Hello everyone, today I am talking with Diana Huff, the President of Huff Industrial Marketing a business that helps industrial manufacturers grow and succeed. Diana just released her new book Cash Flow for Freelancers. Today we will be talking about how to manage cash flow when you have a variable income.
Diana started her business in 1998 when it was known as DH Communications. She is now a marketing consultant, but when she began she was focused on freelance copywriting in the B2B market. At the time, she had a 12 month old son that she wanted to stay home with. Over the years, her business has evolved, but last year there was a huge transformation. She changed her entire focus and now runs Huff Industrial Marketing. Diana wrote Cash Flow for Freelancers because she is very familiar with struggling with the cash flow issues that freelancers have, and she wanted to do something to help others.
Today’s topics include:
- When faced with financial issues, Diana turned to all of the popular financial books. None of them applied to her freelance situation, they were all geared for people with steady jobs and incomes.
- Figure out your own personal break even. That is personal and business expenses combined.
- If you don’t know how much you need to bring in, you don’t know what to do
- With freelancer variable income, freelancers may need to modify a budget
- You need to know three numbers for business
- Break even – how much you need to bring in
- Sales goal – a little bit more than break even
- Cash income goal – cash can come in from different places (more than break even)
- Budget cash cushion into your break even amount – this is for when you have low months
- Paying yourself a set amount, a salary that is part of the break even
- You can also take a distribution at the end of the year or quarterly
- Have a business account
- Treat your business like a business
- Project based cash flow analysis – steady out cash flow
- Payment terms, 50% up front and 50% on delivery
- Become efficient to get done faster – document processes
- The second invoice is net 10, not net 30, 60 or 120
- When people don’t pay, you have to get on the phone and call them
- Pre-paid work is great if the client will go for it
- Written and signed hard copy contracts with terms stipulated
Resources and links:
Double Your Freelancing Academy