Feast or Famine: Dealing with the Ebbs of Business Cash Flow
Cash flow lumpier than your mother-in-law’s gravy? You’re not alone. Let’s talk ‘feast or famine’ cycle and how to manage your cash flow.
Emma Bowdler
I’m a cheerleader for women and an accountant bursting with personality.
For many small business owners, freelancers, and entrepreneurs, riding the cash flow rollercoaster is exactly that — thrilling highs followed by nerve-wracking lows, and most of the time you’ve just got your heart in your mouth, hoping you did the safety harness up properly.
It might be fun at first, but after a few years in business, this ‘feast or famine’ cycle is just plain stressful and not at all what we signed up for. So, if you’re sick of living that caviar, then canned tuna, life? We gotchu. Let’s look at some ways to even out your cash flow (and your mood) when running a business.
🎢 The Rollercoaster We Didn’t Buy Tickets For
A pattern characterised by alternating periods of high activity and abundant cash flow (the feast), followed by stretches of low activity and very little cash flow (the famine). It’s a term with its origins in ecology (makes sense), and just like the little critters doing their darndest to withstand life’s ups and downs, business owners also need to be able to switch between modes and be resilient in the face of constant change.
Yum, A Fabulous Feast
Your inbox is bursting with inquiries, your phone is a hotline of potential, and your bank account is nice and juicy. You’re in high demand, and it feels as if your biz is a runaway train of success — fast, exhilarating, and a little out of control.
During the feast, time management becomes a challenge because everyone wants a piece of your expertise, and they want it now. It’s tempting to say yes to everything and ride the wave of abundance, but we also know it ain’t gonna last forever. While it’s a time for celebration, it’s also a time for caution — because we can only eat so much.
Now An Effing Famine
It’s the stuff of nightmares. The inbox is eerily quiet, the phone silent, and the bank account…well, let’s just say it’s on a ‘diet’. Projects wrap up, clients suddenly vanish into thin air, and the market seems to be taking a pretty serious downturn.
The famine phase is marked by uncertainty, self-doubt, and stress. It’s a time when saving pennies becomes crucial, and the scarcity mindset starts to creep in. Marketing efforts may seem futile, and motivation can disappear as quickly as your leads do.
However, as Forbes suggests: “Downtime can be used for reflection, learning, and strategising for future growth.” It’s important to stay proactive and use this time effectively to make sure you eat again, and soon.
When the Market Ebbs and Your Stress Flows
Like all things, there’s more than one factor that contributes to the feast and famine reality of many small business owners, freelancers and entrepreneurs. But here are a few:
1. Market Demand:
Just like fashion trends (how are low-rise jeans back? omfg), market demand can change seasonally or due to economic shifts.
Your once-hot service may suddenly cool off as trends or needs change.
2. The Nature of Project Work:
Many businesses operate on project-based work, which naturally leads to peaks and troughs in workload and income.
Clients often also have their own cycles of budget availability or project need, which affects your workload.
3. Economic Upticks and Downturns:
No business happens in a vacuum. The external forces and impacts of macro-economic policy often exacerbates the feast and famine cycle.
In a market downturn, opportunities dwindle and budgets shrink. Clients may delay or cut spending, leading to postponed or cancelled projects and a notable scarcity of new opportunities.
The opposite can also be true, and people are wanting to spend all over the shop.
4. Planning and Forecasting:
A lack of preparation for lean periods can leave businesses vulnerable when demand drops. Effective planning means forecasting revenue lows and creating a budget that accounts for these fluctuations. This involves setting aside a portion of profits during good times and reducing non-essential spending during slower periods.
5. Inadequate Pricing Strategy:
Pricing too low or not having a pricing strategy in place can also exacerbate the feast and famine cycle’s impact. Your prices may not adequately cover your costs or reflect the value of your services.
It’s crucial to develop a pricing model that accounts for your expertise, market rates, operational costs, and desired profit margins. And then review and adjust your pricing on the reg to ensure it aligns with industry standards and your business growth goals.
With this in mind, let’s talk about how you can more effectively *plan for* the feast and famine cycle.
Embracing the Cycle, And Planning Around It
Managing our cash flow is how we keep our dreams on track. It’s not always the fun part of what we do, but it’s what allows us to keep on doing it.
The reality is that every business goes through cycles. The key is to not just endure them but to use them to your advantage by understanding, anticipating and planning for them in such a way that you can secure your business’s future and build a foundation for lasting success.
A few useful strategies for identifying when you’re in feast, when the famine is coming, and how to make the rollercoaster less bumpy:
🫂
Embrace the Budget
It seems snore, but creating a budget that’s as detailed as a winged eyeliner tutorial. Know where every dollar is supposed to go, and make sure your money is working harder for you.
Download our free Bottoms Up Budget and get on your way to financial freedom.
🫂
Embrace the Budget
It seems snore, but creating a budget that’s as detailed as a winged eyeliner tutorial. Know where every dollar is supposed to go, and make sure your money is working harder for you.
Download our free Bottoms Up Budget and get on your way to financial freedom.
🚰
Know Your Flow
Understanding your cash flow isn’t just good practice; it’s a business owner survival skill. Use tools, apps, or the good old spreadsheet to keep track of your financial ins and outs.
Look for trends. See when the peaks and troughs are. Know what the signs of feast, and the signs of famine, are and plan accordingly.
👥
Focus on Client Retention, Not Just Acquisition
Often when things are getting dire, we think we need to bring in lots of new clients. But it’s almost always more cost-effective to keep a current client, or sell to an old one, than to find a new one.
Plus, old clients are like old friends — they’re gold. Pick up the phone, or send them an email.
🍽️
Diversify Your Financial Diet
During feast times, it’s time to get your squirrel on. Allocate a portion of your excess into a ‘famine fund’. This is your cushion, your financial safety net, designed to catch you when things get chilly.
Whether it’s a ‘Rainy Day’, a ‘Famine Fund’ or a ‘Sh*t In the Fan’ Fund — you’ve gotta have backup for when food is harder to come by.
🤹
Keep Upskilling
During times of abundance, it’s common for us to focus solely on the workload at hand, pushing ‘anything that is not absolutely necessary’ to the back burner.
However, as entrepreneurs, we always need to be in the business of acquiring new skills or improving existing ones. Upskilling during the feast phase ensures that when the market changes and famine approaches, that we have enhanced our value proposition and become an even hotter ‘commodity’ to current and potential clients or employers.
🐿️
Squirrel Away
for the Winter
(or your ‘famine’ period)
During feast times, it’s time to get your squirrel on. Allocate a portion of your excess into a ‘famine fund’. This is your cushion, your financial safety net, designed to catch you when things get chilly.
Whether it’s a ‘Rainy Day’, a ‘Famine Fund’ or a ‘Sh*t In the Fan’ Fund — you’ve gotta have backup for when food is harder to come by.
➕
Add to your Offerings
It’s the ol’ ‘upsell’ at the register trick, but in all seriousness – using the ‘famine’ part of the cycle to think about other ways you can solve a problem for your clients, and then trialling a new product or service to meet that need can be a good way of bringing in some cash during a downturn.
If you are a copywriter who writes articles, do your clients also need their LinkedIn bios refreshed? If you do a tax return, do your clients also need tax planning or a business strategy?
Think about what else they need and keep yourself on their radar. Remember: ‘One and done’ is rarely a strategy for solid and sustainable business success.
🫶
A Strong Support Network is for Always
Often we neglect networking during the ‘feast’ because we are completely overwhelmed with work or we assume we don’t need additional contacts or opportunities. However, the relationships you build during these times can be lifelines during leaner periods.
That’s because nurturing a network is not just about job opportunities, it’s also about ideas, advice, and support. Stay connected, even during the feast, share your success, offer help to others, and maintain your visibility. This way, during leaner times, you have established connections to turn to for potential opportunities or for support in navigating the market downturn.
A Friendly Reminder From Your
Business BFFs
We absolutely get the rollercoaster ride of running a business. One minute you’re riding high and everything just clicks, nek minnit you’re feeling all over the shop and checking the couch cushions for cash. It’s all part of the journey.
Just remember that: during the feast — tuck as much as you can away, keep networking, and enjoy the ride while knowing it won’t last forever. And if things are a bit quiet right now, take a deep breath. This is just a season, and maybe it’s time for a bit of reflection and strategising for more food-filled days ahead.
If you need a hand to get on top of your cash flow and come up with a strategy for dealing with the Feast and Famine Cycle, let’s chat.
Book a Business Growth Strategy Session and let’s do it!
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