Financial Planning

Overview

Most solopreneurs avoid financial planning until something goes wrong — a surprise tax bill, a month where expenses eat all revenue, or a decision made without understanding the numbers. This playbook gives you a lightweight but rigorous financial system that takes 30 minutes to set up and 15 minutes per month to maintain. No accounting degree required.

Step 1: Set Up Your Financial Reality Baseline

Before planning, know where you actually stand right now.

Gather these numbers (estimate if you don't have exact figures):

• Monthly revenue (average of last 3 months if you have history; projected if pre-revenue)
• Monthly fixed expenses (rent/co-working, tools/subscriptions, insurance, hosting, internet — things that don't change month to month)
• Monthly variable expenses (marketing spend, contractor payments, per-transaction fees, travel — things that fluctuate)
• One-time expenses coming up in the next 6 months (equipment, legal, conferences, annual subscriptions)
• Personal income need (the minimum you need to pay yourself each month to cover personal living costs)

Write these down. This is your baseline. Everything else in this playbook builds on it.

Step 2: Build Your Monthly Budget

A budget is simply: how much money do you plan to spend in each category, and how much do you plan to bring in?

Budget structure:

MONTHLY BUDGET
==============

REVENUE
  Product/Service Revenue:        $________
  Secondary Revenue Streams:      $________
  TOTAL REVENUE:                  $________

EXPENSES — FIXED
  Hosting & Infrastructure:       $________
  Tools & Software:               $________
  Insurance:                      $________
  Legal / Professional Services:  $________
  Other Fixed:                    $________
  TOTAL FIXED:                    $________

EXPENSES — VARIABLE
  Marketing & Advertising:        $________
  Contractor / Freelancer:        $________
  Payment Processing Fees:        $________
  Travel & Events:                $________
  Education & Learning:           $________
  Other Variable:                 $________
  TOTAL VARIABLE:                 $________

TOTAL EXPENSES:                   $________  (Fixed + Variable)

GROSS PROFIT:                     $________  (Revenue - Expenses)

OWNER SALARY (your pay):          $________

NET PROFIT (retained in business):$________  (Gross Profit - Owner Salary)

Rules:

• Marketing budget should be 10-20% of revenue (or a fixed dollar amount if pre-revenue — treat it as an investment with expected ROI).
• Owner salary should be set first, then expenses fit around it. If expenses + salary > revenue, something must be cut or revenue must grow.
• Always budget a 10-15% buffer for unexpected costs. Unexpected things always happen.

Step 3: Cash Flow Forecasting

Revenue on paper is not cash in your account. Cash flow timing is what actually keeps a business alive.