How to Stay Cash Flow Positive In Your Freelance Business
Since quitting my job in 2013 to dedicate myself to my freelance writing business, I’ve made it a point to stay cash flow positive each year since the very beginning.
Cash flow positive refers to the fact that I’ve always made a profit. In other words, I’ve always brought in more revenue than expenses. In fact, I’ve always had money left over after taxes and expenses.
It’s important to remain cash flow positive because if you don’t have a profit you’re not making any money. While companies like Amazon and Uber can spend years spending all their revenue, freelance writers aren’t unicorns. I’m also a firm believer in setting a solid foundation for long-term success. Perhaps I’m being conservative, but in my book slow and steady wins the race.
Manage your expenses.
In order for my business to stay cash flow positive, I make sure to regularly analyze my business expenses. I basically measure how much it’s costing me and how much I’m getting out of it. Sometimes I even get rid of a service because I simply don’t need it anymore.
Here is an extra tip based on a lesson I learned the hard way: Make a list of your non-monthly business expenses, how much they are and when they happen. This helps you plan ahead and avoid overspending. For instance, I know I have to pay for my web hosting in June so I’ll probably hold off on Facebook ads next month.
Be patient with your investments.
It can be very easy to get yourself into debt when starting a business, especially if you’ve got a business credit card with a high credit limit.
This is actually a mistake I see tons of beginning businesses make – they get their hands on some plastic because it’s easier to attain than a business loan and then they spend thousands on an idea they don’t even know if they are going to stick to yet. I see them spending money on design, trademarks, business cards and a whole mess of things they end up abandoning six months later. Not only are you not cash flow positive, you’re also in debt with a failed business under your belt.
All of this is to say, be patient with your investments. Test the waters first. Layer in investments over time. Don’t fall into the trap of “spend money to make money.” While as a whole I’ve found the saying to be true, there’s a right way to invest and a wrong way to invest.
If you want to remain cash flow positive from the get go, then you’d better learn how to hustle. Sometimes you’ve cut down your business expenses to the bare bones and simply can’t go any lower. However, making more money is always an option.
It’s really not that hard to get cash flow positive in your business. You just need to be patient as you test ideas, learn the ropes, and hustle. Like I previously mentioned, my view is pretty conservative so it doesn’t work for everyone, but I’d rather have stability than take on too much risk.