Alright folks it’s time for the first post in my Personal Financial Planning for Entrepreneurs blog series. I’ll keep writing as long as I have questions to answer, so leave a comment with the ONE thing you want to know about managing your personal finances as a business owner.

The first question comes from Jennifer, who wrote that she would like to learn about how to avoid cash flow crunches.

This is a huge concern for nearly every one-person show and for many small companies with just a few employees. And, it’s especially common for service providers, since work is usually done on a project basis. If you don’t have projects, you don’t have income. And that can be devastating for your personal bank account too.

You’ve probably heard this being called the “feast or famine” cycle. Sometimes you’re flush with cash, making bank every day with new projects. And then it all. Dries. Up.

Why does this cycle happen in the first place? One of the most common reasons is that when you get busy with projects, you slack off on marketing. So your leads dry up and eventually so does your income.

Let’s look at a few things you can do to steady your cash flow and make sure your bills still get paid.

Automate Your Marketing

This is the most important thing you can do to regulate your cash flow. Use Buffer or Hootsuite to schedule promotions. Use automations and workflows in your email management system (MailChimp or other service) to move prospects through your sales funnel automatically. Use Contactually to remind you of who you need to follow up with and when so that you never miss an opportunity to turn a lead into a customer. Whatever you can create a process for, create a process for it. Follow that process yourself until you can afford to hire someone to follow that process for you.

Repeat.

Your marketing can’t stop because you have lots of projects on the go. You can’t grow a business this way.

But if you always do your marketing, your leads continue to grow. And so does your business. And so does your revenue. And then you can hire people. And so on.

Keep Cash in Your Business

It can be tempting to take a little more out of your business for yourself when you have a big revenue month, but try not to do this. You’re better off to take only the income that you need to pay your personal financial obligations, and let some cash pile up in your business so that you’ll always have enough in the account to pay yourself that consistent income all the time, even when you don’t have many projects going on. There can be some tax advantages to this as well, especially if you’re incorporated; talk to an accountant about how this applies wherever you do business.

Outsource What You Can

This one might seem counter-intuitive, since it takes cash to make it happen. But outsourcing your most routine tasks to other people will help your business run smoothly and consistently – and this will create a better experience for your clients, allow you to know what’s going on in your business at all times, and ultimately do better work. Better work should lead to more referrals. Which should lead to more projects and more money. Wash, rinse, repeat.

Raise Your Prices

Charging higher prices can give you a great cash flow bump but if you don’t do the other things I’ve already mentioned, you can still end up in a crunch – it might just be a less painful one. So, to lessen the impact of a slow month in your business, you can simply charge more for your stuff while keeping all other things the same.

Create a Recurring Income Stream

Recurring income is one of the best ways to avoid a cash flow crunch. The more predictable you can make this income, the better. Recurring income is often passive income, but not always – passive income can also be incredibly inconsistent. So the best kind of recurring income to address cash flow problems is revenue from subscriptions.

For example, affiliate revenue is an excellent income stream that can be both passive and recurring. If you help an affiliate partner promote a big launch, though, you’re not creating consistency, but rather more work for your self to manage and promote the launch. It’s not really going to solve your cash flow problem. On the other hand if you’re an affiliate for a product that’s sold as a subscription, you can get both passive and recurring income from subscribers every month. For example, I’m a proud LeadPages affiliate and I get a small commission each month from people who have bought through my link and purchased a monthly subscription. It’s work to grow that number, but at least I know about how much I’ll earn every month as an affiliate.

You can also sell your own information products or courses, and if any of those are subscription services, then you can create a consistent and predictable stream of income. The bigger you grow that revenue stream, the stronger your cash flow.

Got a question about managing your personal finances as an entrepreneur? Leave it in the comments and I’ll answer it in an upcoming post.