Financial Tips for Small Business Owners
Coming up with a financial plan for a small business involves time, creativity and resourcefulness, especially when working with a small budget. Entrepreneurs often lack the financial business savvy that larger companies benefit from, so starting out with a stable budget and sticking to it is critical for long-term success. Here are a few tips to get you started on your journey.
Emergency Funds
The reasons for accessing emergency funds are numerous and can include personal disability, negative publicity, natural or man-made disasters, and loss of inventory. Short-term business loans a better option for handling these unexpected emergencies. They can be deposited far quicker than a large traditional loan and can offer multi-year repayment options.
Keep your emergency savings account separate from your regular expense account. This will help you resist the temptation to dip into it for regular operating expenses. A good rule of thumb to follow is to have six to nine months of savings to tide you over in the event of emergencies.
Cloud Computing Solutions
Migration to cloud computing is becoming a serious trend for small business owners. An Intuit study has predicted that 80 percent of small businesses will have migrated to the cloud by 2020.
Savings can be realized by a reduction in IT requirements for infrastructure, including servers, physical storage, maintenance and upgrades.
Workplace collaboration is much more efficient. The ability to access and modify documents from a master copy for all employees saves time. In addition, the web-based software allows you and your employees to access data from anywhere and at any time.
The ability to integrate with other specialized services such as cloud-based marketing and accounting packages is a great feature that will leave more time to focus your time where it matters, on running your business!
Retirement Planning
According to a recent BMO Wealth Management Survey of 400 small business owners, only a fraction are prepared for retirement. A financial advisor can help you determine what your retirement needs are and ensure you have investments in a diversified portfolio.
Many 401(k) providers are now targeting small businesses and provide low-cost plans for businesses with fewer than 100 employees. It’s a great way to attract employees and help them plan for a successful retirement.
Seek Out Discounts
When paying an invoice, always take advantage of discounts offered if it’s paid early and be aware of late payment fees so you can avoid those at all times.
Check with your vendors to see if discounts are offered. For example, they may be available if merchandise is bought in bulk or payment is made three to six months in advance.
Just as bundling home services such as internet and cable with one company can result in savings, the same can be realized for a small business. Review your insurance plans and your telecommunications and internet providers to see if you can leverage savings through this option.
Hire Professional Help
Sometimes it’s necessary to consult with professionals to avoid unnecessary financial mistakes. An adviser with tax planning experience can help you realize tax savings and has knowledge of possible tax rebates. When you’re filling out an application for a small business loan, a financial adviser or accountant can provide assistance to ensure the right information is being communicated. This information can be critical to obtain approval of funds.
Preparing a business plan can feel overwhelming, but enlisting a professional can provide accurate financial projections leading to a far greater chance of your business succeeding and thriving.
Following these tips will help you stay organized and focused on operating your business. They are important elements in navigating your entrepreneurial journey and avoiding common mistakes that many small business owners make.
