Owning and operating a small business, as you know, has many moving facets. From start-ups, small businesses to businesses that have been operating for years, creating a realistic financial strategy is essential for long-term growth and success. Approximately one-fourth of small businesses start with no finances, calling for a systematic financial management approach that will allow small businesses (regardless of their initial financial amount) to thrive. If you are kickstarting a new small business or have discovered your current financial planning strategy could use some guidance, the following small business owners financial planning tips will address how to manage small business finances:
Business Finances 101: Generate and Grow Your Emergency Fund
Does your business have an emergency fund? Without one, business owners can find themselves in a difficult financial situation when financial emergencies arise. When your business acquires additional revenue, it’s smart to invest a portion back into your business, but we also suggest choosing a certain amount of money you can delegate into an emergency fund. When an unexpected circumstance occurs, you do not want to dip into your personal finances to cover the costs. Any time that you bring in more money than expected, set a certain amount aside for an unexpected emergency.
Prioritize Your Personal Goals
You will find that your business and personal goals will intersect, but it’s important to distinguish between the two. For your business, ask yourself questions such as, What are my immediate priorities? Where do I want my business to be in five years? Your personal goals should be similar, establishing a 5 and 10-year plan that includes assessing your family’s priorities. We recommend speaking with a small business financial advisor to map out how much money you will need to meet your business goals as well as your personal financial goals. The bottom line, you need to look at your personal financial goals to ultimately help determine your business goals.
Invest In The Business
If you want to continue to grow, you must invest in your business. Whether that means investing in technology, your people, the product or all three, putting money back into the business to support its growth is key. People will take notice. Both customers and employees will appreciate when they see investment and it will further showcase the value that your business offers as it thrives.
Maintain Good Credit
As your business grows, you may want to expand your space and take out additional loans to cover growing business expenses. None of those things can happen if you do not maintain solid credit. To make this happen, we advise that you pay off your debt funding as soon as you’re able to and don’t take out loans that have high-interest rates you may not be able to pay back. When choosing to fund, it’s imperative that you only take loans that you can pay back fast and easily. Make looking over your lines of credit a weekly task so that you are always aware of your current circumstance and can therefore actively stay on top of it!
Hire A Financial Advisor
Talking with an advisor who understands the mechanics behind small business owners’ financial planning will put you on the right path towards creating a financial strategy that works best for you. From guidance on smart savings to creating a foolproof financial plan, working with an advisor will allow you to worry less about your finances and spend more time doing what you do best.
Are You Ready To Plan For Your Small Business’s Financial Future?
When you partner with Jacobi Wealth Advisors, you will be prepared for any situation and learn how to manage your small business finances successfully. For more business finance 101 tips and to experience the Jacobi Method, contact us today.