Are you in control of your business’ finances, or do you feel like the unpredictable ups and downs of your business checking account are taking you for a not-so-fun joy ride at your expense?
It’s time for a pulse check.
And yes, it might resemble that awkward moment at the dentist when they ask, “How often are you flossing?” and you somewhat innocently respond with “5 times a week” when, in reality, it’s more like 3 (on a good week) and they give you that skeptical raised eyebrow look.
In both scenarios, it’s a bit uncomfortable but ultimately beneficial for your well-being.
Raise your hand if…
If you raised your hand to any or all of these red flags, the truth is, it’s probably impacting your personal and professional life more than you may realize.
You deserve a life and business that is fulfilling, without the stress, anxiety, and even strained relationships that often come with inconsistent revenue.
Unfortunately, this kind of feast-and-famine cycle is common for creatives.
But I genuinely do not believe this has to be the case. The “starving artist” trope is a flat-out lie (and frankly, pretty unoriginal at this point).
That’s why it’s my mission to prove to you that you can build a business you love that actually loves you back by showing you how to break out of the cycle once and for all in your own creative business.
This blog will address some of the best strategies I’ve developed for myself and my clients over the years to help you tell the difference between seasonal fluctuations and genuine problems in your creative business along with actionable solutions to manage your revenue effectively and sustainably.
I’m going to cut right to it.
Sometimes inconsistent revenue is completely out of your control.
I don’t say this to deflate you more.
Believe it or not, I’m actually sharing this with you to empower you.
The truth is, it all boils down to understanding why your creative business’s income is all over the place. Without that insight, it’s tough to figure out which strategies will actually make a real difference in your financial stability.
Often, businesses that are struggling to wrangle their finances will fall into three categories.
If your creative business faces outside influences, you can adapt to them. On the other hand, if your business is seasonal or your current strategies are falling short, you have the flexibility to make changes and overcome challenges.
You’re not stuck with unpredictable income or the issues it may cause; you can take action to bring more stability and consistency to your earnings.
Before suggesting strategies specific to the cause of your inconsistent revenue, there are two universally beneficial strategies I recommend all of my clients adopt immediately when we first start working together.
The first step is always to get comfortable with your numbers– which is often a really uncomfortable experience in the beginning if you don’t have a handle on your business finances.
I urge you to push through the discomfort because knowing your numbers inside and out isn’t just a good idea, it’s absolutely necessary for the health and survival of your business.
As the saying goes,
“Change begins at the edge of your comfort zone.” – Roy T. Bennett
When you genuinely understand the state of your finances you can proactively and intentionally manage the money coming in and out of your business – THIS is key to long-term sustainability as an entrepreneur.
It all comes down to cash flow.
After all, cash is king for a reason.
So what is cash flow?
Cash flow is the flow of cash going into and out of your business. It can be positive or negative, and it’s as fluid as your sales and spending (hence the term…cash flow).
Positive cash flow is when a business is earning more than it is spending, and negative cash flow is the opposite, where it is spending more than it earns.
Negative cash flow can sneak up on you, even if your business is turning a profit.
Yep, it’s true!
It all hinges on when payments come in and bills are due. That’s why staying on top of your accounts receivable (sales, collections, outstanding payments owed to you by your customers or clients) is crucial. It’s just as essential to manage your accounts payable (what you owe) and their due dates so you can time things right.
When you know your numbers inside and out and understand your cash flow, you will be primed and ready to strategically overcome the financial fluctuations in your business.
So how can you tell if your inconsistent revenue is a real problem or just a business cycle you haven’t identified yet?
I can’t answer this for you, but I can point you in the right direction.
Sometimes your inconsistent revenue isn’t necessarily a big, deep problem. Often, it may simply be a seasonal thing or a cycle in your business!
For some businesses, this may be obvious (i.e. a holiday photographer will often be busier leading up to Christmas and New Year’s). But for others, especially in those first few years, it may be a bit more subtle.
That’s why you need to prioritize paying attention and looking for these trends so you can respond accordingly.
Take time to reflect on which seasons tend to be lighter or heavier when it comes to orders, sales, inquiries, or any other metrics you decide to use. (I often recommend you do this quarterly and then during a year-end review.)
Consider if these ups and downs in your business were caused by things like your marketing, a new product launch, a holiday, or even a world event.
To predict and handle them better, you need to know your ideal customers’ spendinig habits and what affects their choices.
Then, see how your cash flow aligns with these trends (is the money coming in lining up with the money going out?). You don’t have to be an accountant, but you do need to have a solid understanding of your numbers.
In business, projections are like predicting how your company will do financially in the future, including money made, spent, and profits. They help with planning and decision-making.
Projections are key to anticipating (and getting ahead of) big fluctuations in your finances, and the right tools and data can help you see what the next month, 3 months, and beyond will look like.
While all businesses benefit from financial projections, it’s easier for some businesses or business models than others.
Financial projections tend to be simpler if you’re a business with long-term contracts, and can be a challenge for anyone launching a new product without any historical context to inform your projections.
Fortunately, as you gather more data and maintain a steady focus on engaging with your audience, marketing, selling, and developing your overall business strategy, you’ll get better at predicting typical launch numbers and the outcomes of specific approaches.
This means that even without extended payment contracts, you can develop a strong sense of how to make accurate projections.
Then, you can intelligently lean on your financial team such as your accountant, bookkeeper, fractional CFO, COO, financial planner, or business strategist for guidance and support as needed.
This is what it looks like to truly step into your role as CEO of your creative business.
With your numbers leading the way, you’ll want to plan ahead for any seasonal trends you’ve identified and the impact they have on your creative business.
Here are some strategic ways to do this:
No matter your business situation, I recommend setting money aside in an emergency fund. This Rainy Day fund should include at least one month of expenses set aside if possible.
Over time, you can grow this fund to cover 3 or even 6 months of business expenses depending on your business and how conservative you’d like to be. It’s a great goal to have in mind that will ensure your business (and financial health) can weather any “storm,” slow season, or market turn.
This is especially important for solopreneurs whose personal lives are so intrinsically tied to their businesses.
This fund becomes your runway.
If you find yourself spending more than you’re billing and feel like you’re in a constant game of catch-up, adjust your payment plans to match your business cycles. It’s ideal to set up a billing schedule that lets you collect money before expenses hit, but it’s not always possible.
If you have a product-based business (or some services), you might need to lay out cash for materials upfront before getting paid.
So, rethink your payment plans and when the money comes in to keep those surprises at bay.
I always encourage my clients
to bill early and often within reason (i.e. a deposit, at project milestones, at regular intervals, upon delivery, etc.) so you can cover your costs before they become a problem for you.
If you’ve identified a recurring cycle or pattern in your business, remember that you have the flexibility to make a change to maximize your cash flow and minimize the impact.
Getting creative with your products or services, or giving them a fresh spin, can be a great idea, especially when things are slow. It’s a smart solution to boost your income during quieter times and be better prepared for these seasons in the future.
For example, say you run a graphic design studio, and you’ve noticed a lull in client projects during the summer months. To make the most of this time and lean into the season, you could offer special summer-themed design packages or run a design workshop series to engage with clients and generate additional revenue during what is typically a slower season for your business.
But that’s not the only solution.
I also have a client whose 4 lightest months follow her biggest months. And this used to stress her out until I showed her why it’s ok.
The first quiet month of her slow season is a welcome opportunity for her to rest, reset, and recharge. Then, she has even more time and mental energy to promote her business, develop additional offers, and prepare for the next season of hustle!
While those are specific examples, the sky’s the limit in your business.
Basically, get creative!
Anytime you’re feeling stuck financially, remind yourself there are so many different things you can do if you’re just willing to try.
If you’ve decided it’s not a seasonal or cyclical issue you likely have a strategy problem that is causing you to…
If and when you’re having low cash months, what should you do?
Being able to name it as a problem is the first step! Then you need to understand where it’s coming from.
It’s time to figure out why you’re having a low cash month.
Let’s take a look at some business problems that could be causing your inconsistent revenue.
Your money challenges could very well be a classic case of the feast-and-famine cycle!
Businesses caught in a “feast-and-famine” cycle have good times with high sales followed by bad times with low sales.
This typically means for a while you’re driving lots of sales and then no sales. Lots of sales and then none, on repeat.
Your financial strains could also be caused by market trends. While market fluctuations and industry trends are often out of your control, they are still a problem you will need to solve if they’re negatively impacting your finances.
To respond to market changes, you may want to consider reevaluating your offer messaging, pricing, or even the offers themselves to reflect what your ideal audience is looking for here and now.
Ultimately it’s about being as proactive as possible and planning ahead whenever you can.
Speaking of planning…
Once you know what the root of the issue is, you can plan and address it head-on. Be realistic and ask yourself,
“Is this a real problem or not?”
“How proactive do I need to be in solving this problem?”
“With time, will it sort itself out on its own?”
“How urgent is this issue?
“How can I make the most of my time, energy, and remaining funds?”
If that’s the case, maybe you use this quiet time and double down on your creative rhythms so you can pour into your personal and professional development, or even do some research or develop a new offer or product idea!
In many situations, the tightest cash months can be the biggest springboards to big cash months in the future!
Often less money coming in means you have more time and capacity for innovation, development, advertising, or investing in your business right now which can lead to bigger months later.
On the other hand, sometimes waiting it out isn’t the best solution. Depending on your circumstances, the cause of your inconsistent revenue may require a plan, pivot, or action.
In this case, you may want to put a plan in place to ensure the ebbs and flows of your business finances don’t bleed over into your personal finances.
For example, if you want to make your finances more stable, even when your income is unpredictable, you can choose to pay yourself a set amount on specific dates, like $7k on the first of every month or $5k every other Friday. Stick to these amounts and rhythms, whether the month is busy or slow.
This might lead to your business account growing in good months and shrinking in slower ones, but your personal finances will stay steady. This stability can give you a sense of security and confidence in your business year-round!
Mindset plays a big role in managing money in your creative business. Whether your income is all over the place due to seasonal trends and you need to keep your expectations in check, or it’s an internal business issue that needs some serious troubleshooting, your mindset makes a difference.
First and foremost, I get it.
But there’s no need to panic!
It’s tempting to go into meltdown mode when your livelihood depends on the success of your creative business.
But I urge you to try to stay calm, especially if you’ve got proof that your offers have worked in the past.
Even the best-laid plans often go sideways.
You can plan to perfection and still come up short. Instead of feeling defeated any time this happens, learn to embrace the uncertainty of entrepreneurship! Be sure to give yourself grace and allow any fumbles to be opportunities for growth instead.
Truth be told, nothing in your creative business will ever be 100% perfect and there will always be things that will pop up and impact your business. The key is learning from these experiences so you can better navigate them in the future.
Bottling it all up isn’t the answer– it’s not good for your bottom line OR your mental health! Reach out for help, whether it’s personal or professional, to get you through these tough times.
You could explore financial support like a loan or an operating line of credit to give you some breathing space or you could collaborate with a financial advisor for added confidence.
You might also explore other supportive options!
Support can come in the form of resources, time, tools, friends and family, professional strategists, coaches, and more.
This is where you’ll need to get resourceful. When money feels tight, how can you make the most of what you have right now? You want to make sure you are really leveraging those resources whether it be time, energy, finances, connections, or knowledge so you can make the most of what you do have instead of dwelling on what you don’t have.
Often you have more options than you may realize. All you have to do is be open to creative solutions!
Dealing with inconsistent revenue in your creative business can be pretty unnerving.
But now, you’ve got the right strategies to support you and your unique situation moving forward, so there’s no need to panic or doubt yourself and your business.
Whether business slowdowns are due to seasonal trends or deeper issues affecting your bank account, the good news is there’s always something you can do to take control and get back on track. Let’s kick that “starving artist” myth to the curb!
And if you’d like a business coach to help you navigate these unsettling seasons in your creative business, be sure to join my email list.
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