How to Strengthen Your Belief in Your Business's Financial Future

In employed work, we’re confident that we’ll receive our next paycheck. Even if we’re fired or laid off, the employer is legally bound to pay us for the work we’ve done. When you’re your own boss, the future can feel less certain. Self-employment comes with a lot of variability and many highs and lows. Employed work is all or nothing, which to me is a much greater risk! The trick with self-employment is learning how to navigate that variability. 

In my previous article How to Understand Your Books and Confidently Make Big Business Decisions, I talked about the present-moment financial health of your business. I showed how to take a snapshot of the current moment. It’s important to know that, but how can you be sure it’ll stay true in the future? There’s so much in business (and life) that is unpredictable and unknowable. But let’s not ruminate on the existential when we can ground ourselves in data trends. Today I’m going to address the data and trends you can use to forecast the future health of your business. 

Upstream Statistic

The way to “know” is to identify an upstream statistic. This can be any evidence that you’ll be able to bill in the future. This can look a lot of different ways. Maybe your business is like mine, and you have future sessions scheduled on your calendar. For others, this might be that you have a contract booked to start in the future. And for some, you might have to look at your sales pipeline rather than a more concrete data point. 

Your upstream statistic will not be 100% accurate. Let's use my business' booked sessions as an example. Of all the appointments on my calendar for the rest of 2026, 20.6% of them never come to pass. I reserve time slots for clients and schedule them far into the future. This means plenty of far-future sessions won’t come to pass. However, the sessions scheduled for this week are a pretty sure bet. Still not 100%, because pretty much every week there is change within the week. (Because of my cancellation policy, I see many reschedules and few true cancellations.) I see a within-the-week cancellation only about once a month. (Even if you have a business similar to mine, your schedule is guaranteed to behave differently!) Looking at a week multiple months in the future, I can estimate that 20% of those won't happen. Looking at next week, I can estimate no more than one of those won't happen.

In addition to a one-off cancellation rate, we also need to consider the length of a typical client relationship. Clients won't work with you for forever. Your contract will influence this. The likelihood of someone breaking a contract is far lower than them not renewing a contract. But it's far from perfect. Based on my contract, most of my clients should work with me for 12 weeks, but my average is 22 weeks on average. Even if your contract doesn't dictate it, you can get a feel for what is typical. If a client starts today, it's fair to assume I'll be working with them 11 weeks from now. 22 weeks from now, they might be getting ready to leave my caseload. And that would mean I'd be looking for someone to replace them.  

There will always be a margin of error for your upstream statistic. The source is likely to be clients cancelling or cycling off your caseload. The trick is to get a handle on your normal and know when things are outside of it. I mentioned my business’s normal, but yours will be different. Contracts and policies can influence this margin, but that's not the whole picture. And none of this can be completely controlled by the business owner. What the business owner DOES have control over is the activity they take to keep new clients coming in the door. 

Your Sales Pipeline

Client attrition is bound to occur no matter how long-lasting our clients may be. Clients will graduate from our services, or need to make a change. For some businesses, attrition is near instant, and they don't see repeat business. (a.k.a. you only need your appendix removed once!) Attrition isn't a failure of you or your business; it's a reality we need to plan for.  

The remedy for attrition is to know new clients are on their way. This means that to look the furthest out in the future, we need to look at what’s known as your sales pipeline. It can be helpful to track this information, but you don’t have to. Your sales pipeline is all the folks who are interested in your service, but they’re not yet a client. This would be anyone who’s booked a discovery call or sent an email inquiry. This could also be less direct. Imagine having a conversation with a possible client. In some industries, you can count on it taking months before they’re actually ready to sign on as a client. (Think of a corporate client who needs to run the decision up the chain of command… that can take time!) The super tech/data savvy might get even more indirect. Could you draw a correlation between traffic to your website and actual inquiries? Zooming this back out, we’re looking for a step that comes before someone becomes a client. And something that's easy enough to measure.

Once you know what that step is, you can monitor that activity. It's not a direct one-for-one that those will become clients. Rather, activity at that step is a precursor to your future client count. This means you've got warning. If your prospective client activity (aka leads) is dipping, then you know your future client count is at risk. Time to hustle up some fresh marketing! Effort now will ensure that dip doesn’t result in low client numbers in the future. 

Pipelines never have a 100% conversion rate. Not everyone who calls you up or looks at your website will become a client. If you’re managing a 20% conversion rate, you’re doing great, but we don’t actually need to know your conversion rate. We need to know what’s typical for your business and if it’s varying significantly from the norm. For example, my target is 24 to 45 client leads over a 3-month period. If my lead calculation on my CRM's dashboard is in that range, then I’m on track! But lower than that means I need to take action. And if it’s below 15, then it’s officially time to panic.

Your Action Step 

Figure out a measure that works for you and your business. Maybe an upstream statistic or sales pipeline measure works better for you. You could track one of each. Whatever you choose, make sure it’s something easy for you to locate and track.

Spend a period of time (3 months? 1 year? Depends on your client flow!) collecting data to establish what variability is normal. It will go up and down; that’s normal. You’ll note that I count leads over a 3-month period because time has taught me that people reach out in fits and spurts. If I looked at leads in a week-to-week fashion, then I’d become stressed out by the extremes in both directions!  

You may need to correlate the data you’re collecting with your client count or revenue. Also keep in mind any natural delay. For example, let's say I'm collecting data on the number of initial sessions I have. I won't know until the next week if those sessions become clients. And any payment won't happen until after the first real session. Data on my initial sessions for this week correlates to client increases one week from now, and revenue increases about three weeks from now.

Continue tracking your measure after you've established a normal. This will allow you to keep a breast of the future health of your business!

Anxieties of Change

The next time you have a concern, leverage your data! It's great for concerns about money, or a client quitting, or a plan to make a revenue-impacting change. Change is eternally present. The future is perpetually unknowable. But trends do happen! It’s easier to navigate the variability of self-employment when you know what’s normal based on reliable data points. You’ve got money in the bank now, and you can have confidence that you’ll also have revenue in the future!