Financial Planning For Small Business Owners

financial planning small business owners smb finances

Anyone who wants to be financially independent one day has to have a financial plan. When financial planning, the objective is always to reach your financial goals. That can be becoming financially independent by a certain age or having enough money to start a business. For small business owners, financial planning is vital to make sure the company succeeds. 

Here are 4 top tips to financial planning for small businesses: 

1. Create Financial Goals 

Financial planning is all about reaching your goals. To have goals you need to create them and decide what they’ll be first. Before considering the goals you should set for your small business, you should set personal financial goals. 

Take a look at your priorities and decide what it is you want to accomplish financially in your life. Are you trying to buy a home? Maybe you want to save money for your children and their future college education. Whatever it may be, once you have those priorities set, you can start to make a plan for them. 

Business goals work the same way. Just like setting and trying to reach financial goals in life never stops, it never stops for businesses either. How large do you want the company to be? Maybe you want the business to be worth x amount of dollars by a certain year. Whatever it is, you have to make sure it’s realistic. The company will need to still be able to pay it’s expenses and bring in that profit, meaning the timing of some of those goals may take longer than desired. 

2. Have A Safety Net In Place 

Starting a business can be a risky thing to do. Unexpected changes in the market can hurt your company and leave you powerless. To prepare for these changes, it’s important to establish a safety net with your financial planner. 

In setting up a safety net, you need to decide how much money to set aside for the net. You also need to diversify your income. By having a safety net built you ensure that if an aspect of the market crashes, you won’t lose everything. When you diversify your portfolio, you have less risk. 

3. Retirement Planning 

Planning for retirement is an important part of financial planning as a business owner. Loving what you do does not mean that you want to do what you do forever. When you work for someone else, you have retirement benefits through your job. However, as a business owner, you don’t have that perk. You have to plan for your own retirement, which is why it always needs to be a thought on your mind. 

4. Think About The Current Needs 

As a business owner, you’re responsible for not only making money but also taxes, employees' wages, business assets, and much more. Here’s a few things to keep in mind when financial planning for your company: 

Taxes 

This should always be at the forefront of your mind when it comes to your business's finances. You need to make sure that you’re paying your quarterly taxes as well as setting aside at least 25% of your income taxes. Having an accountant or bookkeeper in place that can help you in determining just how much you’ll need to set aside for taxes. They’ll also assist you in maximizing your tax return. 

Business Expenses 

Factoring in the overall expenses of your business is also important when it comes to financial planning. Every business has expenses, it is essential to find a way for your revenue to outweigh your expenses and become profit. If you don’t, your business will never be successful. 

Succession Plan 

Having a succession plan in place includes developing and growing future leaders in your company. This may not be expected, but is an important part of financial planning and can carry a lot of liability. You need to make sure that your business has a plan for various scenarios. A sudden quitting or death of a business partner, retirement, expansion. Whatever the reason, you want to make sure your business will be able to continue on without them. 

Conclusion

There are so many other aspects of financial planning that small business owners should be aware of. It’s important to go over these with a professional to guarantee that you aren’t looking over anything important.

Official Bootstrap Business Blog Newest Posts From Mike Schiemer Partners And News Outlets