Real talk about entrepreneurship: my $600 month
I enjoy peeling back the curtain on being self-employed. It’s always fun to compare notes with fellow travelers down this road, whether they’ve been at it longer than I have or they’re just getting started. And if I’m having a conversation with someone who has an actual job – as I did for almost a quarter century – it’s like I’m describing life on another planet.
So I thought I’d take a moment here to tell you about my July. It was a dream of a month, the kind I never would have thought possible as an employee. That is, except for the part about breaking a record nobody ever hopes to break.
In July, my family and I spent most of the month in Michigan, enjoying lower temperatures, less humidity and a slower pace of life than we usually experience in the DC area. I took advantage of the holiday and worked about a third fewer days in the month than usual.
I partnered with a colleague to facilitate an executive team meeting for a new client in my hometown of Chicago. The same week, I went to a water sector conference in Buffalo. I spoke on a panel, caught up with some friendly folks I knew – and got to see Niagara Falls for the first time.
I later teamed up with another colleague to facilitate a LEGO® SERIOUS PLAY® workshop for a federal agency.
It was the month of new experiences and new discoveries, punctuated by plenty of rest that I sorely needed.
In short, July felt awesome. In almost every way except one. Financially, it was the single worst month my business has ever had.
My total revenue for July 2024 was $600. That’s gross revenue, not revenue after expenses.
I had earned less in a month than I could’ve if I’d worked full time for a week at our county’s minimum wage.
But this is not where I run screaming back into the world of organizational employment. It’s where I celebrate my growth as an entrepreneur. Four years ago, three years ago, perhaps even two years ago, I’d be embarrassed and eager to put this behind me – not to share it in public. I would also not be able to say the following:
My reaction to the $600 news was not panic, but understanding. I knew it would happen and was prepared.
My family and I will be fine. We have savings for moments exactly like these, which we refill during stronger months. I was grounded in my sense of realistic revenue projections for the rest of the year, which is looking very solid. I also saw the dip coming and understood why it would come.
How did this happen? It happened in part because I don’t get paid if I don’t work. I did take some time off in July. Also, my late spring into early summer was slow. The dry spell finally broke in July, and all sorts of new work (or potential new work) started flowing my way again.
But booking work, doing work and getting paid for work often happen on three very different timelines. I have some clients who pay me up front, and some who pay me up to two months after the coaching or facilitation is done.
The result is a bit of a money roller coaster. I’ve had monthly gross revenue totals ranging from my $600 July 2024 all the way up to $38,000 a couple of years ago.
Here is what I’ve learned to do as a business owner, to insulate us from the impact of the highs and lows. In short, create a cushion and avoid surprises:
As quickly as you can, build up a significant amount of savings in your business and resist the urge to touch it for anything other than cash flow. I’d recommend holding 2-3 months’ worth of your regular expenses.
Keep a running list of projections for the year, consisting of work you’ve already done and work you’ve signed on to do.
Keep a separate running list of prospects. Only move something from prospects to projections once you have a signed contract to do the work.
Know the difference between your bank balance, your current invoices, your projected future revenue and your pipeline of prospects.
To be clear, learning not to panic when your income temporarily bottoms out isn’t the same as wishing for it to ever, ever happen again.
But if it does, I’ll be ready.
Onward into August!
Image: Flickr user wonderlane (cc by 2.0)