How to Conduct an End-of-Year Audit on Your Freelance Business
When was the last time you evaluated your business?
Throughout the year, it’s easy to get caught up in the day-to-day of running a business without ever looking up from your laptop. That’s why the end of the year is an excellent time to look back and conduct an audit of your freelance business.
What should you audit?
While the elements you audit can vary depending on your individual business goals, here’s a good framework to start with:
Financials: Take a deep dive into the numbers behind your business including income, pricing, and expenses.
Clients: Were the types of clients you worked with a good fit? Is there another industry or type of client you want to explore?
Time: How many hours did you work each week/month? Did you take time off?
Services: Did you notice more demand for one offering over another? Are you working on projects you enjoy *and* that bring in revenue?
Systems: How do you keep your business organized? Take a look at processes, boundaries, and contracts.
Let’s review each of these sections and which questions you should ask yourself while conducting your end-of-year audit.
Audit your financials
Start your audit by doing a deep dive into all things financial. Did you achieve your income goals this year? What were your biggest expenses? Did you raise your rates? Can you afford to expand your team in the next year?
Whether you use accounting software or a spreadsheet to track your money in and out, dig into the numbers and see how they align with your business goals. If you aren’t confident with the financial side of freelancing, work with an accountant to make sure you’re on the right track.
Once you have a clear picture of how much you’re making and spending, you can come up with new money goals and identify where you can make adjustments to your business to meet those goals.
Audit your time
Be realistic here: How much time did you spend working this year? 40+ hour weeks? Five-hour days? Did you take time off? Whether you feel like you worked too much or just enough, use these insights to set goals around how much you want to work next year. Maybe you only want to work 25 hours each week. Or perhaps you want to take a few days off every month. It’s important to be realistic about how much you’re working and how much you want to work to avoid burnout and build a sustainable business around your life — and not the other way around.
In addition to tracking how often you work on a daily or weekly basis, figure out how much time you spend on certain tasks. For example, maybe you find that you spend hours creating proposals for each potential client. If this is the case, then you could use a scoping tool to streamline your process and save a significant amount of time in the future.
If you don’t know how much time you spent on your business, make it a point to track your hours going forward. Use a tool like Toggl or Clockify to see how much time you’re spending on each administrative task, project, or client.
Understanding how much time you realistically spend on your business can help you identify where you can cut back or which tasks you could outsource.
Audit your clients
Look back at all of the clients you worked with this year — who was your favorite? Did you have any bad client experiences? Identify what about your clients made them a dream or a not-so-great fit.
Sometimes we don’t know exactly who our dream client is until we work with them which is why it’s important to identify the qualities of your favorite clients. Make a list of all of the positive qualities of your favorite client experiences, as well as your own values, so you know what to look for when talking to prospective clients next year.
Audit your services
Another essential element to audit at the end of the year is your service offerings. What are your primary services? Did you notice more demand for one offering over another? Are you working on projects you enjoy? Now’s the time to refine your offerings or explore adding services that complement your current ones and can help you earn more.
This is also the time to evaluate your pricing. Are you using value-based pricing? Has the market changed? Going into a new year is an excellent time to raise your rates. If you don’t know what you should be charging, explore our free scope of work templates to see what other freelancers are charging.
Audit your systems
Finally, audit your business operations. Take a look at processes, boundaries, and contracts. How do you keep your business organized? What worked well and what challenges did you run into? Consider everything from your internal tools to client communication to contract terms.
Maybe something you struggled with this year is late payments. If this is the case, then it would be a good idea to add a late fee to your contracts going forward. Another challenge could've been that you spent too much time switching tabs to access all of the tools you need to run your business. If this sounds familiar, then it’s essential to streamline your process with an all-in-one freelance platform.
An end-of-year audit is a perfect opportunity to get insights into what’s working well in your business and what could use some improvement. After conducting an audit on your freelance business, you’ll feel more confident than ever going into a new year.