There are many aspects to consider when it comes to running your business. It’s important to set goals for yourself as a way to check in to ensure that you are on the right track. Start early in your goal-setting process, especially your financial goals, so that you’ll be able to maximize your profitability and be able to create financial stability in your business, which will directly impact your personal finances.
As a small business owner, you need to consistently monitor both your professional and personal budgets closely. They greatly impact one another. Below are some tips to help you create smart financial goals for both yourself and your business.
Organize Your Finances
When it comes to the finances of your business, make sure that you separate your personal finances from your professional finances. It’s important to separate the two so that you can better manage them. This way you can clearly see how both your personal finances and professional finances are doing. A way that you can separate your finances is by opening a bank account dedicated solely to your business. This way any influx of revenue can go straight into your business account so when you have to take care of expenses, you‘ll be dipping into your professional account rather than your personal one. When first starting out, it may be more convenient for you to use your personal bank account as a source of financing. But, in the long run, it may lead to difficulties as your business grows.
Consider looking at your current expenses. When first starting out, it’s important to make sure that you’re not spending more than necessary. Certain expenses are required such as technology, equipment, and employee wages. If there are any unnecessary expenses such as fancy employee perks, office space, or third-party experts it may be taking away from other investment opportunities.
When breaking down your expenses, some expenses that are beneficial to your business include effective and consistent marketing, financial software, and a strong technology team. Taking the time to figure out what is necessary for your business will help you to avoid taking on unnecessary expenses and allow you to put more money into resources that will help your business grow.
Understand Your Taxes
As a small business owner, your taxes will look different when comparing them to your personal taxes. Many owners will do their own taxes as a way to save money. But as your business grows, the ability to keep up with both personal and professional taxes may become more difficult. At the same time, doing your own taxes requires a lot of time and patience.
If you are someone who doesn’t have the time to dedicate to doing both types of taxes, then it may be worth it to consider hiring a professional. The only people that are qualified to help you are tax lawyers, CPAs, and enrolled IRS agents. These professionals understand the tax laws in your area. They know how to navigate the different required tax forms for a small business. While it may cost you, it will be worth it. Because it will allow you to have one less aspect of your business to worry about. It would also keep your business safe should any audits occur.
Small business taxes can be complicated and often have multiple tax deadlines that you will need to be aware of. Outsourcing your taxes by finding a good accountant will ensure that your quarterly taxes get paid, that your payroll taxes get paid, and that you can keep up with the annual changes that make filing taxes so challenging.
Create a Risk Management Plan
Owning your own business means that you are responsible when things go wrong. No matter how well you prepare and plan every aspect of the business process, there’s no way to prevent unexpected pitfalls. Creating a risk management plan can allow you to have a cushion for your business plan. So that if and when something does go wrong, especially impacting your financial goals, you’ll already have a set course of action to take to navigate any issues that arise. There are many different types of risk that exist. But it’s up to you to determine which risks will have the greatest impact on your business.
Strategic risks are those that involve your competitors, changes in technology, or an increase in cost for your products or services. Addressing any concerns with these risks will help you be better prepared and more adaptable for when changes occur. Reputational risks involve anything that’ll hurt how your business is viewed by the public. This would include not only the state of your finances and sales but also your employees. You should make it a priority to discuss expectations and guidelines, as it’ll help to ensure that employees are well-versed with your policies to avoid any potential damage to the reputation of your business.
It’s important to also make sure that you are taking care of your employees. This way employees excel in their roles while knowing that the company values them. If you don’t put time into your employees, then you’ll be putting yourself at risk to lose good people. Part of running a business is employee retention. If you’re experiencing low hiring rates or a decrease in employee retention, that’ll negatively impact your overall reputation.
Consider Your Employees
Providing your employees with financial and mental wellness resources may help employees feel more confident both in their professional and personal lives. Resources may include budgeting, stress management, and relocation tips. If an employee is considering relocation due to the flexibility of remote work, providing different financial assistance resources can help alleviate their stress by helping them understand how much they can afford to pay for a house during the relocation process.
As a business owner, it’s your job to find ways to not only fulfill the basic needs of your employees such as health benefits and competitive pay. You also have to invest in them so that they’ll continue to learn and grow. Financial goals aren’t simply for your business. Investing in your employees will only benefit you as they’ll be able to bring more to the table. This allows you to bring your business to the next level.
Taking the time to set financial goals will help you to improve your small business practices. It also allows you to achieve the success that you’re striving for. No matter how much you prepare, there will always be challenges. But creating ways to check in with your business and yourself will help to ensure that you’re heading in the right direction.