How’s your cash flow?
Let me reveal a dirty secret.
A while back, mine was… Inconsistent.
I’ve got a habit of taking money out of my business as fast as possible. And so when my cash flow gets inconsistent, it causes stress. Because my business accounts start feeling empty. And I want to keep paying myself what I’m used to.
And it doesn’t really matter if you’re expecting to take home $2,000 per month… Or $20,000… Or $200,000…
That stress feels the same. And the ways to get rid of it are largely the same, too.
First: the wealth-building power in what I’ve already revealed…
How quickly do you set money aside, into accounts you don’t expect to spend from? This is what I’m doing when I’m taking money out of my business.
It’s nice to max out your IRA or other tax-advantaged retirement account. And so yes, I’m talking about that.
But it also helps to have a long-term retirement account you don’t plan to touch, for any money you save above and beyond the contribution maximums (as well as for when you don’t qualify anymore due to income). Sock as much of your income away, as you can, into this place (or places) where you won’t touch it.
That’s financial security.
Add an extra layer of financial security by also creating a medium-term “rainy day fund” you can use for bigger expenses. Such as buying a new roof, or a new car, or other bigger purchases. This money should be easily accessible, but out-of-the-way. Preferably in an account that won’t lose money, but can earn you a bit of interest.
Put money in here for these expenses ahead of time, so you won’t have to take out debt and pay interest — which is a covert wealth-destroyer.
And if you do end up having a cash-flow crunch, this is the money you can tap into to cover living expenses for a while.
Depending on your total savings, you should have anywhere from 2 to 12 months’ expenses covered in this account. And if you are anticipating a bigger expense (such as buying a new car), build it up even more in anticipation of that.
If you’re a freelancer or solopreneur, you should make it your goal to minimize the amount of money kept in your business account, and maximize the amount flowing to these external accounts.
If you have a more complex business (such as what I’m developing with my agency), it may be a smart move to also have a similar “rainy day fund” for the business. (Or, if you prefer the seemingly-ubiquitous war metaphors in business, a “war chest.”)
All of this will help to reduce the stress of the natural ebbs and flows of cash flow in your business…
And yet, there’s also a little trick I picked up to help keep my cash flow consistent…
I often think of the phrase, “stupid simple.” This falls under that.
I’ve written over and over again about all the ways you can improve your life and business through tracking.
The truism is, “What gets measured gets improved.”
I’ve used that to lose 30+ pounds of unwanted weight. I’ve recently been using it to grow my strength through a daily pull-ups challenge (today I’ve done 58 pull-ups, tomorrow I’ll do 60).
I’ve used it with productive time in my business. I’m using Toggl to track my time on various tasks. I fill out a daily form that tracks all sorts of critical metrics in my business. Just this week I added keystroke counter WhatPulse to my computer, to track how many keys I hit on any given day.
I track my personal finances, how much is in each account, and how that’s changed through time.
But I was never doing a great job of tracking expected cash flow.
Which, a bit back, led to my cash flow conundrum.
There were a couple months in a row where I was just a little more uncertain than I was comfortable with in whether or not my cash flow would let me keep pulling money out of my business as fast as I wanted.
(This was, in part, my fault. I’d been investing in growth at a level where I knew it would take 45 to 60 days to break even. And I’d been a little aggressive in testing.)
Long story short, I was stressed on cash flow.
So my coach, Joseph Rodrigues, insisted I…
Start tracking all expected future cash flow!
I know, this is a “stupid simple” idea. And it’s Business 101. But let’s be honest. Most copywriters didn’t take Business 101 (our copy doesn’t suffer for it, but our business practices might).
We run a weekly meeting following the Traction Level 10 Meeting™ formula. (That’s a video link.)
A major part of that meeting is addressing any issues that have come up in the business in the past week. And so we added a permanent “Issue #1” to the meeting to do a quick check of all cash flow sources.
This includes, in no particular order, client project work that will generate fees, copywriting royalty streams from current promotions in the market, BTMSinsiders, affiliate promotions, and a handful of other significant sources of cash flow.
When I was resolving the cash flow situation, we spent maybe 10 minutes each week thinking about next steps for the big cash flow items. Now we spend a quick 3 to 5 minutes each week for a quick update of the list.
I’ve also updated my time tracking significantly. I used to prioritize tracking by project or business area. I’ve shifted it though so now I have three main tracking categories. There’s “Cash Flow, Internal,” “Cash Flow, Client,” and “Other Productive Time.” If something falls under the main cash flow areas in my business, it gets tracked as such. If it’s admin work or other work not directly contributing to cash flow, it’s tracked as other productive time. (And breaks and wasted time don’t get put into one of these categories.)
This “stupid simple” trick keeps cash flow consistent…
Every Friday morning I’m reoriented in a big way to what’s going to keep pouring wealth into my accounts. Every day of the week, I have a way of checking how much time I’ve invested in these cash flow activities.
And this simple move has created a sense of accountability, that keeps money flowing in with more consistency and speed.
It relieved the cash flow stress I was feeling, and it’s now feeling like that was the distant past.
And because this keeps me focused on these critical sources of income in my business, I am more confident than ever in the projects I take on and the way it helps to maintain cash flow.
Less stress means more mental bandwidth for doing productive, proactive activities in my business. Which in the long run helps me provide more value to YOU and to my clients.
Note to copywriters: Royalties are a critical part of both my cash flow and wealth-building plans as a copywriter. Check out my full training on Copywriter Royalties and Pay-For-Performance as part of BTMSinsiders membership.
Yours for bigger breakthroughs,
Roy Furr
