— May 7, 2018
If your business is struggling with cash flow, your household is likely struggling with cash flow as well (unless you’re dipping into personal savings to pay the bills).
Managing cash flow is one of the biggest problem areas I had in my business for quite a while. Cash would come pouring in through the faucet. I would think everything was gravy, so I sat back and got a little lazy. Then the faucet would stop abruptly, and I’d find myself panicking. This is absolutely not a sustainable cycle. Here are tips for surviving and managing your money when your business has cash flow trouble:
Keep Marketing Like It’s Your Job
Marketing is part of your job. One reason freelancers can struggle is that all marketing activities stop when their client roster is full (or close to full).
The problem with this is you have to scramble to find new clients again if any one of your existing clients should cancel. The lack of income, while you’re looking for clients, causes cash flow issues. Committing to market and pitch constantly will help make sure you always have warm leads available so you won’t go into crisis mode.
Revamp Your Invoice Process
Your cash flow is going to suffer if you’re not sending out invoices quickly and following up on them diligently. Don’t assume your client will get around to payment later. Check to make sure your clients have received invoices and ask for a payment timeline.
Invoicing once monthly is sure to cause some cash flow problems. It’s difficult to manage your personal and business budget when you get a windfall of cash at the end of the month and nothing throughout the rest of the month. Change the payment terms and send out invoices at least twice a month to stagger payments.
Stop Selling Yourself Short
I can help you find out whether or not you’re charging enough money by having you answer one question. Are you running around like a chicken with its head cut off to keep up with clients but still having income problems?
You’re definitely not charging enough if you answer yes to this question. Set new, higher rates for new clients and come up with a plan to increase your rates for existing clients at least by the end of the year.
Trim the Fat from Your Business Budget
Bringing in more money is important but your expenses could also be what’s causing the problem. Are you investing too much into your business at a time when cash is low? Did you decide to outsource some tasks too soon?
Look through every one of your business expenses to make sure they’re necessary. Comparison shop with web security systems, email marketing systems, virtual assists, and in every other area where you spend money. Cut back on spending until your finances are more stable.
Trim the Fat from Your Household Budget
Lastly, your personal budget is separate from your business budget but it still plays a role here. I kept a very minimal personal budget when building my business. I only spent money on the necessities until I had enough clients to give me some flexibility.
I also took on part-time work for the first year to help pay the bills. There is no shame in going back to a “real” job if you need some money to help you through a cash flow problem. What can you do in your personal life to ease the burden of having low cash flow right now?