Remember in the old days how you had to report to a boss every day? You had to show up at certain time, punch a clock when you entered your work place, when you ate, and when you left for home.
You had to dress a certain way determined by a dress code. You often did extra work that you were never paid for and never received credit for doing. When you wanted a raise you felt like you were begging.
Those days are all gone now and you run your own home business. However, one other thing is gone – a steady paycheck. Whether it was a huge paycheck or a paltry amount, it was always consistent.
Now that you’re on your own, how do you deal with a fluctuating income?
Dealing with a Fluctuating Income
- Try to build a cushion before you go full time in your business. The first few years will have a lot of ups and downs, so having the safety net of a savings account can be a huge help.
- In the beginning, lower your expenses as much as you can. If your spouse is working, try to live off one income and put your profits back in your business.
- Keep all your business and personal money separate. Get a checking account for business transactions. Save receipts for all your expenses so you won’t be paying extra income tax.
- Track which months are the best for you. This will help you in future years. If you know that the summer months are slow then you can plan in advance. Save some of the money you make in the good months to cover the bad.
- Never stop marketing. When you’re busy it’s easy to not spend time on your marketing. But if you don’t feed the funnel, you’ll run out of business, and then it may take some time to get new clients. So keep your marketing strategies going at all times.
- During the months that are good, don’t raise your standard of living right away. Don’t set yourself up with high payments for a new car or a higher mortgage. Keep expenses as low as possible until you’ve been in business for several years.
- Think of other business ideas that might work during your slow months. If you’re a ghostwriter and you know no one orders projects during the Christmas holidays, then plan ahead and set up a blog in November to sell Christmas gifts. Don’t rely on one income stream. Diversify your skills and your types of income.
- Find ways to make ongoing income. Build a membership site where members pay you a monthly fee. Create a twelve-month course where students pay you each month. Find clients who’ll pay you a monthly fee for services such as posting to their blog or writing their newsletter. Then you’ll have a base income every month.
- Start two savings accounts. One is for your quarterly tax payments and one is for the months when income is down. This can also be your emergency fund. Nothing is more frustrating than to have your refrigerator die during a month when income is down. Plan for the inevitable by not spending all your income during the good months.
Dealing with the ups and downs of your own business can be tricky. But with some advance planning, you can survive the bad times and eventually thrive during both the ups and downs.