Money Management for Small Business: 6 Ways to Budget With Irregular Income

If there's one thing we like doing it's talking about money. As creative small business owners sometimes the money isn't flowing every 2 weeks like it is at a traditional job. There are ebbs and flows that we must account for so we don't end up broke because we rolled our faces in the dollar bills from the last client's deposit. Today, we're excited to have on Lauren Bowling of L Bee and The Money Tree to give you tips on money management. Read below to find out 6 ways to budget with irregular income. 

While running your own business is empowering, it can also be a huge source of stress. You’re stacking your own finances with a business, and both have to make ends meet! Think Creative Collective

While running your own business is empowering, it can also be a huge source of stress. You’re stacking your own finances with a business, and both have to make ends meet! Trust me, I both get it and I’ve been there. 

As I’ve networked with other entrepreneurs over the last year since committing to my own business full-time, I’ve had the opportunity to hear from others about what financial pain points they’re struggling with. Uneven cash flow is always at the top of the list!

While I’m not eating filet mignon every night just yet, I have learned a thing or two about how to deal with the roller coaster that is managing both your business and personal finances when you’re the boss. 

Get Accounts Receivable-Savvy

A frequent cause of low cash flow is clients not paying on time or straight up ignoring invoices. This happened to me a lot in the beginning as well, and here’s how I fixed it.

  • Do an accounts receivable audit. Use your accounting software (if you have one) to understand the data. Look at which clients pay on time, which don’t, and your average invoice to payment time. 
  • Charge a deposit. I know this is a “duh” moment but if you’re not doing this you really should start doing at least 50% up front. 
  • Change the “terms” of your invoice to NET 15 instead of NET 30. Really, if you’ve provided the service, they should pay you as soon as it’s complete. Unless you have super large invoices, it shouldn’t be hard for another business to come up with the cash to pay you in a timely fashion.
  • Start charging a late fee. 
  • Consider early payment incentives, like an up front payment discount

All of the above will help nudge your clients into ponying up. Remember – you’re the one providing the good or the service at an incredible value with excellent customer service! You have a ton to offer and you shouldn’t discount your product/services worth. 

Use that as your leverage and your control.

Organize Your Personal Finances

Step aside from the business finances for a minute. Look at your own personal finances. When running your own business they go hand in hand, which is why it pays to be as organized with your personal finances as you are (or hope to be) with your business books.

Getting your business and personal finances organized can really help in the long run. Having super organized paycheck and bill pay accounts, with a tax savings account and emergency fund with 6-9 months of living expenses can really save your butt from unexpected expenses. 

At first, it might seem like too much to manage, but this is the information age! You can open accounts, do transfers, and pay bills right from your laptop or phone. 

Understand What Causes Your Uneven Cash Flow

Are you not actively marketing during your busy season? Not spreading out your business expenses evenly enough? Not charging your clients what you’re worth? Once you identify the real problem, it becomes easier to find solutions. 

If your business has a seasonal slump, what could you do to boost your income? 

Give Yourself A Paycheck

Here comes the not so fun part – cutting back. Trust me, the drama of biting your nails in the slow months is only paralleled by the high of spending like a king in the big ones. The best way to deal with uneven cash flow is to give yourself a paycheck, based on your average monthly income.

To find the average take what you made LAST TAX YEAR and divide by twelve. Then divide that by two if you want to get paid by weekly and have the amount automatically debited from your business account. Voila. A paycheck.

Having a set paycheck number makes it easier to budget for your personal expenses, save for taxes, and allocate money to personal financial goals like saving for retirement or vacation.

Having a set paycheck also means you’re saving in those high dollar months for the ones where your income may be lower. 

Expand Your Services or Product offerings

When running any business, it makes sense to diversify your income streams as much as you can. This not only equals more money in the long run, but also more even money as certain products and services may do better each season. 

Think about what you as a business can offer in addition to what you’re already doing:

  • Could you offer a seasonal special package to drive up business? 
  • Or maybe do consulting for projects related to your business?  
  • Charge for coaching/mentoring sessions for those who want to be in your industry?
  • Digital products?

The options are endless and it’ll feel nice to have a little backup for the slow months.

Track Your Money

The best way to stay motivated with your money is to track it each month. By tracking your budget, debt repayment, and monthly spending all in one place, it is easy to get a sense of your net worth and what financial assets you have in play. 

Click here to get the Grow Your Money Tree Tool Kit, which offers all of the above spreadsheets and a companion e-book on how to hustle your way to more money. 

Maybe you need to take it a couple of steps back and work out your business plan. We're not into long, stuffy and wordy traditional business plans so we created a one page formula that you can finish in less than 30 minutes. Snag your free copy of The Easiest Business Plan Ever and get organized. 

Lauren Bowling is the blogger behind the personal finance site L Bee and the Money Tree and host of the award-winning web series, Awkward Money Chat. Blogging since 2012, Bowling is now a recognized thought leader in the millennial finance space with her expertise featured in the pages of Redbook and Woman’s Day magazines and on leading online financial news sites including Forbes, The Huffington Post, CNNMoney and U.S. News and World Report.  Keep up with Lauren on Facebook, Twitter, and Instagram




You can now support the show with a one-time donation!