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If your bank insists that you open a higher cost 'business acccount,' consider going to a credit union, where rates and terms are more favorable than those of commercial banks.
• THE BANE OF FLUCTUATING CASH FLOW
Managing fluctuating income is one of
biggest challenges of self-employment.
The most difficult part of having a fluctuating cash flow is dealing with anxiety that arises when cash flow is tight.
Most people who have been self-employed for a considerable amount of time develop a simple faith that money will flow again. But it gets uncomfortable for us, too, when downturn is severe or prolonged.
Here are some tips on coping.
Have a marketing plan and stick to it.
Shift your spending to mimic your cash flow. In other words, spend more when money comes in, cut back when it is not. And put away some cash for a rainy day.
Keep your obligatory monthly payments as low as possible. These are necessities that are billed monthly such as telephone and other utilities, car payments, etc.
If you must put a purchase on a monthly installment, as, say, most people do when they buy a car, opt for longest-term loan possible.
A longer loan term lowers your required monthly payment. This makes it easier to fulfill your obligations during lean months. Pay more than is required during fat months to pay down these loans (this will reduce your total interest payments and pay off loan more quickly).
Rather than paying for web hosting and other services on a monthly basis, opt for an annual installment that comes due during a fatter month. Not only do many web hosts give you a discount for choosing annual option, you eliminate one payment you must come up with during a lean period.
Continued in Part Two.
Ellen Zucker has been successfully self-employed for over 10 years.
Self-Employment 101: It's about making a living and creating a life! ... Observations, information and resources for those of us who are self employed or just thinking about it. http://www.selfemployment101.com
