Feeling nervous about taking the leap into entrepreneurship because of inconsistent income? You’re not alone! Whether you’re freelancing, running a small business, or hustling on the side, we all face this challenge at some point.

I understand firsthand how scary it can be—before leaving my stable government job to pursue full-time wedding photography, I spent countless hours budgeting and planning just to make sure all my bills were covered without that predictable paycheck.

But fear not! Today, let’s tackle this together with practical tips to navigate the ups and downs of inconsistent income —all while keeping your sanity intact!

Navigating the Waves: Mastering Inconsistent Income in Your Creative Business

Tip 1: Create a Budget

I’ll be honest—I didn’t start budgeting until I got married and combined incomes with my husband. I’m not sure how I survived without one! Creating a budget forced us to write down every single number related to our income and expenses, making us honest about earnings, taxes, contributions to retirement accounts, student loans, mortgage, and other expenses.

To create a budget, start by being open and honest about your financial situation. List your essential expenses, such as housing, utilities, food, gas, healthcare, debt, insurance, and education. Next, allocate funds for irregular expenses and emergencies (i.e. sinking funds!) like car maintenance, home repairs, medical expenses, vet bills, gifts, celebrations, vacations, taxes, and other milestones. Between your essential and irregular expenses, you’ll get a clear picture of how much money you have left to save, invest, or splurge.

As a business owner, I highly recommend separate business accounts for managing income and expenses. For me, I utilize the Profit First Method to organize my business finances — it’s been a game changer! Gone are the days where I worry about how I’m going to pay my taxes when tax time rolls around! Additionally, I recommend using budgeting tools and apps to simplify financial tracking. You should track EVERYTHING as a small business owner— no matter how big or small it may seem!

Here are some examples of things to track:

• Operational Expenses: Rent or mortgage payments for your office, utilities, office supplies, software.
• Employee Expenses: Salaries, benefits, training if you have employees.
• Advertising and Marketing Campaigns: Social media ads, etc.
• Business Taxes: Income taxes, sales taxes, payroll taxes, and other applicable taxes.

And here are some tools I recommend to keep you on track:

• EveryDollar
• QuickBooks
• Acorns
• Qapital
• Goodbudget

Tip 2: Diversify Your Income

They say having one revenue stream is too close to none, and boy, did that hit home during the pandemic! Many photographers saw their income vanish overnight with canceled weddings. That’s when I realized—I needed a change!

The goal? Diversify your income so no single customer or product accounts for more than 15% of your revenue. In the year since the pandemic, I’ve slowly began to diversify my income. Here are a few different sources I’m currently utilizing:

• Wedding Photography
• Senior Portrait Photography
• Online gallery sales
• Template Shop
• Affiliate income
• Etsy Shop

And I’m currently working on adding:

• Online courses
• One-on-one coaching
• Group Coaching

Diversification not only boosts your earning potential but also shields you from uncertainty with inconsistent income —now that’s peace of mind!

Tip 3: Create an Emergency Fund

Recently, my financial advisor asked, “What’s your safety net for peace of mind?” It got me thinking—financial peace means different things to different people. A lot of times we don’t ask ourselves what would bring US peace when it comes to our savings.

Here are some easy steps to creating an emergency fund:

1. Set a Financial Goal: You know how we talked about essential expenses before? The general rule of thumb is that your emergency fund should contain 6 months of essential expenses. Go through your bank statements for the last 3 months and figure out how much you spent on rent or your mortgage, utilities, groceries, insurance, and debt payments… and that number is your monthly ‘essentials’ cost. Multiply that number by 6 and that’s how much you should have in your emergency fund! This number will look different for everyone, but once you know your target goal, it’s time to start chipping away at it.
2. Determine a Realistic Timeframe to Achieve Your Goal: The budgeting apps I mentioned above can help with this – I personally utilize Everydollar! They will help you decide how much money per week or month you need to achieve your goal.
3. Set Automated Transfers or Percentage-Based Savings: I love automatic transfers so I don’t even have to think about it! If you typically pay yourself on a certain day of the month, consider having an automatic transfer go into your emergency fund account that day too (so you never ‘see’ the money).

Tip 4: Cultivate Client Relationships for Consistent Work

As a wedding photographer, a strong percentage of my clients are referrals. Referrals are the greatest fuel for my business! Did you know that the cost of acquiring a new customer is 5-25x more expensive than keeping a current one? This highlights the value of customer retention.

Here are some of my best tips for nurturing client relationships:

• Under Promise, Over Deliver: This is like having a secret weapon in your business arsenal! Set expectations slightly lower than what you know you can achieve, then exceed them by going the extra mile. This builds trust, credibility, and creates loyal fans who appreciate your dedication.
• Develop a Referral or Affiliate Program: Encourage your satisfied clients to spread the word about your business by offering incentives like referral discounts, thank-you gifts, or participation in an affiliate program. People love to share great experiences with others, especially when there’s something in it for them!
• Leverage Social Proof on Your Website and Social Media: Highlight customer testimonials and positive reviews on your website and social media platforms. Studies show that online reviews are highly trusted by potential customers, often as much as personal recommendations. Displaying these can significantly boost your credibility and conversion rates.
• Ask them!: If you’ve provided a fantastic experience for your clients, don’t hesitate to ask them to share it with their friends and networks. Sometimes all it takes is a gentle nudge to turn satisfied customers into enthusiastic advocates for your business.

Tip 5: Maintain Organization and Financial Tracking

Every industry experiences its own cycles and seasonal trends. For instance, as a photographer, my busiest months are typically from May to October, while winters tend to be slower. Similarly, retail stores often see spikes during the holidays and quieter periods during certain months of the year.

Understanding these patterns in your industry is crucial for effective planning and navigating both busy and slow seasons of business. By anticipating these fluctuations, you can better prepare and avoid unnecessary stress with inconsistent income during quieter times. Personally, I’ve learned to embrace and enjoy my downtime by using the high seasons to cushion for slower periods.

To stay organized and financially sound, consider these strategies:

• Put Yourself on Payroll: Determine a sustainable income level that allows you to save and manage debt effectively.
• Hire a Bookkeeper: Having a professional track your finances month by month ensures you stay informed about your business’s financial health.
• Implement Effective Invoicing and Payment Tracking Systems: Utilize tools like Honeybook to streamline invoicing and ensure you capture all potential tax write-offs, minimizing financial oversight and maximizing profitability.

I hope this has shown you that handling inconsistent income is entirely doable. With the right mindset, strategies, and support, you can establish a strong and thriving business that navigates financial ups and downs with resilience.

Always remember, your dreams are worth pursuing, and mastering financial management skills empowers you to craft a life that brings you joy and fulfillment!

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