
Are you guilty of making any of these top 10 cash flow mistakes? Let’s see if we can’t fix that because cash flow mistakes are the #1 reason that online service-based businesses fail. We don’t want that to be you!
Cash Flow Mistake #1: Charging hourly rates
Oh my, goodness is this one a doozy! I mean, we’re all about ditching corporate over here so you know that I’m going to give you hell for this one! WHY in thor’s name are you working for an hourly wage like you’re still working a corporate job???
You own your own business now! You do not have to play by the corporate rules!
What to do instead
Flat rate retainers/projects are the only things you should be using as an online service provider. And don’t just tally up how many hours and multiply! We’re talking about pricing based on the value you are offering to the person paying you.
(Don’t know how to do this? Check out HerHQ.co to learn how to do this better in your business. Those ladies are the shit!)
Cash Flow Mistake #2: Investing too much in “coaching”
I know the siren song of the business coach is strong. There are some really great ones out there and then there are the ones who are straight-up energy vampires that get you addicted to sucking off their energy that they are sucking off other people… and in the meantime, they suck up all your profits too.
Plus the typical sales pitch talks about “manifesting” and “trusting yourself to make back your investment”. I have news for you.
There is no magic pill.
There is no one miracle cure that will instantly make the money pour into your bank account like the Niagara falls. Every single business coach is selling the exact same thing – are you ready?
Business coaches sell what worked for them.
That’s it. That in NO WAY means it will work for you and as long as you skip from one coach to another trying to find the magic thing that will make all the business stuff just “flow” then you will continue to bankrupt your business.
What to do instead
Invest in a “coach” when:
- You have the money to pay for that coaching out of the profits of your business
- You want to get some specific advice that will help you in a specific area of your business
- You intend to be the person taking the action (otherwise you should be outsourcing this instead of learning it yourself – see next mistake)
Cash Flow Mistake #3: Not hiring help

You cannot run a profitable business and DIY every single thing in your business. You just can’t. I don’t care who you are. You will never be the expert in everything nor should you be trying to be.
Look I get it, it’s counter-culture to focus on being really great at a few things and letting the rest go. We are told that we should “do it all” to “have it all” but it’s bullshit.
When you try to do everything yourself you are setting yourself up for a major cash flow mistake. How? You are taking up your time that could be used generating new clients/sales with tasks that you could pay someone else to do for a fraction of the cost.
If you are paying yourself well (and you should be) then your time is worth a lot. Don’t waste it doing tasks that someone else can do for less money and, frankly, can probably do a lot better than you.
Facebook ads? Stop trying to take a course to teach you to be an ads expert. Seriously. There’s a reason it’s a full-time job to keep up with that shit. Outsource.
Email management, social media posting, blog writing, podcast editing, finances – all things to outsource so you can focus instead on money-making tasks.
What to do instead
Once you are paying yourself well, saving enough for taxes and profit, and have enough in operating expenses to outsource – do it. (If you aren’t sure what that looks like check out my post on How to implement Profit First with one bank account)
Specifically, hire someone who can take away the work that is currently preventing you from taking on more clients. This creates an immediate return on investment and helps prevent the next cash flow mistake.
Cash Flow Mistake #4: Hiring help too soon/too fast
Do NOT hire before:
- You are paying yourself your ideal salary
- Saving enough for taxes
- Saving for profit
- Have operating expenses within your ideal range AND
- Have enough left over to pay for your contractor
Hiring a VA (very typically the first hire) before you are ready is only going to kill your profit margin and keep you from growing your business. Plus this cash flow mistake of hiring too soon and/or too fast means that your operating expenses will very quickly outstrip your ideal target percentage. (again if you missed how to calculate this read this post here).
What to do instead
Hire based on the formula I gave in mistake #3 and hire one person at a time. If you are in it for the long haul then you want to take it slow. You will make mistakes when you hire and you’ll learn a LOT about how to effectively onboard and train someone.
Plus you’ll see tons of gaps in your processes that need help. Fix this with your first hire before you bring on a crap ton of people, have a hot mess on your hands, and have to stop paying yourself because you hired so many people the costs got away from you and you’re too afraid to let any of them go.
Cash Flow Mistake #5: Your expense margin is too high
Most people think that making more money is the key to solving any cash flow mistake. They are wrong. The one thing you can control the easiest and the fastest is your expenses.
If your expense margin (the amount you spend on expenses compared to your overall revenue) is too high then you will ALWAYS have cash flow issues no matter how much money you make. Because the more you make the more you’ll spend.
What to do instead
First, go read How to implement Profit First with one bank account. Then take a look at your expenses and see where you are at in relation to your ideal percentage.
My rule of thumb for expenses is this:
If it’s not 100% necessary to complete client work or client experience or actively making you money then cut it.
Sarah Blanchfield
Brutal? Maybe but we get a bogged down in a lot of “should haves” with our expenses – when in reality the only things we NEED are the ones that we have to have to do the work, give clients an incredible experience and/or are actively making us money (aka bringing in new clients or sales).
This may mean that you have to evaluate whether the time, effort, and money you are putting into some areas of your business is actually bringing in sales. This is a GOOD thing and brings us to the next cash flow mistake.
Cash Flow Mistake #6: Not tracking leads

Surprised to find this one on a list about cash flow mistakes? That’s why it’s here. Because people do NOT realize the power of lead tracking and how it SHOULD be impacting your financial & business decisions.
If you are not tracking your leads you are missing out on knowing:
- Where people are finding you
- How people are moving through your offer suite
- How long it takes for people to purchase after entering your community
- How long your clients stay on average (if you’re retainer-based)
And all of this information is critical to avoiding cash flow mistakes because it tells you:
- Where to market – and where not to
- How to help up/downsell people at the right moment based on how people typically move through your product suite
- How to anticipate when new sales may come in based on marketing pushes
- Where you need to shore up your processes and/or add new offers to keep people in your offer suite
So I think you can see the benefit here, amiright? Understanding where and when the income is likely to come in is vital. Going back to expense management you should also be able to see where to cut costs that are not generating anything for you.
What to do instead
If you aren’t already using a lead tracking tool check out this one by Abby McGrew of Wayfarer Design Studio. It’s the one I use and it’s freaking awesome. I love that it’s easy to plug in your info and it gives you lots of pertinent data.
The rest of my information about folks is captured in Xero (because once someone buys they aren’t exactly a lead anymore!)
Cash Flow Mistake #7: Not setting profitable prices
I know we touched on prices in the first cash flow mistake but just because you’re charging flat rates doesn’t mean that the rate is profitable.
Most folks start out seriously undercharging because they are basing their price on:
- What they would be willing to pay for their own services
- What other people are charging
- Their hourly rate times the number of hours of work
- Their intuition (spoiler alert: your intuition gets hijacked by your money mindset crap and insecurity…so just stop it with this one, k?)
Just like with tracking your leads to make sure you’re focusing your time/efforts on where you can get the most bang for your buck; pricing is the same.
Some offers will be more profitable than others. You want to know how much each offer costs you to fulfill (your time, contractor time, software costs, etc.) and how many people are buying it to understand whether it’s an offer you want to continue.
For example: if you offer social media management for $500/month. It may take you 8 hours of work. If you want to be taking home even $50/hour that’s $400 already gone. Then software costs, let’s say another $25 for that client. Total profit $75. That’s a profit percentage of 15%. Whomp. Nope. Not profitable.
What to do instead
Let’s take the same parameters and turn them profitable. 8 hours at $50 = $400. Plus the software for $25. So that’s $425. In order to make a 60% profit margin, you would need to charge $1050/month for the same service if you wanted to do the work yourself at $150.
OR you could hire a contractor to do the work at, say, $25/hour. 8 x 25 = $200 + $25 (software) = $225. You could make a 60% profit margin by charging $550/month. See the difference? Both are great options. Both are now profitable.
Lesson? Just because you have a tiny bit of money left over after your “wage” and expenses for the job, it doesn’t mean your pricing is profitable. (And also, there is ALWAYS more than one way to be profitable).
Cash Flow Mistake #8: Shiny object syndrome
I know this cash flow mistake well. Don’t feel guilty if this one hits hard, because I get shiny object syndrome too.
We are like kids in a candy store – we make a bit of money and FINALLY, we can invest in what we want to purchase, all under the guise of “building” our business.
I’m actually not even going to tell you to stop with this one – the key is not to stop – the key is to plan for this to happen. Because it’s not a matter of if, it’s when.
What to do instead
When you are creating your business budget and thinking of all the categories of things you need to have in your budget plan for shiny object syndrome to occur. (If you are reading this going “say whaaaat???” read 15 Best Budget Categories for Online Service Providers)
If you deliberately set aside money to spend in this area then at least when you feel the compelling need to purchase that $37 template that the Instagram story ad is pitching – you will purchase it without blowing your budget.
Cash Flow Mistake #9: Only focusing on income generation

I know we’ve talked about this a bit before in other cash flow mistakes but it bears repeating. Focusing on fixing your cash flow with just more money is a losing battle. There are multiple factors that come into play when solving cash flow mistakes and it won’t be solved by simply making more money.
Remember, there are multi-million dollar businesses that go bankrupt because they don’t manage their cash flow correctly. They make a hefty bundle but it flew right back out the door and then they had to close their doors – for good.
It’s not how much money you have but what you do with it that counts
Sarah Blanchfield
What to do instead
You need to have a comprehensive cash flow plan that takes into account:
- Expense management
- Income forecasting
- Timing of expenses, income, and deposits
- Taxes
- Profit savings
- Payroll
Cash Flow Mistake #10: Not paying attention to it at all
Truthfully this one is the most dangerous cash flow mistake of all. Ignoring your business finances is the fastest way I know of to kill your business.
Most folks don’t ignore it completely, they fall into one of the traps above and then overfocus on one or two areas instead of developing a comprehensive, proactive plan.
What to do instead
If you are remotely tempted to ignore it altogether, do what you would do in any other circumstance – hire a professional to help or quit trying to be a business owner. Those are really your only two options. Either pay someone else to help you (you will still need to care about it some you can’t outsource caring about your finances) or stop being a business owner because if you insist on ignoring it long enough that’s exactly what will happen anyway. You’ve been warned.
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