How to create a self-employed business plan

For new self-employed business owners, it’s important to create a business plan to keep your new venture on track. New ideas evolve over time, and without creating a solid plan at the beginning of your new business it can be easy to get off-track with your overall goals, KPIs (Key Performance Indicators), and even your growth timeline.

Having a business plan to refer back to, or adjust if necessary, can be one of the key principles to developing your business over time.

In this blog from QuickBooks, we discuss some of the key components and resources you may need to develop a solid business plan.

How to create a business plan for self-employment

Creating a self-employed business plan requires a few essential steps. Although your business plan is likely to change over time, meaning you may want to return to this document and make amendments, in the early days of your business this will be a go-to guide for yourself or even new employees should your business expand. 

You can also use your business plan to attract new investment or interest from collaborators or suppliers if necessary. This is the crucial first step in developing a business. Here are the 10 steps you can follow to ensure your new plan creates a solid foundation for your future work.

1) Decide on a business offering

In this part of your business plan you can detail exactly what services or products you will offer. How will these elements be delivered to your customer base? What are the specific products or services you will provide? 

Some self-employed business ideas may start out as fairly vague, for instance, deciding to open a clothes shop or start a software company. It is at this point of the planning stage that you should detail your refined idea to describe the specific service or product you want to offer. 

For instance, using the above examples you may decide that your clothes shop will be a vintage wholesaler, or your software company may develop third-party apps that connect to social media. 

Once you have determined the specifics of your business, you can list all of the services and offerings your business provides. In the case of a vintage clothes shop this may look something like:

• Buying clothes in bulk from suppliers.

• Buying clothes from individual sellers.

• Sorting through bulk buys to determine individual sale items and items sold ‘by weight’.

• Selling bulk items and individual items.

• Evaluating rare and unique item values for customers.

In this instance, you have detailed a specific list of services that help to better describe how your business will operate on a daily basis.

2) Determine your business goals & mission statement

Explaining the goals of your business gives you targets and KPIs to aim for. This section could detail financial goals or even brand awareness goals.

By referring back to this section in the future, you can decide if your business is on track depending on your current timescale. Business goals may look like:

• 20% Increase in annual sales in Year 2 vs Year 1

• £100,000 annual turnover

• Increase social media brand mentions by 45% in year 2

Once these goals are in place you can decide if your business is on track. If you are close to achieving these goals in your given timeframe then you know your business plan is working as intended.

If you are in danger of failing these goals you know to take a look back and reassess your current business operations to bring these KPIs back in line; and even further than this, if you have exceeded these goals before their given timeframe then you know you are running a successful business and may decide to make use of these results by re-investing extra money into new areas.

In terms of your mission statement, this should be an introductory section that offers a short pitch, similar to an elevator pitch, that succinctly explains the mission statement of your business. A mission statement can be easily used to explain your business to potential investors or partners.

3) Conduct market research & understand your customer base

Market research requires a few steps to get an accurate understanding of your competitors, your customers, and the spectrum of your industry as a whole. Conducting market research not only gives you a clear indication of your potential success, but it can also show you new opportunities for your business. These can include unexplored niches, or services which, on the surface, may have looked profitable, but in actuality may not be worth the investment.

Using the example of a software company, let’s look at how the results of your market research may cause you to pivot your business plans.

• Following the success of some recent mobile apps, you decide to start a company that develops its own mobile apps.

• You already have experience in developing apps for personal use, for fun, or as part of a degree at university or a previous job.

• From this experience, you know development can be started with a relatively low initial investment compared to traditional businesses.

All of these factors have encouraged you to create an app development company, however, during your market research you discover the following:

• The app market is saturated, with millions of apps available. Standing out requires significant marketing efforts.

• Acquiring users can be expensive, often costing more than the revenue generated per user.

• Many apps rely on advertising, which requires a large user base to generate substantial income. Alternatively, in-app purchases and subscriptions need high conversion rates.

• Apps require ongoing maintenance, updates, and customer support, which adds to the costs.

• App stores (like Apple's App Store and Google Play) take a significant cut of the revenue (up to 30%).

After considering these points you realise it may not be feasible to simply create a company that develops first-party apps, this is in part due to the fact that updates or patches to your app can be a costly ongoing expense that is both a requirement for gaining new customers and for gaining money - one you cannot afford without a large user base from the get-go.

However, these factors have also made you realise that you could instead develop apps for other companies, and charge extra for additional patches or app updates once the final product has been delivered.

In this case you would remove many of the cost burdens from your company and place them on another company, who are paying you to make changes and fixes.

This is just one example of how market research can completely change your company for the better, helping you to identify new areas of focus or adapt your business to an entirely new market.

Discover our in-depth guide to market research in this blog.

4) Analyse and understand your competition 

Looking into competitors can give you a good example of the types of companies and services that may divert potential customers away from your company. It will also give you a good idea of how customers react to different marketing styles, offers, price ranges, and a number of other factors that require proper analysis in order to improve your own services. 

Thorough competitor analysis may also reveal unexpected competition in the market. For instance, you may already know who your largest competitors will be based on their similarities to your own service, but there may be other companies who offer a similar product or service as only one part of their business. In this instance, competitor analysis can reveal more about your overall industry than you originally realised.

5) Formulate a brand for your business

Your brand is how customers will differentiate you from other businesses, and solid branding can help to gain new customers by attracting them to your business. 

This partly consists of competitor research, but you can also conduct surveys on branding to determine if there is a specific look, colour scheme, or overall company philosophy that customers react well to.

6) Create a marketing strategy 

Marketing strategies detail the ways in which your company or brand will be marketed to your target audience, which may include the marketing channels and platforms you will use, marketing types such as video adverts or email notifications, and the techniques you will use to identify new clients.

Explore our guide on marketing ideas for small businesses for detailed information.

7) Develop a pricing strategy 

Pricing strategies will differ greatly between companies. For many self-employed businesses, their strategy may be to simply undercut their competition, which can sometimes work to gain a foothold in your market. 

However, this is not always a viable tactic when you consider production or development costs, supplier fees, and a number of other costs associated with your industry. 

In this case, it is important to consider how you will price your services or products to ensure you gain maximum profit, whilst still being able to compete with your competitors’ pricing structure.

Discover expert pricing strategies.

8) Put together a financial forecast 

Financial forecasting consists of detailing your available funds at the start of your business, and allocating these funds in a timetable along with a list of your expenditures, and expected profit/loss.

This will include:

• Your currently available funds

• A timeline of your estimated revenue per month

• A list of all expenditures

• A profit and loss statement that takes into account your expected expenses vs expected revenue

9) Plan contingencies for all outcomes

As with any business, it is likely that something will not go to plan along the way. One of the best ways to ensure your future financial success is to prepare for any contingencies by creating a ‘rainy day’ fund, where you can offset any unexpected expenses by having cash to fall back on. This should be budgeted for at the beginning of your business, and usually continuously added to in the case of emergencies.

10) Compile and execute your business plan

Once you have gathered all of the above information you are ready to execute your self-employed business plan. This information should give you everything you need to set up your business, keep your business plans on track, and plan for any contingencies that may occur in your first few years.

Business plan checklist

An effective business plan should consist of the following:

• Detailed business offerings

• A mission statement or elevator pitch

• Thorough market and customer research

• Competitor analysis

• Create a brand for your business

• Marketing strategy

• Pricing strategy

• Financial forecast

• Contingency planning

• Plans to execute your business idea

Evaluate your business needs

Now we have discussed how to create an effective self-employed business plan, you should evaluate which resources and systems your new company will need. It can be easy to take everything on yourself when starting a new business, but this can often lead to mistakes and burnout, particularly if you are working outside of your area of expertise. 

In most cases, it can be of great help to hire an accountant and make use of accounting automation software for your self-employed business. Taking the stress away from your accounting process means you are more likely to be compliant with the various taxes you are liable to pay as a self-employed individual, as well as the taxes owed from your business.

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