Financial Planning Tips for Small Business Owners

By on June 27, 2013

Small businesses need a strong financial plans to help them stay on top of their finances and be successful in the long-term. If you own a small business, think about the big picture – review your current finances, project future expenses, plan for inflation, understand how much money will be necessary for future investments, and create some goals for the upcoming years.

Here are a few tips small business owners should consider when drafting their financial plans:

6 Financial Planning Tips for Small Business Owners

1. Set High Standards for Record Keeping and Administration

Just because you had a great business idea, know how to produce a needed product or can manage a team does not mean you inherently know how to perform bookkeeping, accounting or human resource administration.
Don’t ignore your financial books or policy administration. Set high standards for reviewing your finances and maintaining high standards in management. Reviewing the numbers to know what money is coming in, how much is going out, what expenditures are being used for and have a good handle on existing inventory. Get help from professionals if you need assistance; hire an in-house bookkeeper or employ a third-party to manage your finances, taxes and employee wages.

2. Make a Budget

Every business needs a budget to manage the larger financial picture and design plans for the future. A budget can also help business owners manage losses. If something happens to interrupt your business mid-year and you’re left scrambling to pay employees, replace expensive equipment or lost income, knowing how to read you budget will help you, your insurance agent and financial planner to make accurate and effective adjustments.

3. Watching Your Bank Balance

Many small business owners are distracted with day to day operations and fail to regularly check with bank balance, then surprise, a check bounced and fees are levied. These finance flubs can go on to affect the owner or business entity’s credit score, incur fees and even hurt your relations with suppliers who deal with your insufficient funds. By managing your budget, bookkeeping and checking their bank balances DAILY, small businesses will be able to avoid unnecessary losses or expenditures. And come tax time, the task will be easier, too! Internet banking can be an easy way to check that account daily – be sure to take precaution with passwords to avoid cyber crime.

4. Manage Your Cash and Credit Carefully

Cash management is crucial for a growing company. Manage your cash flow and credit to cover the time you between paying your suppliers and employees and the time it takes to collect income from your customers. Accurate cash flow projections may alert you to financial shortfalls before they arise or become problems.

And just as you would manage your own personal credit, businesses which finance with credit must continue to pay on time. f you have extra income to pay off debts, prioritize high interest and high balance loans or credit cards.

5. No Frivolous Spending

As a small business owner, you should be reviewing every expenditure in the books. Without cost controls, you could be overspending and setting yourself up for failures. Set limits on what the business will spend for supplies and compare prices to ensure you getting a good deal.

Your business will have to spend money for rent, equipment, inventory, office supplies, phones, chairs, etc. – the list goes on, it’s unavoidable. Make time to review your expenses – look for ways to spend less on necessaries and cut out any excess purchases.

6. Take Action to Expand and Grow Your Business

In this modern age, you can’t wait for clients and customers to come to you. Take necessary yet affordable steps to promote and improve your brand, product or services. New social media platforms offer a great return on your marketing investment as an affordable way to expand your audience.

It is important for small businesses to avoid or mitigate financial threats to success. Take time to create a logical financial plan. An accountant, lawyer or trusted financial advisor with experience crafting budgets and long-term financial forecasting plans can help you design a budget, help set important expenditures, review your tax responsibilities and plan investments or savings specific to your small business goals.

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About Terri A. Kamoto

Senior writer for FSN - Terri is a former financial analyst dedicated to making personal finances, budgeting, investment and insurance advice accessible, up to date and easy to understand. It is hard to find professional advice written in a language someone without a financial background can understand. Terri helps companies synthesize industry lingo and expertise into clear and informative content which builds smarter, financially successful individuals. You can find Terri on !

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