Cash flow is a key indicator of the strength and vitality of any business. It is defined as the net amount of money your business takes in or spends in a given time frame. If you specify the time frame as one year, you are essentially calculating your annual net profit.
The wedding industry can be very seasonal, depending on the specific business you conduct and/or the part of the country in which you reside. “Engagement season” may mean a lot of deposits, “planning season” will bring about additional expenses, and “wedding season” means final payments, but also additional payroll expenses. You may even have a fourth season in there that results in no cash flow at all!
I want to challenge you to strategize your business in a way that will allow it to produce a positive monthly cash flow.
Now, I am not saying that this is necessary for a business to be successful. Perhaps you take three months off during the winter and don’t want to worry about anything during that time. Trust me, I understand. I make 60% of my annual income in 6 weeks out of the year.
I am recommending this strategy for someone who conducts business all year-round and is looking for a way to stay profitable through the slow times, rather than stressing out and dreading tax day.
So what can you do during your slower months to boost your revenue? As a wedding planner, offer hourly consultations. Maybe you can package three or four together and guarantee your client will come back for four consecutive months. How about engagement planning? Photographers can create customized Christmas cards for their clients over the past year. If a stationer, create your own greeting card line and sell them at local boutiques, or online for that matter.
The idea is basically to be making some sort of profit every month. If you set a monthly goal with which you are satisfied, you will no longer depend on the big months, but rather enjoy the extra income they bring.
What are some things you have done to increase your monthly cash flow?
Friday, May 29, 2009
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