As you’ve probably noticed by now, a significant part of being successful as a freelancer is staying organized. When you’re your own boss, there’s a lot of work to be done just to keep your business going, which can be frustrating—but the good news is that if you develop a few tracking systems and simple habits, you can minimize the time your business tasks require, so you can focus on creating e-Learning materials.
So let’s get into it! From my perspective, here are the four most important things you’ll need to track as a freelance e-Learning Designer.
While it might seem like an obvious idea to keep track of the money you have coming in, the important part about keeping a close eye on your revenue is that you do it regularly. For example, I recommend getting in the habit of tracking each payment as soon as it occurs—because the longer you wait, the more likely you are to have problems later on.
In the case of revenue, tracking it means using software to record each payment you receive. QuickBooks, YNAB (You Need A Budget), Microsoft Excel, and even Google Sheets are all great tools for this. Be sure to test-drive a few options, because a lot of your decision will come down to which tool is easiest for you to use, and which you’re comfortable using on a long-term basis.
In addition to revenue-tracking software, you’ll also want to make sure you’re keeping an eye on the invoices you’re sending to clients. By tracking invoices, you’ll be able to compare the money you’re owed with the money that’s come in. I recommend blocking out a recurring time each week for invoicing. Make sure each invoice includes key information, like the client’s name, the date, a detailed description of your deliverable(s) and your expected payment terms (for example, if you require payment within 30 days, list “net 30” on the invoice).
Again, the hard part of this practice will be making it a habit, so anything you can do to keep yourself disciplined will be beneficial. In the past, I’ve blocked out an hour each Friday on my calendar for tracking revenue, to ensure that I’m setting aside time for it, and making it part of my routine.
Expenses can be difficult to track, because it requires being detail-oriented and diligent. The important thing to remember is this: Each and every expense you track will save you money in the long run, and every expense you forget to track will cost you. When tax time arrives, you’ll be able to deduct your expenses from what you owe, so make sure you’re aware of every dollar you’re spending towards the success of your business. The most common expenses for my business are:
- Website domain and hosting fees
- Internet connection bills
- Cell phone bills
- Software subscription fees
- Office supplies
- Legal and professional fees
- Business meals
By tracking your receipts, you’re keeping proof of the money you’ve spent investing in your business, so that total can be deducted from your taxes. There’s no way around the fact that keeping track of receipts, bills, and payments is a pain, so make sure you’re easing the process for yourself whenever you can. For example, I’ve gotten in the habit of taking pictures of my receipts and uploading them to my DropBox cloud storage as soon as I get them.
Just like tracking revenue, the hard part about tracking expenses is learning the habit, and sticking with it on a regular basis. There’s nothing worse than having to sort through an entire year’s worth of receipts because of your own procrastination!
Once you have solid systems in place for tracking your revenue and your expenses, you’ll have the ability to monitor both together and effectively gauge your cash flow. Your cash flow is your opportunity to track the money going in and out of your business, and determine if you’re making a profit, or losing money, over a given period of time. For example, at the end of each month, I review my own cash flow to help me make decisions about both sides of the equation—sometimes that’s a reminder to keep my expenses reined in, and other times it can serve as a reminder to start reaching out to clients with overdue payments.
Most freelancers and small businesses start out with more expenses than revenue, and that’s normal—after all, it takes money to make money, and you need to start by investing capital in the basic tools that will allow you to work with clients. The point of cash flow monitoring is not to make sure that you’re turning a profit every month—you won’t, but instead will likely have good months and bad months—but rather to give yourself a longer-term perspective to enable smart money-related decisions.
Cash flow information is most useful for predicting your own financial future, because you’re not only tracking financial events that have happened (like client payments and expenses); you’re also integrating information about upcoming financial events. For example, if you know that your annual website hosting fees will be due in two months, your cash flow can tell you the impact those fees will have on your profit. Similarly, understanding the money you’re expecting next month will help you see if the month is on track to be profitable or not.
The most important thing about tracking your cash flow is predicting financial problems and emergencies. For example, if you can forecast that you won’t have enough money to pay your ongoing expenses in three months, monitoring your cash flow can give you early warning that you’ll need to take action. Hopefully, you never encounter this type of situation, but if you do, keeping close tabs on your cash flow may be the key to helping your business survive.
And remember: As I mentioned previously, it’s important to keep your business financial accounts and your personal financial accounts separate. Tracking your own cash flow is nearly impossible when you’re having to separate your personal transactions from your business transactions.
Lastly, it’s important to make sure you’re keeping track of your own personal and professional goals on an ongoing basis. It’s very easy to get lost in the urgency of your work (and all of that pesky financial tracking you have to do), and often times, the first thing freelancers stop tracking is their own progress and professional development. (If you haven’t written your own goals yet, check out my post on Knowing Your Goals as an e-Learning Freelancer.)
Make time to review your own progress: What strides have you made towards your short-, medium-, and long-term goals? Which might require renewed dedication? If you’re not seeing the results you wanted, what changes can you make to help get you back on track?
It Gets Easier, I Promise
To be totally honest, tracking is my least favorite part of being a freelancer. Tracking revenue, expenses, cash flow, and goals means dealing with complicated minutiae all the time, and it never ends. But as much as it can be a pain, once you’ve mastered the habits and tools, it becomes a very small part of your life as a professional, and will essentially evolve from a daunting and overwhelming series of tasks into a series of small tasks that enable the success of your business.
To help you get started, here are a few links to help you delve deeper:
- QuickBooks: “10 Tax Deductions Every Freelancer Needs to Know”
- IRS Publication 535: Common Business Expenses and Deduction Rules
As you go through your own tracking activities, make sure to pat yourself on the back; don’t forget that by doing this, you’re setting yourself up to succeed!