The Financial Reality for Solopreneurs: A Balance of Passion and Practicality

For many entrepreneurs who’ve gone into business on their own, the idea of having total financial control of their own operation was a major motivator. When we surveyed 1,000+ solopreneurs, nearly a third (32%) cited the desire for autonomy (in all aspects) as their top reason for starting their own business.

The Power of One: 2025 Solopreneur Report details the results of our survey in full, including motivations, financial ups and downs, technology use, and more. While you can’t really put a price on autonomy, the survey made it clear that it’s also not without its cost. Here’s what we learned from respondents. 

The Financial Rollercoaster: Understanding the Risk and Reward

Before getting to exact statistics, it’s important to understand the basics. The financial reality for solopreneurs is that they face a steep financial learning curve. Whether your solo business is your only source of income or just a side hustle, setting off on your own professional venture is often a high risk/high reward situation. 

Here’s a glimpse at the financial commitment solopreneurs can face:

• Capital investment. Getting a startup off the ground requires upfront costs, and often those will come out of the solopreneur’s own pocket. This can be a great motivation to push your venture to succeed. The more profitable the business, the more likely you are to recoup your losses.
• Fundraising. To offset out-of-pocket spending, solopreneur fundraising can be a big help. This could mean seeking out external investors, seeking donations from your community, and researching small business grants. Once external investors are involved, there’s an expectation that they’ll receive a return on their investment. 

The First Step to Stability: Mastering Solopreneur Bookkeeping

What is the first step to financial planning as a solopreneur? For most business owners, it’s keeping track of everything. Some solopreneur bookkeeping basics can go a long way toward keeping a handle on your income, investments, payments, and more. Here are a few solopreneur bookkeeping tips to help you get started:

• Separate business and personal finances. It’s not impossible to run your business and your life out of one bank account, but it’s not recommended. Keeping things separate will make it easier to manage your cash flow and make sure everything is accurate and accounted for.
• List the numbers you know. Start with fixed expenses (rent, monthly subscriptions, any other costs that don’t change).
• Be realistic with estimations. Variable expenses can be difficult to predict, so be sure to base your estimations off of previous months and years (if you can).
• Save for emergencies. Easier said than done, right? Just remember that every penny counts. Save what you can when you can. If you’re able to budget for fixed monthly savings transfers, that’s ideal. More on saving strategies later. 

Finding Your Financial Footing

58% of solopreneurs feel financially secure about their businesses. 

This is likely the impact of the freedom that comes with working for yourself. Solopreneurs are business owners who work without co-owners or employees. So while they do have to juggle all business functions on their own, being a team-of-one often significantly reduces their overhead. 

Some of their work may be outsourced to accountants or other as-needed specialists, but overall they get the satisfaction of having a direct hand in almost every part of their business. They also get complete control over all financial decisions, including what gets outsourced and what stays in-house. This means, despite the extra legwork, they’re more likely to feel confident in the value of their work — because they can see its impact.

64% agree that their business is a reliable source of income. 

The other benefit of working solo is getting to collaborate one-on-one with clients, and the reliability it can bring. This personal facetime can go a long way in building solid professional relationships, and a steady flow of work and income. When you’re the only one answering questions, replying to emails, and taking the time to attend meetings, clients may see you as hard-working and consistent. So even if you can’t take on the same workload as a team of professionals, the clients you do have are likely to work with you again. 

Navigating Income Gaps

Nearly half (48%) of solopreneurs have gone without income for at least a month.

This is the less sunny side of solopreneurship. Being your own boss often means sacrificing a steady paycheck. For a small business owner — particularly a sole owner — this can mean periods of significant financial uncertainty.

So what’s behind these income gaps? For one thing, it can take two to three years for a new business to turn a profit. Beyond that, you also have to consider the reality of being a business-of-one. A single person can handle only so many gigs at one time, meaning that even one late client payment could lead to reduced or nonexistent income until that invoice is paid. Plus, demand for almost any service can fluctuate. When business slows down, your cash flow probably will too.

However, if you’re an aspiring solopreneur, you shouldn’t let that curb your ambitions. While 51% reported that their solo business was their only source of income, the other 49% stated that they had other income sources. The 49% included those who were solopreneurs:

• Full-time, but maintained a second income source
• Part-time, alongside another commitment

Building a Safety Net

68% have less than six months of savings — or no safety net at all.

One crucial element of solopreneur financial security is setting aside funds in case of emergencies and unexpected expenses. But for many solopreneurs, there isn’t always much left over to put into a savings account. That’s also why it’s so important to properly budget when you’re a solopreneur.  

Here are some budgeting style suggestions for creating a financial buffer from one of our partners, Collective, a financial management platform for freelancers and self-employed people:

• Allocate certain percentages to different categories
• Dedicate an account to pay all your business obligations (think taxes, payroll, and debt) and the rest for purchases based on your values (or whatever else you want)
• Budget month-by-month, based on last month’s income/salary
• A zero-based budget where every dollar is allocated for, or is assigned to a “job”

How much should a solopreneur save for an emergency fund? There’s no one-size-fits-all number, but a good rule of thumb for creating an emergency fund for solopreneurs is striving to put away 10% of your annual income as a goal. 

Mitigating Risk: Insurance as a Financial Safety Net

And savings aren’t the only possible safety net to consider. Small business insurance can provide peace of mind, even in uncertain times. Depending on the type of policy or policies you have, commercial coverage can be a financial safeguard in the event of:

• Third-party injuries and property damage
• Alleged errors and omissions
• Business interruption
• Legal action 

Remember: Business insurance is an investment in your business’s longevity. And with Simply Business, finding the right coverage for your business’s needs is quick and easy. Try our online quote comparison tool to get matched with tailored policy options, shop prices from trusted insurers, and get covered — all in one place, all in just minutes.

Surviving Financial Stress

Financial stress was the top contributing factor for solopreneurs who have considered abandoning their business ventures.

Solopreneurs are a resilient bunch, but everyone has their breaking point. Over a third of those we surveyed (34%) admitted that they’ve considered packing it all in at one time or another, even if they never gave in to that impulse. Of those respondents, 72% cited financial stress as the primary reason.

So what can we learn from this? Financial uncertainty may come with the territory, but it can also take a mental toll. And managing stress might not always be the first thing on a solopreneur’s to-do list, especially given how much they have to juggle to keep their business running.

Fortunately, there are a few strategies that solopreneurs can adopt to help alleviate some of the financial burden:

1. Budgeting for the Unpredictable

Budgeting is a classic for a reason. It’s a best practice for any business owner trying to optimize their earnings, and it’s something anyone can do. Check out our free business budgeting template for solopreneur budgeting tips and a free PDF download to help you create your own. 

2. Invoicing for Prompt Payment

Be proactive about invoicing. As a solopreneur, your income depends on clients fulfilling their end of the bargain. Even one late payment can be a major financial stressor. Getting paid on time starts with a solid invoice system. Looking for guidance on invoicing best practices for small businesses? You’re in luck. You can download and customize our free invoicing template to create an invoice structure that works for you. And if clients aren’t settling their bills in a timely manner, check out our guide to getting overdue invoices paid (with free late payment templates). 

3. Diversify Solopreneur Income Streams

Remember that 59% who said they had more than one source of income? Holding down a second job (or income-driven commitment) might not be the best option for solopreneurs short on time, but if it is something you’re able to do, having that second income stream can be a lifesaver.

Long-Term Strategy: Taxes and Retirement, and Investment

Does running a business feel like putting out one fire after another? You’re not alone. But try not to lose sight of the big picture. Small business financial planning should consider the future — not just the present. Here are a few things to consider to help you stay financially secure for the long haul. 

Tax Planning

Let’s start with something that’s more of a medium-long term consideration: taxes. Small business tax cycles often include both yearly and quarterly deadlines, which makes regular planning an important part of maintaining good financial health. 

Here are some basic tax strategies to help keep your business on track:

• Brush up on local tax requirements. These can vary state to state, so you want to make sure you aren’t missing important tax deadlines where you work.
• Keep organized financial records. This can feel tedious, but you’ll thank yourself later when you get to avoid last-minute scrambling.
• Work with a tax professional or accountant. They’ll be able to help you maximize your deductions, and ensure everything gets filed correctly. 

For a more in-depth overview, check out our guide to small business tax strategies.

Reinvesting Profits

If you’re making a substantial enough profit, it might be time to consider reinvesting them into your business. Here’s why:

• You can use them to update your tools, equipment, and hardware, which could enable you to expand what your business can offer.
• During your busy season, you may be able to afford bringing on a seasonal employee to help keep things running smoothly.
• If you find you’re outgrowing your business space, you may be able to move to a bigger one — or open a second location.

Of course, as with any other financial decision, there are downsides to consider as well. Our guide to small business and solopreneur reinvestment strategies can help you weigh your options. 

Investing in Your Future

When it comes to saving for retirement, it can be tempting to keep kicking that can further down the road — especially if you work for yourself. But the sooner you think about it, the better prepared you can be when it’s finally time to hang up your hat. 

Why is solopreneur retirement planning so important? There are a number of reasons, but here are some of the biggest ones to consider:

• Social Security benefits generally aren’t enough to live on comfortably, with the average check being $2,000.
• You can’t always rely on family members taking care of you in your golden years. Any number of things can happen — family moving away, financial emergencies, an uncertain economy — that can make it difficult to depend on this option.
• Retirement planning is financially prudent — and not just because planning ahead typically is. Having an established retirement fund means accruing interest, which can help you maximize your savings.

If you aren’t sure what kind of retirement plan is right for you, you’re in luck. Our guide to retirement planning for small business owners covers popular plans so you can weigh the pros and cons.

Balancing the Books — and the Dream

If you’re an aspiring solopreneur, don’t let the numbers get you down. While it’s important to consider the financial realities of going into business on your own, here’s one stat to remember:

76% of the solopreneurs surveyed were confident their business would grow in the next 12 months.

It’s clear that the majority of solopreneurs are optimistic about their future, in spite of the fiscal uncertainty. Going solo may be hard work, but it’s worth the effort.

Want more of what we learned from our solopreneur survey? Get all the details in The Power of One: 2025 Solopreneur Report.