Future-Proof Your Business: Strategic Financial Planning to Manage Income Fluctuations and Achieve Long-Term Stability

As a business owner, your income is essential for keeping your household running smoothly. It’s what allows you to pay yourself consistently each month, offering the security of a regular paycheck and the freedom of being your own boss.

But what happens when things slow down? When a client project wraps up and isn’t immediately replaced, or life throws an unexpected curveball—like a health issue or a personal emergency? Or what if you simply need a vacation or want time off?

A drop in income, planned or unplanned, can put significant stress on both your business and household finances.

The good news? You can prepare for it. And when you do, those income gaps won’t throw your entire business (or personal finances) off track. You’ll feel steady even when life happens, whether it’s a short dip in income or a significant life event.

Today I’m going to walk you through how to create a strategic financial plan that accounts for those kinds of ups and downs and ensures your business and personal finances can weather the business income fluctuations or unexpected life upheavals.

Assessing Your Current Financial Situation

Let’s start by recognizing that building a financial plan isn’t just about managing today’s income—it’s about creating a stable foundation that supports your business for the long term.

By approaching your financials with a long-term view, you’re not just reacting to immediate situations; you’re proactively ensuring that income remains steady even when revenue fluctuates. This can help you maintain peace of mind despite any ups and downs.

Let’s review the key areas to consider when creating your financial plan.

Understand Your Financial Baseline and Patterns

Start by reviewing your revenue and expense trends over the past year or two (or more).

Ask yourself questions like these:

• What’s my average monthly revenue? Yearly?
• What are my average monthly expenses? Yearly?
• What’s my average monthly profit? Yearly?
• Are there times when revenue drops or higher expenses pop up?
• Are there regular, big investments I like to make in my business?

The goal of this review is to see where things really stand financially and what your expected highs and lows are over time.

Assess Your Risk Tolerance

Consider your comfort with financial risk.

If stability and consistency are important to you, you’ll likely want to create a plan that ensures you get paid the same amount every month, with a low chance of surprises.

If you’re more comfortable with uncertainty or don’t mind reacting to shifting circumstances, you may choose to pay yourself a higher monthly salary and be willing to spring into action if revenue drops or expenses arise unexpectedly.

This is a personal choice. Consider what works best for you, your personal financial situation, and your own nervous system.

Determine the Buffers You Want to Have

Just like in your personal life, your business can benefit from having a financial safety net—or a financial buffer.

There are two different buffers to consider: a monthly buffer and emergency savings.

Making these a part of your business’s financial plan will ensure that even if there’s a lull in revenue or you need to step away from work for a period of time, you’re still able to pay yourself.

First, consider a monthly financial buffer—how much monthly profit you want, on average, beyond your planned salary and expenses. This is an amount of money that easily weathers expected month-to-month fluctuations over the course of a year or two.

Second, there’s how much money you want available in emergency funds for your business. This is what you’d use to cover business expenses and your salary if there’s a significant business issue (like a massively failed launch) or a big personal emergency (like a medical or family issue requiring you to step away from work for some time). These are situations that require funds beyond the monthly financial buffer you’ve already made available.

(Depending on your circumstances, you could possibly create a third savings category, setting aside money for things like vacations or a maternity leave, though I personally chose to plan those things into the previously listed buffers. It’s a personal choice.)

You may not yet be at the place where you can set aside buffers; we’ll talk more about how to get there in a moment. For now, though, just consider your risk tolerance and what buffers would increase ease in your financial life.

Create Your Financial Plan

It’s possible that as you’ve reviewed the details listed above, you’re realizing you’re paying yourself at a rate that leaves no wiggle room for dips in income or personal emergencies—and you’re okay with that.

Or you could be realizing that this explains perfectly why you’re a little stressed every month about finances. Or something else.

The good news is that you now have a better picture of what’s going on, and you can make a new plan going forward.

Here’s what you’ll take into consideration as you make your financial plan. This will likely be an iterative process.

Set Your Monthly and Emergency Buffers

With a clear view of your revenue, profit, and risk tolerance, start by putting a stake in the ground for your buffers.

How much buffer do you want, on average, every month?

Is this something you want to have available starting next month, or is it something you want to work toward by a specific date?

How many months of emergency funds do you want to create in your business?

When would you like to have these funds available?

If you’re also wanting to create a separate savings fund for vacations or maternity leave, factor that in here as well.

Determine Your Monthly Pay

Taking into account everything we’ve discussed so far, consider how much to pay yourself. This may be a number lower than what you’re paying yourself now.

As with most advanced business strategies, there isn’t a set formula for choosing this number. It’s about taking you, your business, and your values into consideration.

And yes, there can often be a difference between what you want to get paid and what makes financial sense given the factors above. Know that you can make a plan to get paid what you want and create the buffers you’re looking for; it just might take time to get there.

Create Your Buffer-Building Plan

Now that you have a clear picture of your financial situation and financial goals, consider what steps you’d like to take to get there.

Do you want to use higher-profit months to build savings? Do you want to increase your revenue? Do you want to scrutinize your expenses?

Next, let’s cover what that could look like in your business.

Building Business Savings (Buffer) for Long-Term Stability

There are three obvious ways to create financial buffers in your business, and I’ve outlined them here. Though feel free to get creative and consider other options that might be unique to your business.

Use Higher-Profit Months

One way to start building your buffers is by using higher-profit months to save. During busy periods, it’s tempting to either increase your salary or put extra revenue toward new, additional expenses. But if you set aside a portion of those profits, you can build a cushion that will support you when business slows down.

Increase Your Revenue

You can look at increasing revenue—whether through offering additional services, holding special promotions, or raising your prices. This may allow you to keep your current salary the same, and use new revenue to build your buffers.

Decrease Your Expenses

Another way to build your business buffers is by reviewing your expenses. This isn’t about eliminating the expenses that support your business or help you generate revenue. Nor is it about holding back on critical investments that will help you grow your business. Instead, think of it as simple housekeeping—a way to make sure you’re not spending money where you don’t need to.

Look for the low-hanging fruit. Are there subscriptions or tools you no longer use? Could you renegotiate certain contracts or find more affordable options for routine expenses?

By making small adjustments here and there, you can free up funds to put into savings, without sacrificing the essentials that keep your business running smoothly and growing.

How a Financial Plan with Buffers Saved My Bacon (Twice)

Back in 2013, I had the idea to start treating certain streams of income—like affiliate income—as “bonus income.” Instead of using it for regular business expenses or to increase my salary, I set it aside as savings.

First, I rebuilt my personal emergency fund, which had been depleted when I quit my corporate job to start my business in 2009. Once my personal savings was where I wanted it, I shifted my focus to a business savings plan.

As my business and team grew, I worried that a failed launch would leave me unable to pay my employees. So I began funneling profits into a business emergency fund, aiming to cover expenses and payroll for quite some time—perchance revenue dropped to zero.

I confess that my actions were mostly driven by anxious and worried caretaking and codependent parts. But as it turns out, it was a smart call for me.

In 2020, my business suffered an unexpected, six-figure financial loss when I took a maternity leave. Then in 2021, I was struck with serious health issues and had to stop working for three years (without a secondary household income to support us). I was able to get by because I had both business and personal savings, and I’m deeply grateful to past Jenny for saving like she did.

Plan for Stability, Peace of Mind, and Long-Term Success

Running a business comes with its ups and downs, but by proactively planning for financial hiccups, you can smooth out those rough patches and maintain stability in both your personal and business finances. Whether you’re preparing for slower client periods, unexpected time off, or simply wanting to take a well-deserved vacation, a strategic financial plan allows you to continue paying yourself no matter what.

The best part? Planning ahead is an investment in your future self. You’ll thank yourself if or when life throws you a curveball and you’re ready for it.