An essential part of growing a business is looking back at your work, successes and failures to see how you can do better. This theory is especially important for freelancers who need to reflect on their own work, as they don’t have a boss to do a review it for them. That’s why every solopreneur or small business owner needs to do an end-of-the-year summary.
What’s an end-of-the-year summary?
An end-of-the-year summary is a report that outlines and examines your year in business. It’s a summary record that helps you get perspective on the current year and also keep track of the details of your work history.
Why is it important?
Creating an end-of-the-year summary is essential for helping you see what is working and what isn’t working in your business. It allows you to get perspective on:
- Where you are making/losing money
- How you can make more money
- How you can cut costs
- Where you can better invest your time and money
- What opportunities exist for different products or services
While you should look at factors that help you improve all year, planning and executing a summary at the end of every year helps you take a consistent picture of your business across the same time period.
What should you include in your end-of-the-year summary?
Every freelancer will have different factors and considerations to include in their end-of-the-year summary. Depending on the size and type of your business, you might have unique stats, data and components that are meaningful. Include anything you feel is relevant, and always include this list of items in the end-of-the-year summary for your freelance business.
Revenue per service
Break down the services you offer and determine how much money you made on each. This process will help you identify the more in-demand services you might want to focus on in the new year.
For example, if you spent 100 hours on business card design and 300 hours on website design, you might see that website design is in higher demand and decide to focus on that service in the new year.
Revenue/hour per service
With your end-of-the-year summary, it’s not enough to just look at the income brought in by each service. You also need to look at the amount of time you put into each service and compare it to the amount of money you made for the service.
Say you made $10,000 designing business cards and spent 100 hours on those projects. You averaged $100 per hour for that service. If you made $5,000 designing logos but only spent 20 hours on those projects, you averaged $250 per hour.
This information tells you that logo design is a more lucrative way for you to spend your time. Don’t just look at your income — look at your income per hour to find the best ways to spend your time and grow your business.
Income per client
Next, look at your year’s work as it relates to your clients. List your clients along with how much revenue you made from each one. Consider which clients are most valuable to your business and which ones you might want to drop.
If a client is taking a lot of your time and energy, but not bringing you much revenue, consider dropping them.
On the other hand, if you enjoy working with a client who is lucrative for your business, make a plan to see if you can work more with that client.
After you break down your list of clients, dig deeper into that information and list the industry of each client. If you have clients in a variety of industries, look for trends.
For example, if 60 percent of your clients are in one industry, you might see that there is an opportunity for you to grow in that space. As you make your marketing plans for the next year, focus on targeting industries that you have had success with in the past.
Busy and slow times of the year
Pull reports that show a calendar of your projects throughout the year, and look for dips and rises in output. Look for trends that show when you were busy and when you were slow.
Knowing when a slow period is coming will help you next year as you can plan ahead and know when to stretch your resources and schedule time off. Also, note busy times and make arrangements to have extra help from your subcontractors during that those time periods.
Finally, look at the way you spent your money during the year to find out what was worth the cost and what wasn’t. Pull an expense report and review how you spent money as it relates to:
- Office/admin costs
- Education (conferences, books, magazines, course, etc.)
Consider the costs you can cut in the upcoming year. Identify recurring costs that you might no longer need or can reconfigure for a lower annual fee. And determine your ROI on marketing, advertising and educational expenses to help you plan your investments for the new year.
How to prepare your end-of-the-year summary
It’s much easier to pull the data mentioned in this post and create an end-of-the-year summary if you have smart systems for tracking your work and finances.
To simplify the process, use an accounting software and time management tool that helps you track your hours and projects. If you didn’t do it this year, plan ahead for next year and set up programs to track this data. Consider using tools like GoDaddy Online Bookkeeping for accounting and Toggl for time tracking.
With your end-of-the-year summary, you’ll be able to easily look back at your successes, failures and opportunities to find better ways to grow your business and increase your income.
Also published on Medium.