There are a lot of awesome things about being a digital entrepreneur: flexibility, no commute, the ability to challenge yourself intellectually, and the list goes on. But, there are a number of not so sexy aspects to working for yourself and I thought I would spend sometime talking about one of the most important aspects of working for yourself: learning to manage your cash flow.
Money Flowing In and Out
Cash flow when you’re working for yourself and growing a business is in my mind one of the most important parts of managing your business (after customer service). Without money flowing in consistently you won’t be able to: manage your bills, take care of expenses, or-eat. Seriously. Ideally, you have a number of projects that your billing for each month and the money is coming in like a river.
Is a bit different. In my case I have noticed that while I make enough money most months-in my case my money flows in consistently towards the tail end of each month. In fact, I ended up changing most of my billing dates towards the end of each month so that my monthly accounting would be easier to manage.
It has been a learning curve and for many people running a business they may never learn to manage the ins and outs of cash flow. I hope that won’t be the case for me and I am working behind the scenes on some projects that will keep my cash flow consistent.
Some things that I’ve learned:
- You always need a nice buffer in your bank accounts.
- The one time you REALLY need your money…it will come late (Murphy’s Law).
- At any given time you may have thousands of dollars on its way to you. Creating the insatiable urge to check your mailbox over and over again potentially driving you crazy because a watched pot never boils.
- Money that you thought would arrive during the month that you’re currently in without fail will arrive the next month-skewing your income from month to month.
- You can make A LOT of money working for yourself…if you’re focused.
- Follow up on money that is owed to you. Fortunately I haven’t had problems with non-payment. Knock on wood. But, I’ve heard of a lot of people who have dealt with lack of payment.
- My pay ahead process was a really good idea.
- Diversify your income streams.
- Create a product. I am actually working on a number of products and am very excited to share them in the next couple of months.
- Date your accounting software. I have a weekly date with my books and I make sure to check in with my finances. What I’m spending on, what I’m earning, etc.
- Work with a financial professional. I have a CPA whose name is…Michele LOL! It’s kind of funny. I have already scheduled my quarterly appointments with her for the entire year.
I must admit that while this has a difficult and occasionally stressful part of the entrepreneurial process I’ve loved the challenge of figuring out how to manage this part of what I’m doing and as a result I am pushing myself professionally in ways that will make me more money and tap into personal and professional strengths that I hadn’t considered using when I first decided to leave my old job.
The sky’s the limit.
Has Cash Flow Been Sexy For You?