Good times, bad times, you know I had my share. – Led Zeppelin
If you have been a solopreneur for any time at all, you are probably familiar with the whole cycle of feast or famine, boom or bust, wax or wane. It is one of the very most frustrating—and stressful—aspects of the freelance business lifestyle.
I remember, the first month that I met my financial goals, how excited I was. It was the largest contract I had ever negotiated and I felt both thrilled and scared. I was being trusted with a lot of money and I wanted to do a great job.
It was also a psychological breakthrough. I had proven to myself that I could be profitable and get the kind of clients and projects that would allow me to feel financially secure. Then I got scared because I realized that I would have to “prove” myself every month for the rest of my life. Daunting!
That was spring. My business continued to do better than it ever had over the summer and into the fall. Then the holidays hit. Business slowed down. Way down. That Christmas I barely had two pennies to rub together. I gave my kids a twenty dollar bill each plus stocking stuffers and that was it. I felt embarrassed—and very worried.
January hit and people were back in business and I continued to meet my financial goals and negotiated even larger contracts than I had the year before. What I hadn’t fully appreciated was the impact that—now that I was profitable—taxes would have on my financial situation. I also faced a couple of unexpected expenses. Can you say dental work? When it rains, it pours.
When April hit I faced both taxes and projected quarterly taxes. Apparently, everyone else did, too, because all of a sudden, when it seemed I needed the money the most, new projects weren’t coming in. On top of that, my second largest client was late in paying up.
Although I was loathe to do it, I had to dip into my emergency savings account: You know, the one that I was supposed to rely on in case I fell down the stairs and truly couldn’t work for a month or two. I tried to feel grateful that I had savings, but, instead, I felt embarrassed that my expectations hadn’t matched up to reality and that, when push came to shove, I wasn’t truly prepared psychologically or financially.
The experience was uncomfortable, depressing, humbling, and ultimately quite instructive. I feel fortunate that I had read articles about freelancing, and that I had already joined the Freelancers Union so that I was at least theoretically familiar with the idea of feast or famine.
I was embarrassed to talk about it, but that changed when a successful Realtor I know casually mentioned, during the course of conversation, that “Cash is tight right now. It won’t be for long.” In that moment, I realized that most, if not all, independent business people (solopreneurs and small business owners), go through “dry” times; times when business is less good than usual or even kind of stinky.
Rather than be embarrassed, it’s something to be proud of. We solopreneurs have chosen the “road less taken.” Being a solopreneur is a brave and creative act. I am definitely not saying it is superior to a 9 to 5 job. What I’m saying is that the rewards and the risks of each are different. As solopreneurs and small business owners, we face the demands of a constant need to hustle, finding ways to balance sales with production, and the dreaded “feast or famine.”
Because it is one of the major downsides of the way we choose to work, I want to share the lessons I learned plus some tools I uncovered. Although you’ll probably have to learn from your own experience (we solopreneurs don’t lightly take other people’s words for anything!), my hope is that, when the going gets rough (and it probably will at least once), this post or something similar will find you.
I’ll assume that, unlike most people, you are a cautious person who is willing and able to prepare for the worst ahead of time.
Feast or Famine Prevention Tactics
You can prevent some or all of the feast or famine dynamic by doing the following:
- Understand your financial goals. Understanding your financial goals means that you take a look at your lifestyle and decide how you want to live, retire, and even when you think you might die (I know that sounds daunting, but financial planning is all about considering goals like having children, buying a house, and planning for when you cannot work). Be honest with yourself. Although for some it may be unreasonable to work two days a week and surf the rest of the time, if this is what you want, own up to the reality of your desires.
- Create a business model that reflects your financial goals. This requires some research and some math skills. Included in your business model will be how much you have to charge per hour or per project or per product in order to make the kind of money you want to make in order to to achieve your goals.
- Create a financial roadmap. Now that you know where you want to be, you need to create some kind of roadmap, or strategy, that tells you how you are going to get from point A (where you are now) to point B (where you want to go).
- Understand that your goals will change. As soon as you set out on your personal journey to success-the-way-you-define-it, you will find that the journey itself will change you. You may find that you want to work more hours and charge less because it is easier. Maybe you’ll want to focus on products rather than services. Or maybe you will discover a new direction entirely. It will be time to recalibrate.
- Be patient. The reality is that getting where you want to go, especially if you change where that is, takes some time. You cannot be so goal-oriented that you do not enjoy the process of attaining your goals because, if you do, you will find that your life is unpleasant and you are not enjoying yourself. And who wants that?
I’m going to admit that budgeting, financial goal setting, tax planning, and even moving money around in my bank accounts (i.e., paying myself in a timely fashion) is a challenge for me. Numbers don’t come easily to me and, even now, I don’t have my budgeting, accounting software, and cashflow, and projections organized the way I want them. As a “non math person,” this is a work in progress for me and I am proud to say that I am way better organized than I ever have been and also understand business math much better than I used to.
Watch me give myself a little pat on the back.
The point of all these projections and financial goal setting is to help you see trouble coming before it arrives and also build saving into your budget so that when trouble does come, you have a way out. Understanding your money very well helps you feel and stay in as much control as you can given that life is what happens when you are busy planning (something else).
- Budgeting software. To be honest, I have not found a budgeting tool I love. You can use a spreadsheet, mint.com, or even QuickBooks if that is something that you use.
- Hourly rate calculator. Try: https://motivapp.com/freelance-hourly-rate-calculator. I was happy to see that my calculation, although not the same as my stated fees, was in the ballpark. Find out if yours is, too.
- Retirement savings calculator. Try this one: http://www.kiplinger.com/tool/retirement/T047-S001-retirement-savings-calculator-how-much-money-do-i/index.php. The link is ugly but the information is good.
In an ideal situation, you will carry little to no debt and even have a financial cushion.
But let’s say that you have not been organized and things have gone a little awry. You don’t have much work, you’ve started to put a few things on your credit card while you wait for a check to come through, and maybe you’re starting to feel a little panicky.
Feast or Famine Treatment Tactics
During times of famine, the most important thing you can do is keep your mood up. Not having enough work can make you question your skill set and your sanity.
Here’s what to do:
- Start marketing. If you got really busy and you stopped marketing, it’s time to do two things: 1) do all the marketing you know to do and 2) commit to regular marketing from here on out. It’s like exercise: to be fit you need to do it regularly.
- Rely on routine. I have morning rituals, evening rituals, and work day rituals. During times of stress or difficulty, staying with your routines provides security.
- Work IN your business. Since you don’t have a lot of cash at times like these, work in your business. Catch up on low priority projects, get organized, do some of the production work you’d farm out if you could. When you’re busy again, you’ll be glad you “cleaned house.”
- Work ON your business. Ironically, now is also a good time to work on your business (see marketing, above). Since time is what you have right now, you can do some deep strategic thinking.
- Network. Assuming you’re going to get through this, which you will, start meeting people you can partner with or help out. This could translate to future business for you, but, even if it doesn’t, giving builds confidence and enhances your mood.
- Have a side project. This awesome advice comes from Kevin D. Hendricks: Having a creative project that might ultimately generate income builds your skill set and keeps your mood up. In my case, it’s publishing my personal work. During times of famine, I work on book projects.
- Spend extra time with friends and family. If things are slow, by all means go on a walk with a friend or schedule extra time with family. The beauty of being an independent is that your time is more or less your own.
Although the down times can be stressful, it’s important to stay active, keep your confidence up, and have fun!
Feast or Famine Wellness Tactics
Here’s what to do to stay healthy whether it’s feast or famine. The most important thing you can do (see marketing, above) is to keep up a “rain or shine” marketing routine.
Here are some other ideas:
- Encourage repeat business. Some people call this a subscription model. Others call it a retainer model. Whatever you call it, the more regularly scheduled repeat business, the more stability you’ll have. But don’t stop marketing! Keep planting seeds.
- Line up work. If you get so in-demand that you can schedule work into the future, you may never have to live through famine again. This pro tip is mostly for people who are already profitable, but, even if you aren’t, there may be ways to work this in. For example, I have smaller clients who can only afford to spend so many marketing dollars per year. As we create their marketing plan, we schedule projects a few years out. When it’s time for their website update, I’m there!
- Outsource or partner. When times are good and business is growing, it’s a great time to outsource. By outsourcing, you can build your business and take on more or larger projects. Now is the time to leverage the networking you did when business was slow.
Although my personal experience with feast or famine was a painful, I’m (sort of) glad I went through it. Weathering the hard times made me a stronger person both personally and professionally.
If you have never struggled through a famine period, more power to you. Get educated and take some precautions and maybe you never will. If you are going through a difficult time, take heart. You are not alone. Most solopreneurs have gone through this.
Why not take the pledge?
As a parting gift, here is a 30 part financial literacy program you can pledge to follow. Some of the information will be familiar to you, and some of it will probably be new. Check it out.
Good luck and keep up the good work!
Do you need digital marketing services? Please connect with us for a complimentary digital strategy session! Just click the button below to get started.