How I Plan for the Unpredictable in My Business
I remember writing my first business plan and putting the financial section off until the very end. How could I possibly predict what I’d earn in the first year?!
While income projections definitely become easier as you go along, they’re never a guarantee.
2019 was my highest grossing year to date, but despite that, I had a severe dry spell that lasted several months, and when my studio mate moved out, I had to pay double rent and internet. As my expenses increased and my income decreased. I was forced to take out a business loan.
During that span I was stressed, anxious, and felt like a failure. I was seriously considering closing down my business and pursuing a full-time job.
In my darkest moment, a super flexible, part-time job opportunity with very good pay presented itself. It was with one of my clients who I had been employed by previously, and accepting that job has been the best thing I could have done for my business.
My job kept my personal finances afloat and helped me get on top of business expenses and taxes. The strange thing is, even though I was barely making I profit I was still paying quite a bit in quarterly taxes.
That caught up to me Q2 of 2020. Last quarter, I didn’t have to pay a cent. It was wonderful!
This quarter, however, is a different story. In Q3, I paid more in taxes than any other quarter in my near seven years of business.
And I’m SO proud.
I’m one of those people who loves to pay their bills. It’s empowering to me! With every bill I pay I feel reaffirmed that I'm self sufficient and capable of achieving my dreams. Especially after last year when I had to hold my studio rent checks for weeks and hope my landlord wouldn’t kick me out.
It’s such a strange juxtaposition of going from $0 in taxes Q2 to the most taxes I’ve ever paid in Q3, but it just reaffirms how unpredictable business can be and how you have to plan for that.
During the coronavirus pandemic, I haven’t slowed down at all. I actually got busier. But watching my business friends experience such fear and unpredictability reminded me of how I felt late 2019 when I had to take out a business loan.
That experience allowed me to take a step back and to build a better foundation. As a result, I implemented a few practices that allow me peace of mind and will hopefully pull me through any unpredictable catastrophes.
How I plan for the unpredictable in my business:
• Have 3-6 months of expenses saved in my business account (for rent, internet, software, other expenses, etc.)
• I’m working on saving 3-6 months of owner’s draws in my business account.
• Build passive income. That way my income isn’t limited to my hours worked and if my number of projects slows down, my online courses will still bring in consistent income. (Other sources of passive income include guide books, affiliate marketing, real estate, investments, etc.)
• Evaluate why my business can’t afford to pay me. As a result, I raised my rates, discontinued offers outside of my zone of genius, and evaluated my expenses.
• Have 3-6 months of expenses saved in my personal account (for the mortgage, electric, other bills, etc.).
• Be willing to take on a part-time job when necessary. I’ve been working at my part-time job 20 hours a week since November 2019 and that has enabled me to build up my bank accounts. It’s in marketing so I’ve also been able to expand my skills, test new ideas, AND gain clients. I’m now at the point where my business is so busy that I have to cut back my part-time hours.
• Take advantage of slow spells by evaluating how I do things, improving my offers, increasing my marketing, and more.
How do you plan for the unpredictable? I’d love to know! Give me the scoop in the comments below.
—
Just getting started in business and looking for a roadmap? Check out my Begin Your Business online course. We’ll cover everything from pricing to forming an LLC, assembling your team to getting your first clients, and everything in between.
Been around the business block and looking to grow? My Self-Employed School online course provides a deep dive on topics including website SEO and design, e-newsletters, social media, public relations, and more. It all culminates in creating an easy and effective marketing strategy for your business.
Hey there! I’m Meg:
LOVER OF CATS, ROLLER SKATING, AND VW BUGS
I also love business and share all kinds of tips and resources to help you grow yours.
Ready to commit to becoming more business savvy and being able to work for yourself? Subscribe to my email newsletter. ;)
More Business Resources