Starting a small business can be daunting. From figuring out day-to-day expenses to deciding which business banking option to use, it can feel overwhelming to operate the behind-the-scenes parts of a company while still building a profit—especially when you’re a solo business owner.
However, with the right strategies, you can adopt strategies that support your business goals. Here are key best practices for managing your finances when starting as a solopreneur.
Educate Yourself
Solopreneurship will likely feel like an unsurmountable challenge when you’re just starting out. Education is crucial to building your confidence and making informed decisions.
Avoid relying on uninformed online content for financial advice. You want to get your information from credible sources like government websites, financial blogs, and industry-specific resources. Also consider taking online courses or attending workshops on small business finance, tax planning, and budgeting.
Moreover, expose yourself to resources such as those we offer at Maya Business. Our intuitive tools simplify everyday financial tasks like expense tracking and online business banking through our relevant and user-friendly content and financial tools.
Even better, consult financial experts to understand your unique needs. For example, a certified public accountant (CPA) might be able to provide you with insights into tax benefits and deductions tailored for your business.
Once you’ve built a solid knowledge base, you’ll feel more empowered to take control of your business’s financial health.
Separate Personal and Business Finances
One of the most critical steps for solopreneurs is to maintain a clear distinction between personal and business finances. This separation simplifies record-keeping and budgeting while offering other benefits.
You’ll be able to clearly see how your business is performing without mixing in personal expenses. Keeping finances separate also makes it easier to claim business deductions and prepare tax filings, reducing stress during tax season. By using dedicated business banking accounts and credit cards, you can efficiently track transactions, streamline expense management, and maintain accurate financial records, all of which will help ensure compliance and better financial organization.
Create and Manage Annual and Monthly Budgets
An annual budget acts as a forecast, helping you anticipate revenue, operational costs, and low-sales periods. With this overview, you can prepare for lean months by setting aside a portion of your income. You’ll also be able to identify opportunities for cost-cutting with long-term gains rather than quick fixes.
Also break down your annual budget into monthly plans. This granular approach will allow you to track your income and expenses against expectations, as well as to spot trends and to adjust your spending proactively.
Using tools like spreadsheets or online business banking platforms can simplify budget management. Many business banking online solutions include features for tracking expenses and setting up alerts for bills payments, ensuring you never miss important deadlines.
Build a Fallback Fund
A fallback fund, or backbone fund, acts as a financial cushion. This fund is essential for solopreneurs to weather unexpected challenges like fluctuating income or emergency expenses. Start by saving enough to cover one month’s worth of essential expenses, such as housing, utilities, and taxes. Gradually grow this fund until it can sustain you for 6-12 months.
If your cash reserves are not enough to start this financial safety net, Maya Business offers solutions to help. You can create a cash reserve using a Maya Business Deposit account, which earns a competitive 2.5% interest rate, allowing your savings to grow faster than if you were to park money in a traditional bank. Additionally, for times when you need immediate access to funds, Maya Flexi Loan provides quick access to up to PHP 2 million in funding, which can be divided into smaller loans to precisely meet your needs and support your business during unexpected events.
Review Your Finances Regularly
Frequent financial check-ins are essential to staying on track. Schedule regular finance meetings with yourself, weekly or monthly, to review income, expenses, and tax obligations. Adjust your budget based on new trends or unexpected changes. Ensure your budgets continue to align with your financial goals.
If you work with an accountant, use these meetings to touch base and discuss potential optimizations.
Leverage Online Tools and Automation
As a solopreneur, time is one of your most valuable resources. Free up more time to focus on growing your business by leveraging online tools and automation to streamline tasks and reduce errors.
Maya Business Manager, for example, is your all-in-one command center for controlling all of your Maya business banking and payment solutions. It features a user-friendly dashboard and provides detailed automated reports that will give you valuable insights regarding your business finances.
By embracing such technologies, you can optimize your operations and focus more on the strategic aspects of your business.
Separate Personal and Business Finances
One of the most critical steps for solopreneurs is to maintain a clear distinction between personal and business finances. This separation simplifies record-keeping and budgeting while offering other benefits.
You’ll be able to clearly see how your business is performing without mixing in personal expenses. Keeping finances separate also makes it easier to claim business deductions and prepare tax filings, reducing stress during tax season. By using dedicated business banking accounts and credit cards, you can efficiently track transactions, streamline expense management, and maintain accurate financial records, all of which will help ensure compliance and better financial organization.
Optimize Cash Flow Management
Cash flow is the lifeblood of any business. You must prioritize efficient cash flow management to maintain a steady financial pulse. Here’s how:
- Send invoices immediately after completing a project or service. Outline payment terms clearly and follow up on overdue payments. For long-term projects, break payments into milestones or phases to secure steady cash inflow.
- Learn how to negotiate payment terms with suppliers so outgoing payments align with incoming revenue.
- Don’t depend on a single client or income source to build financial resilience.
Connect with Other Solopreneurs
Running a business solo can feel isolating, and as such, building a strong community can provide invaluable support, resources, and opportunities. Connecting with other entrepreneurs—whether through local chambers of commerce, small business groups, or networking events (both virtual and in-person)—allows you to share experiences and insights while also expanding your business’s reach. Online forums and social media groups dedicated to solopreneurs can also be a goldmine for advice, collaboration, and fresh ideas. Surrounding yourself with like-minded individuals not only combats loneliness but can also lead to mentorship, partnerships, and new business opportunities that will help your venture grow and thrive.
Running a business can be challenging, so remember that—aside from making sure not to isolate yourself—you should also acknowledge your accomplishments. Celebrate milestones, no matter how small. Share your wins on social media, treat yourself to a day off, or invest in tools to reward your hard work and keep your motivation high.
Support Positive Business Practices with Maya Business Solutions
Sign up for Maya Business to access our comprehensive suite of business banking and payment solutions that can make it both easier and more rewarding to manage your business.
Setting up a Maya Business account lets you open a Maya Business Deposit account and use it as your settlement account. With an industry-leading 2.5% per annum interest rate, you’ll earn PHP 25,000 in interest per year on a PHP 1 million deposit. Furthermore, you’ll be able to send money to your partners and suppliers for free via InstaPay and PESONet, letting you save more.
Signing up also qualifies you for a no-collateral Maya Flexi Loan offer of up to PHP 2 million in just 3 months, allowing you to have another funding source to further develop your business. Just use Maya as your primary processor for all wallet and card payments. The more you use our solutions, the better the loan offer will be.
Sign up for Maya Business today to enjoy the benefits of Maya Business solutions.
