It’s pretty easy to be aware how much money is coming in the door when you first start your business. Not much! Okay, so this is not always true, but most of us self-employed folks begin with very little capital and few customers. We have to attract both.

The biggest purchase I made to get my business going was a laptop. At the time, I didn’t have the capital to purchase it, so I leased one. It may have cost me twice as much in the end, but without it, I would not have been able to get started. As the money began to roll in, I was able to purchase the other equipment necessary to operate my business professionally – items like a fax machine, better printer and bookshelves.

Knowing how much cash is coming in and out is critical to running a successful business. There is satisfaction in paying bills on time and knowing you have the money to cover them. Using a line of credit and credit cards can be very helpful as long you monitor their usage closely. Although a good number of my clients pay up-front for my services, I still rely on my line of credit to cover bimonthly paycheques for my artistic administrator and myself. I may be expecting a client’s cheque in the mail next Monday, yet Friday is payday.

How do I avoid digging myself into a financial hole? I know exactly what money is coming in and when, and how much is heading out the door. I spend only what I know I can cover by the time the bill arrives. Over the past four years in business, I have paid off my Visa bill in full every month with few exceptions. When I may be purchasing expensive items, I give myself a buffer zone of two to three months, knowing I can then afford to cover the bill. I empower myself to make these buying decisions, because I am aware how much money is available to me at any given time.

Of course, things can change. A client may be late with a payment or an expected project may not come to fruition. These things can and will happen on occasion. The key is being aware how these changes will impact cash flow. Seeing a lack of available funds early on can be a great motivator for going out and finding another client or creating a new product or service.





Earlier this year, I was generating enough money to pay bills. But that was about it. I had made a conscious choice to devote a chunk of time every week to writing and professional speaking. It was so much fun having extra time to focus on my career transition. Then I made a big purchase. I bought a beautiful cabin. All of a sudden, my priorities shifted slightly. I now needed to bring in enough money to cover the cabin’s mortgage and all the other expenses involved in owning and maintaining property. By being completely up-to-date on my financial status, I recognized the need to add another client to my roster.

I looked at my current situation and figured out how much money I would need to support the cabin expenses. Ironically, I was contacted by a prospect while trying to figure out my finances. The timing was perfect. The client’s need for marketing services and her ability to pay the fee I required fell into place within a month of my desire to achieve a higher level of income. Sound lucky? Yes, it was. However, if I had avoided dealing with my impending lack of capital, I would have sunk pretty quickly.

If, like me, you are not a person who enjoys dealing with your own bookkeeping, then hire someone who does. Remove any barriers that stop you from staying completely current with your finances. I check my business account at least once or more every week to make sure I am sitting on the positive side of the fence. I do my banking on-line. At one point, I was not paying my bills on time. As soon as I recognized this to be a problem, I scheduled my payments on-line. This meant I paid each bill as it came in, but I requested that the payment not take place until the due date of the bill. This way, I rarely pay a bill before it is due.

Most of my clients pay their bills promptly. I have been very clear with clients about my expectations. Having outstanding payments from clients can create negative feelings. I prefer to put my focus into my consulting practice, not into a collection practice. Set clear payment terms with your clients. Get deposits up-front or payments in full whenever possible. When we communicate our expectations to our customers, it is surprisingly easy to get what we want.

A positive cash flow enables you and me to relax and do what we love to do best. Set yourself up to enjoy living a life with a positive cash flow. Be in control of your finances instead of letting them control you.

Cash Flow is Paramount, Always Know What You’ve Got and What You Need is an excerpt was taken from Jen DeTracey’s ebook Don’t Forget Your Underwear. Success Strategies for the Self-Employed Woman. This ebook is available as a complimentary download at
www.businesswomanbooks.com. For more information you can reach Jen at 604-255-2098 or by email at [email protected].