Well, friends, it’s January yet again (I know, right?) and it’s quiet here in the Exciting World of Journalism. We typically have a bit of a lull between Christmas and mid-January, and I do what I can every year to take advantage of this opportunity to look over my books and make sure that I’m tracking everything I think I need to know to keep my freelancing business going smoothly.
I became a full-time freelance journalist in January 2011, days after my newsroom was cleared. A new media company had bought my small local newspaper, and fired all of us, except our managing editor, who was kept on long enough to hire replacements. It went from a thriving small newspaper of about 12 people to a newspaper with just two people overnight. And thus, my freelancing business was born.
But just because my job is making words, it doesn’t really mean that my business necessarily runs any differently from yours at the nuts and bolts level. I still have to make connections, track my expenses, and make sure I’m keeping my head above water, so I thought you might want to see what my process looks like under the hood.
I ask myself these three questions every year to assess my small business.
1. What do I want to know about last year that I can’t find out?
When tracking data for your business, there’s only so much you can really keep track of at a time. I’ve done the alarmingly large spreadsheets tracking everything, only to end up spending more time tracking than working, and I’ve done the base key performance indicators (KPIs) that everybody definitely needs to track, and over time, I’ve kind of found that there’s a bit of an ebb and flow to a truly efficient measurement process.
So, now I ask myself: What do I not know right now that I wish I did? For me, for 2023, it’s how many actual billable hours I worked. I kind of have an idea, but I don’t have any hard numbers, which makes it hard to increase my billable to non-billable ratio. If I learn that I’m actually only writing four hours a day, and doing administrative work for the other four to six, well, maybe I can find another hour in there for billable work. I could increase my productivity or maybe even recapture some time for myself.
That’s a new metric I’m tracking for the new year.
2. How useful were the metrics I did track?
This is a somewhat obvious follow-up to the first, but it’s necessary. Did the metrics I tracked for my small business even matter last year? Was I spending too much time sub-categorizing spending that didn’t need to be sub-categorized in my accounting software? Did I make my life overly complicated in new and exciting ways?
When I find metrics I’m not going to use, or that I no longer care about, I dump ’em. That’s right. I don’t nuke the old data, in case I change my mind later, but moving into the new year, I don’t track that metric anymore. I also remove metrics if I add new ones. For example, the new billable hours metric is replacing a more basic article-by-project count. You can only manage so many metrics, so you have to decide what’s most important.
3. Is my financial setup still serving me?
When you first start a new business, everyone will tell you that you need things like business checking accounts, business credit lines, and all of that — but as a solopreneur, sometimes it’s really overkill (this can also apply to a small shop). So, it’s important to take a look at what you need, not what other people think you need.
For example, you might be running a small service-oriented business that doesn’t collect sales tax. That’s pretty simple accounting, so you may be able to run it with a basic ledger by yourself and use just a business checking and savings combo. But let’s say that you add some employees this year — getting a business credit line might help if you don’t have significant savings, just so you can ensure they’ll always be paid on time. As your company grows, your needs will change, and maybe in five years you’ll want to farm out your accounting to a local accountant, or hire one part time.
Regardless of where you are now and where you want to go, looking at your accounting at least once a year is a great way to check the health of your business. If you’re not collecting money fast enough, you’ll know, or if you are having trouble with co-mingling funds, that will become apparent, and in the quiet days of January, you’ll have the time to correct the issues you find.
The only way to know your business’s health is to take its temperature
It can be tempting to never look at the moving parts of your small business, but if you don’t, you’re going to be in real trouble at some point. Take its temperature on the regular, especially during your slow season, so you have a little time to sit and think. This way, you’ll be ensuring that your small business will live on for as long as you’re having a good time doing what you do.
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