Over the last few weeks, we’ve talked about why you should create a freelance income plan and the top mistakes freelancers make when creating their plan.
(Basically, an income plan outlines EXACTLY how you’re going to hit your income goal and have your most profitable year yet!)
Now, it’s time to talk about how to create your plan.
Watch the video below or read on to learn how to create your own freelance income plan!
An income plan helps you be intentional about growing your business and scaling your income, always ensuring your business is GROWING, not staying the same or worse -- decreasing every year.
Here’s a graph that shows how my income has increased over the last four years.
And guess what? I've already earned what I made in 2016 and I'm only halfway through 2017 while writing this.
Marketing played a big role in how I was able to achieve this but before I did any kind of marketing, I created an income plan to help me understand:
How I could revamp my design packages to get more client inquiries.
How much I should be charging to earn the money I need.
Passive income streams I could add to my design business that would boost my income without requiring lots of effort.
Without this plan in place, no amount of marketing would have saved my business from agonizingly slow growth.
74% of the freelancers I surveyed said they have an income goal but 75% said they DON’T have an income plan outlining how they’re going to reach their goal.
Without a plan, your income goal will just get lost in the other 1500 thoughts per minute that the average human being experiences.
I don’t want that to happen to you. So today, I’m going to teach you, step-by-step, how to create your own freelance income plan. You can recreate the spreadsheet I use or you can save a LOT of time and purchase my Income Plan Spreadsheet instead.
How to create your income plan
Before I start, I want to explain three important things:
I’m using Google Sheets (part of Google Drive) for this tutorial. It’s free!
I’m using US dollars as the currency for this example. If you’re using my Income Plan Template and you don’t use USD, you can change your currency by clicking Format > Number > More Formats > Currency.
The goals and figures I use in this example are not real.
Now, let’s create your income plan!
01. Calculate your yearly income goal
Use my previous blog post to learn how to work out your yearly income goal and approximately how much tax you’ll have to pay on it.
02. Set a 'Stretch Goal'
Let’s say you completed step one and realized you need to make $50k per year.
Type that income goal in the ‘Realistic Income Goal’ section.
For this example, I’ve chosen $50,000.
Next to ‘Stretch Income Goal’, type a goal that’s a little higher than your realistic goal. This goal should challenge you more and it’s there to help you reach higher heights with your business.
In this example, I’ve chosen $80,000 as our stretch goal.
If you used my previous blog post, it taught you how to work out how much tax you willapproximately have to pay. Add that figure to the ‘Tax’ section of the spreadsheet.
Leave the other sections blank because we’ll come back to them.
In this section, fill in your current services!
It helps if you have packages. If you don’t, you should consider packaging up your services. It makes it easier for you to predict your income and it’s also easier on clients because clients prefer to know upfront how much your services will cost and what they will get. A package accomplishes both of those things!
In the spreadsheet, you'll need to enter your services like this:
- First, enter the name of the service. (In the screenshot above, I just named them Service #1 etc!)
- Enter the price of each package.
- How many of each package do you think you'll sell per month? Enter that number in the 'Predicted Monthly Sales' section.
- How many months will you sell this package in a year? Or, think of it like this: how many clients will you book for this package?
- Once you filled out those section, your 'Predicted Yearly Income' will automatically be calculatedone
04. Evergreen products
Fill in any existing products you have. Simply check your bookkeeping system to find out how many sales you make on average per month from your products and add them to this section of the spreadsheet.
Don’t have any products? I want you to think of one product you could launch in the next twelve months. An Ebook or a template is the easiest product to start with.
Here’s an example:
Maybe you plan on launching a new service or product? If not, you definitely should.
Launches are a one-time event. Instead of creating a product and simply adding it to your website, hoping sales will magically roll in, a ‘launch’ is when you build hype around that new product. You ‘launch’ a product by promoting it across social media, your blog, your newsletter and maybe in webinars.
In this example, let's plan to launch a $10 product and predict 100 sales.
Need help predicting sales? Most businesses convert 1 - 3% of their audience, so add the size of your email list, communities and social media following together, then work out what 1 - 3% of that is.
A webinar is a live seminar conducted over the internet. You can use tools like Webinarjam to host your webinar!
In this example, I’ve planned two webinars throughout the year to promote and sell our product and generate some extra income.
In this section, plan a few webinars to generate more sales of your digital products!
07. Check the grey box at the top of the spreadsheet
A sum of all your predicted sales will now appear in the grey box. If you put in the work and stick to your income plan, this is the income you are most likely to make over the next twelve months.
How does it compare to your income goals?
If it’s too low, adjust the price of your services and products. If it’s higher than you thought, you now know you need to dream bigger and set higher income goals.
08. Business Expenses
Now, if you’re using my Income Plan Spreadsheet, click ‘Business Expenses’ at the bottom of the screen.
If you’re creating your own spreadsheet, create a new sheet in Google Sheets by clicking Insert > New Sheet.
Then, check your statements or your bookkeeping system and add each expense to the Business Expenses section of your Income Plan.
(Need to add more rows for more expenses? Click a row > Right click > Insert row.)
09. Go back to your income plan
At the bottom of the Google Sheets screen, click ‘Income Plan’.
Add your business expenses TOTAL in the ‘expenses’ section near the top of your income plan.
After you do that, a total will automatically appear in the ‘Income after tax & business expenses’ section. This section shows you how much income you’re actually taking home.
10. Income Tracker
Go to the bottom of the screen again. You’ll find the ‘Income Tracker’.
Each month, open the ‘Income Tracker’ and add your monthly income for each income stream.
Freelance income fluctuates. This Income Tracker helps you see what you’re making each month on average from each of your income streams.
Sometimes, certain income streams don’t make as much as you’d hoped. This tracker helps you see which income streams to get rid of and which to invest more time in.
Voila! That is how you create a super simple income plan to help you understand exactly HOW to hit your income goals.
You can purchase this exact income plan template from my website! Just click the button below to learn more and buy it.