The end-of-the-year period is one that presents a paradox for those who work as freelancers. While the entire professional environment is gearing down for the festive holidays, you may find yourself caught up in a whirlwind activity of meeting deadlines and taking care of outstanding payment issues with the end-of-year work push that prevents you from receiving any new inquiries. However, the most successful freelance writers are the ones who do one thing that can be implemented by everyone: they use the last weeks of every year as a freelance business review to help restructure their freelance business.

The Financial Audit Part of Freelance Business Review

The first key to a good year-end freelance business review is an examination of your finances. Financial management is key to financial freedom. Most freelancers will look at their revenue for the year and stop there. They see a number higher than it was last year, and they know they’re doing well because they’re doing better than they did before. However, revenue isn’t what you should judge by only an increase by a margin. More income doesn’t necessarily mean it’s better for your finances or your freedom; what if you had spent as much as you’ve earned? To really see what’s going on in your finances, it’s important to look at “net” reality. First, start by subtracting all your taxes, software, insurance, equipment, and so on from your revenue. 

If, for example, your revenue increased 20% but your expenses increased 30% more, what really went on in your business is that it’s become inefficient for the year. In addition to the simple numbers, you need to determine your effective hourly rate on each large project. This is commonly a shocking experience. You might realize that the high-ticket project you flaunted as your accomplishment actually paid you less per hour than your smaller, easier tasks due to multiple revisions or too many meetings.

 It’s also the right time to undertake your subscription audit. Freelancers commonly subscribe to each month’s ensemble of SEO tools, design kits, or project management software, but cease using it following a few months. 

Finally, your financial review needs to consider your cash flow consistency. Did you have a feast in May and a famine in August? If your income curve resembles a roller coaster ride, your aim for the upcoming year should be more than just more money; it ought to be more regular. This might involve transitioning away from the odd project payments and toward retainers and services agreements. By the time you are done with this part of your financial review, you ought to have a clear idea of the value of your time as well as the amount of money that you ought to set aside for taxes and your savings.

The Portfolio Audit Part of Freelance Business Review 

Once the numbers are nailed down, the second element of your end-of-year freelance business review is the people who are paying you. The question of who you work with is one thing that changes as you mature from a young freelance business. It is perfectly normal for a young freelance business to work for anyone who has a checkbook. However, as you mature, you need to ensure that your business is selective about the partners that you work with. Not all dollars are created equal. 

Use the 80/20 rule on your book of business, finding the 20% of your clients who contribute to 80% of your finances. These are your best clients. On the other hand, review the list of those who contributed to 80% of your stress. These are your clients who don’t respect your boundaries, are late on payments, or have projects that wear you out. The beginning of the year is the ideal time to edit your list of clients. You do not have to fire the challenging ones, per se; you can try charging them a higher rate to ensure that in the end, you earn as much as the stress. 

This audit will also indicate where you are getting your work. If 90% of what you have is coming from some source, such as a single connection, like LinkedIn, you have to put more effort into the platform. Your entire business will fail if you lose that single connection. 

The Operational Audit for Growth

The final key of your year-end freelancer business review regards the machine itself, that is, the habits that enable you to do your job. Many freelancers face what is called the glass ceiling that prevents them from earning more money because there are simply no more hours in the day. The key to overcoming this ceiling is operational efficiency. Think back on the average day you had this year. What were your time leaks? Perhaps you were doing too much of your own invoicing. Maybe you were wasting time on emails trying to schedule meetings.

It is at this point that you determine what areas of your business you can automate. Perhaps you have not yet put in place a scheduling tool or an automated welcome sequence for new clients. These should be your January priorities. It is the same thing as hiring a virtual assistant. It frees up the horsepower in your brain to do creative thinking, which actually makes you money. Finally, take a look at your ‘tech stack.’ Perhaps your current project management system feels clunky to you. You find you’re avoiding using it. It’s time to upgrade. Your tools should be invisible to you, not simply an item on your list of things to do.

Finally, don’t forget about the most valuable member of your company: yourself. A self-review that looks solely at money and processes but fails to consider burnout is essentially a prescription for disaster. How many vacation days did you actually take this past year? Have you met your own objectives for your health or hobby projects? If you find that your freelancing career is succeeding but your own life is not, it’s clear that your business model has some underlying flaws, and a new lifestyle needs to be developed. 

Final Thoughts 

Conducting a year-end freelance business review is more of a necessity, yet it’s a show of your professionalism. It is the transition from being reactive to being proactive. It’s the point where you can transition from being a victim of your email box to being the master of your career. When closing out the year, it’s essential to be mindful of how your freelancing year went and how to grow. You can join our freelance community for more freelancing tips.