Once that we are aware of why a financial plan is important for translators and that we know the goals that we want to achieve through this plan. It is high time to start crafting our own financial plan. Before we start, I wanted to clarify that I am not an accountant, so I am going to talk about tips that I have been learning during my professional career.

Today, I am going to talk about two elements that you must include in your financial plan: the business set-up costs and the forecast of sales and expenses.

• Business set-up costs

Before planning what we are going to earn with our services every month, we have to be aware of how much money we have to invest in our businesses to start providing such services.

• Why?

Because, if you have an idea of how much money you need to start providing translation services, you will not be likely to face unexpected costs at the very beginning of your professional career. Most business out there fails because they do not plan beforehand their budgets from the very beginning. This result in investing much more than planned and facing a high debt that they cannot longer settle.

So, we need to bear in mind…

• Business incorporation and taxation.

In some countries (at least in my working countries), this process is free. However, incorporating a company or going freelance can be a complex thing to do when it comes to paying taxes, filling forms or invoicing. Maybe you are thinking about delegating these tasks, so you should bear in mind these costs. This is what I did, for example, in Spain, where the tax system is way more complex than in the UK.

• Business premises and equipment.

Are you thinking about working in an office or from home? Anyway, you will have to think about getting a proper desk, a new computer, a comfortable chair in which you will have to spend long hours.

If you are working from home, look around you. What do you need to be comfortable at work? Write everything down.

Have you got any CAT tools that you may use to provide your services? You may also consider getting any tools that can be useful for your business, for example, a tool to invoice and keep track of payments or maybe you will have to get a new legal dictionary if you work in this field, etc.

You may also consider setting a budget aimed to market your business. We will tackle this issue later on, but think about what things you can do to promote your business… Maybe you should invest in new business cards or in an event taking place in your area… Or maybe you’d rather revamp your website.

• Business insurance.

For more information about what you need to start providing translation and interpreting services, you can read my previous post on how to get your business ready.

 

• Forecast of sales and expenses 

• Why?

It is essential to forecast sales and expenses so you can roughly know how much money you need to make your business succeed. This forecast should cover a whole year; that is 12 month from the beginning of your financial plan.

And you may wonder, how am I supposed to forecast something that we are not sure about?

Ok, we can start with something that we do know for sure: the expenses that we have to face every month or every year, such as electricity, water or gas bills, your rent or the annual amount of money that you are paying annually to be part of a translation association. List all of them and write down the costs next to them.

Then, taking into account what we are charging for our services, we can establish a first amount of money that we need to achieve monthly to keep going with our business; that will be our first goal in our financial plan. At the end of the month, you will have factual data about your expenses and sales, and you will be able to act accordingly.

Next step…

Fill in this worksheet with all your sales and expenses to have a better idea of how much we are spending and how much we have to sell to deal with such expenses.