Financial planning is an essential tool for everyone, whether you’re planning for your business or for your personal finances. Here are four financial planning tips for small business owners.
1. Keep It Separate from Your Personal Finances
It can be tempting for entrepreneurs and small business owners to mix their personal and business finances. While there are benefits to balancing your business and personal financial needs, one of the key rules of small business financial planning is to keep your business and personal finances separate. Keep separate accounts, cards and records to avoid mingling things.
2. Track Your Cash Flow
Cash flow is a large aspect of business financial management and ensuring continued profitability. You need to track your cash flow in order to make sure your business is bringing in more money than it’s spending. If it is, then you can work on ways to further improve your cash flow to increase profitability. If it isn’t, then you’ll need to take a step back, determine what the issue is and consider ways to fix the issue. This may require seeking outside funding or adjusting some of your workflows and operations. Depending on the size of your business, you may use cash flow management software, free apps or work with an accountant.
3. Consider Hiring an Accountant
If you don’t feel confident handling your business’s finances, you may want to consider hiring or working with an accountant. Small business owners most commonly hire or contract certified public accountants to handle the bulk of the business’s finances and meet with the accountant regularly to discuss them. Some business owners do feel comfortable enough with business finance to handle their own, but as your company grows, you may still need to hire extra help.
4. Speak To Financial Advisors
Even if you’re not handling daily finances, it’s beneficial to speak with financial advisors so you can understand your overall finances and funding. You can learn general information if you’re just beginning your small business ownership and ask more targeted questions if you have more specific needs or as you become more familiar with the business world. Speaking with advisors ensures you understand your financial situation, needs and options as they fluctuate over time.
Personal financial planning is different from that of businesses, but different types of businesses. The financial needs of small businesses, for example, tend to be vastly different than those of multi-national corporations.