4 financial tips for entrepreneurs
Maybe you’ve got a fantastic idea for a business and your confident it’s going to be successful. Or perhaps your company is already up and running, but you constantly wonder whether you’re doing everything you can to ensure your business’ financial success and security — and your own. No matter what stage you’re at in the entrepreneurial journey, you can follow these four steps to make the most of the business you’ve built and the future you’re hoping it will have.
- Create and maintain a sound business plan. A well-crafted business plan should walk you through each step of launching and managing your company. If you’re planning a start-up or are in the initial stages of your business, it can serve as your roadmap. Ideally, this business plan will incorporate the following elements:
- A description of your company and its purpose.
- An analysis of the market in which you’ll do business and your marketing plans.
- A discussion of the products or services you’ll sell.
- Information on your management, highlighting the expertise they bring to the organization.
- Details on your financial situation and prospects.
A business plan isn’t just a great tool for you, it’s also a requirement for prospective investors and lenders who want a good sense of how your company works.
If you’re already running a business, consider updating your plan. This will help you spot new opportunities you can seize as well as weaknesses that need to be addressed. If you created a plan in the early days of your company, be sure to update it regularly so that you have an informed understanding of where your business stands today.
- Invest in your future. Whether you want to expand your facilities, open another location, hire new employees or fund similar goals, it’s important to earmark some of your budget to spur growth. In order to make the best investments, consider how each possibility would fit into your long-term strategic plan and drive growth
You should also be sure to invest in the assets you already have: Maintaining your equipment and infrastructure, for example, or hiring more qualified people. In some cases, you may need to make investments that will help you keep up with growth that’s already occurred. For example, if your product is so popular that your order delivery times have slowed, you should consider expanding your capacity and your staff. That way you can meet demand without keeping customers waiting.
- Use debt wisely. Borrowing allows you to take advantage of solid opportunities that you can’t cover with cash on hand. So long as you never take on more debt than you can handle, it’s an invaluable resource. To get a loan or new investment, you’ll typically need a solid business case for your request and reliable financial statements. The Small Business Administration offers information on funding a business, including details on SBA-guaranteed loans.
- Don’t forget personal financial matters. As a first step, separate your business and personal finances by creating and maintaining different checking, saving and investment accounts and credit cards for your business. This makes it easier to independently track your business and personal assets and spending, and to establish credit and financial records for the business.
Consider setting up a separate legal entity for your business, such as an LLC, S Corp or C Corp. This protects your personal assets from business debts. While it’s tempting to dip into company profits as needed, your business and personal life will be easier to manage if you pay yourself a set salary and stick to it.
Keep track of when you use personal items — such as your car — for business purposes so you can deduct the value of that use. And remember to determine how your company will pay for employee health insurance, including yours.
Whether you are an established entrepreneur or are just starting out, following these four tips will benefit your business. For now, pat yourself on the back and recognize all that you’ve accomplished on this special day for entrepreneurs! For resources to help get you started, visit cpapowered.org.
Liz Rock, Manager – Branded Content Strategy, Association of International Certified Professional Accountants
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