find out how much you need to make to make a go of your business. From there you can then start thinking about hourly rates or how much to charge for specific projects in order to meet your financial goals. Don't put the cart before the horse or the price before the plan.
Expand on your initial financial projection by using actual or estimated figures for your expenses, how much money you want to be making, and how many hours you can devote to income-producing work. Here's a simplified outline showing one way to figure out how much you need to charge for your services:
- Target Salary:
- Taxes, etc.:
It will vary but you could use 30% to 40% of your salary as a reasonable estimate. This would include income taxes, insurance, social security and other salary-related costs. - Overhead/Expenses:
Some expenses you should have hard figures for such as rent and utilities. Do some online window shopping to estimate other expenses you may not currently have such as desktop publishing software, design magazine subscriptions, additional printer supplies. - Total (1+2+3):
- Billable Hours:
Don't forget to subtract holidays, vacation time, and time spent working that isn't billable to a client such as creating your own marketing materials, sending out invoices, or taking a design class. - Total (4) Divided by Billable Hours (5) is Your Hourly Rate:
Once you have your hourly rate you'll need to do additional research to determine whether or not that rate is suitable for the services you provide and realistic for your area, your clients. If the rate is too high, you may have to find ways to make adjustments: lower your salary expectations, cut expenses, or find ways to increase your billable hours.
Your Assignment
Using the outlines, above, and some basic research expand your initial business plan to include a more detailed description of your proposed business and a financial projection that includes a proposed salary, realistic expenses, and an hourly rate based on those figures.
The purpose of this assignment is to take your business from a fuzzy notion that maybe you can make some money doing desktop publishing to a fact-based business plan for a real freelance desktop publishing business.
Freelance Design > Start a Business > Business Plan Basics
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