As a small business owner, much of your financial planning for the future is based on how well you’re keeping track of your finances in the present. When you watch your bottom line and keep your financials up-to-date, you’re in a strong position to prepare for both growth and any emergencies. Successful financial planning principles can guide the way to your prosperous future.
Plan for Retirement
Some small business owners pour everything into their businesses without pausing to think about their own personal futures. Make sure your financial planning includes retirement planning for yourself and possibly any employees as well. QuickBooks Online can help you run the numbers to set up a retirement plan.
Track Expenses in Real Time
When you’re busy running your business, it’s easy to put off keeping your financial records current. But tracking expenses in real time is one of the most important things you can do to be prepared for the future. Without this timely knowledge, you can’t tell whether you’re making progress toward your financial goals or staying within your budget. Real-time access to your financial situation lets you budget for the future and make wise financial planning decisions about how to allocate your resources.
Make Wise Investment Decisions
Part of planning for the future involves investing well. If you make investments on behalf of your small business, you create a margin to protect your company against any unexpected financial downturns. Once you design your investment policy, put it into practice faithfully and keep adding to your investments over time.
Protect Your Business Against Risk
One catastrophic event could spell disaster for the business you’re working so hard to build. While you can’t predict catastrophe, you can insure yourself and your company against the financial distress it can cause. Set up buy-sell agreements to handle succession in case you or one of your partners passes away unexpectedly, and plan appropriate life insurance where needed. Make sure you also have sufficient disability insurance to take care of any accidents that might happen to your employees.
Try to Avoid Debt
If you don’t keep a close watch on your cash flow, you could easily end up in a situation where you have to borrow money just to pay bills. The debt service you have to pay on these loans can drain the resources you need to grow your business. Monitor your expenses, and keep track of the ups and downs of your product cycle to plan ahead and stay out of debt.
Consult With a Financial Planner
Many people think of financial planners as advisors who can help with personal finances only, but they’re also potentially very helpful to small business owners. Make sure the financial planner has a fiduciary responsibility to put clients first with no conflicts of interest, and choose one with a track record of helping business owners build wealth.
Keeping an eye on your present financials helps you set your business up for success in the future. When you avoid taking on debt and track expenses in real time so you know what resources you have, you’ve done the right things to keep your business healthy going forward.