Image may be NSFW.
Clik here to view.
You already know how important are numbers for each business and may be you heard about the golden rule that says, “take care of your numbers, and your numbers will take care of you”. Also, what you can not measure, you can not make. Companies usually use “Financial Ratios” to measure their performance.
As freelancers running our business professionally, there are a few numbers that we should watch out closely. In this post I will mention a few of these.
1- Revenue percentage of each client: I used to feel very happy once I get a new client that provides a steady translation workflow that keeps me busy for 2 or 3 months. This meant more money, and no headache with many clients. Suddenly, one of my major client lost its contract and I lost around 45% of my yearly workflow. During my work with that client, I declined many projects from other clients paying good rates and this let them turn to some new translators. I learned an important lesson from this. I should watch how much I earn from each client and never ever let a client exceed a 15% percent of my revenue.
2- Growth rate: in my first 3 years as freelance translator, I used to watch for my yearly revenue and if it is not less than the last year, I thought I am one the right track and felt satisfied. But within each year, my living costs kept getting higher and my work revenue is not. One of the important numbers you should be watching is the inflation rate of the country you live in. Basically this indicates how much is your purchasing power. The targeted growth rate should at least cope with the inflation rate. So, each one of us, freelance translators, should compare the revenue of the previous and current one to know how much did you earn more that the last year
3- Prospecting numbers: Also, You should be watching the efficiency of your sales and marketing activities. I will give one example to explain this. If you are using the email marketing as a sales/marketing technique, you should be watching out the number of emails you send to potential clients, and how many of them reply, and how many of them become new clients. This is called “sales pipeline efficiency”. Measuring the efficiency of each technique let you know where to invest in your next sales/marketing activities or what to change in your current activities.
4- Profit margin: getting work is nice, but how much did you pay to get it is an important part of the equation. One of my sales instructors once said each “one of us should add banner in front of his/her disk saying profit= revenue – expenses. How much do you pay for a new computer, printer, brochure, business cards, conference attendance, ink cartridge for your printer, or other necessary items for your business as a freelancer translator? After you collect this you should be deducting it from your revenue too. It is important to know your profit margin, you may find it less than what you expected and may think about asking for higher rates or getting better clients.
There are many business numbers a freelance translator should be watching.Here is a short video with an an interesting example about business numbers
Please leave a comment if you have other numbers in mind that we as freelance translators should be watching.