One of the scariest parts of making the leap to owning your own business is thinking about the money and how to pay yourself consistently as a business owner. Working for yourself means going from a consistent paycheck to what is usually an inconsistent paycheck. It’s often what is most scary and frustrating for creative entrepreneurs, as you probably know.
I started my business five and a half years ago, and have been working for myself full-time for almost three. I was so nervous about quitting my day job because my husband and I had just bought a house, and he was only working part-time then.
Thankfully, I’ve been able to pay myself consistently every single month since working for myself full-time. Being able to pay yourself consistently is easier when treat your business like a business, and not a hobby, and set up a system. So, I want to help you stress less about your finances, and teach how you can pay yourself consistently!
I know you’ve read the blogs and attended the webinars about how to price yourself. Well, they’re all correct – you have to price yourself correctly. I was way under-pricing myself that first year and a half of working for myself. I (somehow) still managed to pay my self consistently. I’m not going to say much more about this subject, because there are pricing experts out there (like Kristin Kaplan), but just know it is an important part of this equation!
Create a waitlist:
In my first month of being a full-time business owner, I was juggling THIRTEEN projects. Thirteen! As you can probably imagine, that was entirely too many. I was about two weeks into being full-time when this happened, and knew that I needed a waitlist. I had no idea how to make this happen, or how to set it up, but I had heard of it before. So, I reached out to some Facebook communities and asked for help.
This is how I set-up my waitlist:
Timeline: I figured out how long it takes to complete each project. This was probably the hardest part, because I hadn’t ever really paid attention to project timelines. Always make the timeline longer than you think you’ll need. It’s better to launch early, instead of late.
Calendar: Then, I kept track of project timelines on my calendar. There are apps and programs out there that can help you do this, but I just use good ol’ Google Calendar. I make an “event” for each client project, and mark it as an all-day event. For example, I will create an event for “Amy’s Website” with a start date of May 1, and end it on June 1. I do it as one on-going event so that it creates a bar of color on my calendar – which we’ll need in the next step.
Balancing: Then, I needed to figure out how many projects I could (or wanted) to take on at one time. Once I see four event bars (from step #2) on my Google Calendar, I know that that particular time period is now at full capacity. When a new client inquires, I look at my calendar for the first spot that has less than four bars, and that’s the client’s potential start date.
Because a majority of my services are over $1,000, I offer payment plans. I know many entrepreneurs who will bump the price up a bit when doing payment plans, but I do not. I think it’s all about your personal preference and how you like to do business, whether or not you want to add some “fees” for a payment plan. My payment plans (and ones that I’ve seen from other people as well), all have the final payment due before the project ends, or on the final day.
Waitlists are useful!
Since I have a waitlist for several months out, this is one of the key ways I’m able to pay myself consistently. Right now, I’m booked out for the next six months – but I’ll be getting money from clients every single month, because of these payment plans. In addition, I will hopefully get some income from passive income, and new clients who book me.
Invoicing and auto-payments:
I use Wave for my invoicing, which makes it really easy to set up recurring invoices. I’ll look at the time between the date of booking, and the launch date. Then, I’ll evenly space out the four installments between their first payment, and the end of our time together – typically around every 5-6 weeks. I do let my clients break up the payments into more than four installments, if need be.
Business bank accounts are important!
Before I even took the leap to full-time business owner, I had a separate bank account for my business. Each month, I pay myself on the 15th and 30th, just like my day jobs would pay me. Having a separate bank account is super smart for taxes, but also for paying yourself!
Consistency is key.
Regardless of what I make each month, I pay myself the same amount each month. All the other income stays in my business bank account. This makes it less stressful for me in slower months, for quarterly tax payments, and if I want to invest in a course, a coach, etc.
When it comes to paying yourself consistently, it really boils down to systematizing it. Organize your waitlist if you have one, have clients pay on payment plans, and make sure you’re using a business bank account. Even if you don’t have a waitlist, you can figure out what you want to pay yourself each month, and keep the “extra” in your business bank account for later.