Business Plans for Translators
By Kevin Lossner
I suspect that most of us in the business have never written a formal business plan nor seen the need to do so. If work is coming in at a good pace and all the taxes and bills are paid with enough left over for extras, then there is indeed no urgent reason to think about such things. Nonetheless, the insight one can gain from writing a formal business plan may be of great benefit even to a highly successful business. And when things get rough or extra funds are needed for equipment and software investments or other things, then a good business plan can make all the difference?
What is a business plan? Good overview descriptions can be found on Wikipedia and elsewhere. Put simply, a business plan is a statement of goals, the reasons why you think they are relevant and the plan for achieving them. There are no rigid rules for the content, but plans usually include an analysis of the strengths, weaknesses, opportunities and threats to the business (aka SWOT analysis) and background on the businesses personnel and other resources. Depending on the purpose of the business plan, financial data (such as profit and loss statements) may be included.
If you are an agency owner with an incorporated business, a number of employees, large cash inflows and outflows, etc. this is possibly all rather familiar. Freelance translators, however, are probably less familiar with the subject. In the country where I live (Germany), it may have been necessary for a freelance translator who used funding from the German federal employment agency for business startups to write a business plan, but even then, many people let their accountants write a minimal plan and scarcely give it a glance. A good business plan, however, is not a one-off effort at the start of a business or just a dog-and-pony show to fool a bank into giving a loan. It is a tool to help you understand your business in its past and present state and to plan where it should be going and how to get there.
Some specific cases where business plans are of value to a freelance translator might include:
starting the business where funding may be needed for equipment and software
investments in new technology (such as servers or upgraded licenses) for an ongoing business
a loan for building an addition to a home to provide separate office space
detailing possible cooperation with other businesses to form partnerships, etc.
planning a move "up market" to increase the quality of one's customer base
(… fill in your own business quandary to solve here)
A business plan can be a good focus of discussion when taking advice from consultants, your tax advisor or a business mentor. It is another way of showing your professional seriousness and is treated accordingly by lending institutions among others.
My business plans
My first foray into written business planning was many years ago when I was in the process of planning a spin-off from an existing consulting business, and it was necessary to define in detail the responsibilities and ownership shares for each partner in the new business. A lot of the writing at that time was handled by attorneys and my partners with my occasional review and commentary, and I must admit I didn't learn much more than keywords for the whole process. Even creating some educational software on the subject years before that hadn't taught me a lot: there is a world of difference between reading about something and actually doing it.
My first business plan for which I can claim full credit was written in the months during which I planned my transition from a wage slave in my newly adopted country back to an independent businessperson. At first my intention was to qualify for the "transition funding", but I soon found the process so informative and valuable for shaping my future that I continued to develop the plan even after I was told that as a foreigner with only a few months left on his residence visa I didn't qualify. It was sort of like brainstorming, and it opened my eyes to a lot of resources that I had not been consciously aware of before. I ran my freelance translating business according to the plan for the first two years and got off to a very good start.
A few years later I had merged my business with another translator, we were thinking of hiring one or more employees for back office tasks and also considering buying or building a house with enough room for living and business. There were many, many things to consider, bank officers to convince and potential employees to inform of how we work and why and what their roles should be. Once again, time invested in updating the business plan was well spent, and we were surprised to find that our business was better and our risks lower than we had assumed.
Business plan outline
There are numerous free outlines available for writing business plans; I started with one of these from the web site of a local chamber of commerce. There are commercial web sites that are ready and willing to sell you a plan for $30 or so, but I think the free samples are a good enough starting point for most people. Take the template and adapt it to fit your business. The outline that eventually developed for our business plan looked something like this:
0.1.1 Objectives of the business plan
0.1.2 Objectives of the company
0.2 Success factors
0.3 Status and plans
1 The company
1.1 Areas of activity
1.2 Legal structure
1.3 Personnel and organization
1.3.1 In-house personnel
1.3.2 External personnel (freelance, consultants, etc.)
1.4 Professional organizations
1.5 Location and technology
2 Market and competitive situation
2.1 Unique selling points of the company
2.2 The domestic and international translation market
2.3.1 Customer list (as of )
2.3.2 Classification of the customers
2.3.3 Distribution of business from the customers
2.4.1 External web sites
2.4.2 Our Internet presence
2.4.3 Participation in newsgroups, online forums, etc.
2.4.4 Future plans for advertising development
3 SWOT analysis
4.1 Current situation
4.1.1 Overview of fiscal years XXXX and YYYY
4.1.2 Business accounts
4.2 Desired situation
5.1 Authorized signatories
5.2 Technical tools for management
5.3 Pricing and quotations
6 Insurance policies
6.1 Professional liability, etc.
7 Business development plans 200X-200Y
7.2 Continuing education and qualification
7.3 Internal technical infrastructure
7.4 Cooperative projects
Appendix 1: Resumes
Appendix 2: Online profiles & Internet site (page printouts)
Appendix 3: Profit & loss statements
Appendix 4: Partnership contract
Appendix 5: Customer letters, certificates, etc.
Appendix 6: Insurance documentation
Appendix 7: Hardware, software, and reference inventories
This outline structure is by no means optimized; it is presented merely as an example. But it should give you some idea of how a business plan for a small translation partnership might look.
Filling in the details
This is the hard part, of course, but this is where you really get to know the "hidden" aspects of your business. Details for my business plan were drawn from many sources. My accounting software provided some nice, easy-to-understand graphs about the earnings from my top customers (showing the spread of risk); ProZ charts for rates showed the relationship of my rates to others working the online market; web statistics showed how many hits my web sites received and how these might relate to other activities like published articles, courses taught, etc. How much time and effort you invest here will depend on how you plan to use the business plan. You might very well have different plans with different levels of detail for various purposes.
Writing a business plan can be hard. And, unlike translation work, nobody pays you to do it – or do they? I firmly believe that the clearer understanding you gain from a well-formulated plan helps you focus and work better, identify weaknesses in your business (oh gee – maybe I need written terms and conditions for my customers!) and correct them, explain your business to people who may need to understand it (really, Uncle Moneybanks, I can repay that home loan!) and overall become more professional in planning and performing your work.