Is your business making money?

On my daily net surf today I stumbled upon this interesting post on LinkedIn:

Are you running a business or a hobby?

When working freelance, in any sector, it is easy to get caught up in the excitement, stress, detail and buzz of performing your work, leaving the number crunching on the back burner, or even completely on hold. While many freelancers have accountants to handle all that - which may or may not be avisable/affordable, depending on the scale and complexity of your business - it is also important to keep track of exactly how much money you are making on a day-to-day basis. Becuase the bottom line is this - no matter how much you love your work, if it's not making you money to pay your bills and put food on your table, then in the long term it's not a business, it's a hobby. The latter is all well and good - but you need to know which of the two you are putting all that time and energy - and money -  into.

It's vital to keep up to date with the figures

All it takes is a few minutes on a regular basis to feed your income and expenses into an Excel spreadsheet (or similar) and let it do the maths. I do this weekly, although in the meantime I keep a log sheet on my desk to jot down all the basic info on each job as I deliver it. Apart from helping to keep on top of your accounts - your daily/weekly records make accounting and tax returns so much easier - it is a simple way of getting a feel of how your business is going and allows to you take steps to improve your profitability as you go along, rather than getting a nasty surprise at the end of the quarter.

Back in 2008, some of my fellow members of the Spanish Association of Translators, Copy-Editors and Interpreters, ASETRAD, developed a fantastic little tool for calculating rates called CalPro, which is designed specifically for the translation business and is an excellent way of measuring exactly what you earn depending the rates you charge. It is a handy way of getting back in touch with the "business" side of the business and also a good reminder to examine all those hidden costs and productivity issues which you may not be taking into account on a day to day basis.

I have also discovered a Canadian-based website called More for Small Businesses, which I think offers some excellent, common sense guidance for owners and managers of small businesses in general.

In these times of economic recession, with stiff competition, price wars and belt-tightening, now it is time, more than ever, to ask yourself the question: Is this a business or a hobby?