Freelancing Business: How to Manage Cash Flow Better
September 11, 2015
September 11, 2015
In business, it’s all about cash flow. The more positive the cash flow is, the better off you are. It’s also one of the most difficult things to attain thanks to pending receivables, due payments, and more. Managing your cash flow as a freelancer is not easy; but it’s not impossible either.
Here are a few tips to manage your freelance business cash flow better:
Build and present value better
It’s not enough as to how skilled you are, as a freelancer. It’s about how you present yourself. It’s all about the perceived quality of your service and how much value your service brings to the table.
Your first step then is to make sure you have that kind of quality to provide. Next, you’d have to present it that way.
This step you take has a direct bearing on your cash flow (we’ll explain soon).
Get the numbers on your side
Once you know what you are capable of delivering (having built up value and a way to present that value), it’s important to hustle and do sales up to the point of abundance.
Build your pipeline (and hence incoming business) in such a way that cash flow remains positive, no matter what.
Keep expenses low
When you have money, it’s tempting to spend it. But that’s the reason why most people have unimpressive cash flows (be it personal or with regards to businesses). As a freelancer, you don’t have the luxury of getting paid each month on the exact same day. If anyone, it’s you who should be spending as less as possible.
Reducing frivolous expenses is the best way – next only to making more money – to keep your cash flow in order.
Get into contracts
While you are free to experiment with one-off work and short-term work, the ideal situation for a freelancer is to get into a contract. If each contract you manage to enter spans more than a year or so, you’d have the comfort of incoming cash, steady business, and more room to grow.
After the initial run on a project, goad your clients into entering a long-term contract with them. If you had enough value to provide (see point 1 above), this arrangement with clients should just be a chat away.
One of the compelling reasons why you’d want to let go of a job and get into freelancing is because this move gives you the freedom to make as much as you need while doing work you love, and that you are proud of.
Since freelancing limits you by time available to you, experiment with “productization” of your services, other sources of income, completely different businesses, or even making money work for you (stocks, investments, dividends_) by planning your finances properly.
How do you manage your cash flow? What tips can you give for our community here at peer hustle?