How to Create Financial Projections for Your Freelance Business
I was blindsided by a slow quarter in year 2 because I wasn’t looking ahead. Q3 hit and I had no projects in the pipeline beyond my retainers. Two months of reduced income, scrambling for work, and a nasty dip in my business checking balance.
Since then, I’ve maintained a rolling 3-month projection. It’s not complicated — a Google Sheet that takes 15 minutes to update monthly. But it’s prevented every subsequent surprise.
The Simple Projection Framework
Confirmed Income (High Confidence)
- Retainer contracts: $7,500/month (predictable)
- Signed project milestones: varies (payment dates known)
Probable Income (Medium Confidence)
- Proposals sent, awaiting acceptance: 50% probability
- Verbal agreements, not yet signed: 60% probability
- Repeat clients who historically return: 30% probability
Expected Expenses (Known)
- Fixed monthly expenses: $664 (software, services)
- Tax savings: 28% of income
- Salary: $4,500/month
- Quarterly tax payments: $3,600/quarter
My Q2 2026 Projection Example
| April | May | June | |
|---|---|---|---|
| Retainers (confirmed) | $7,500 | $7,500 | $7,500 |
| Project A milestone (confirmed) | $2,500 | — | — |
| Project B proposal (50% prob) | — | $2,000 | $2,000 |
| Repeat client inquiry (30% prob) | — | — | $1,500 |
| Expected income | $10,000 | $8,500 | $8,950 |
| Tax savings (28%) | -$2,800 | -$2,380 | -$2,506 |
| Business expenses | -$664 | -$664 | -$664 |
| Personal salary | -$4,500 | -$4,500 | -$4,500 |
| Quarterly tax payment | -$3,600 | — | — |
| Net cash flow | -$1,564 | $956 | $1,280 |
This projection tells me: April will be tight (quarterly payment + normal expenses). May and June look fine. If the probable income doesn’t materialize, I’ll need to lean on the business buffer.
Action items from this projection:
- Increase outreach in March to fill May-June pipeline
- Ensure business buffer can cover April’s negative cash flow
- Follow up on Project B proposal aggressively
When to Update
Monthly: Update confirmed income for the next 3 months. After every proposal/contract: Add it to the projection. Quarterly: Do a full 12-month rough projection for annual planning.
The Bottom Line
Financial projections for freelancers aren’t about predicting the future perfectly. They’re about seeing problems early enough to prevent them. A 15-minute monthly spreadsheet update gives you weeks of advance warning — enough time to market, follow up on proposals, or adjust spending before a cash flow crunch hits.