As a business owner, you have a lot of things on your mind, from how to keep your business afloat to attempting new strategies, networking, hiring and more. This means that you can get stuck in the same old same old when it comes to managing your finances, when the reality is that you should be taking a proactive approach to financial growth and success.
If you have been feeling like your business could use some revitalization, spend some time to re-evaluate how you manage the firm’s finances in light of the following helpful financial tips for small business owners so that you can see the success that your business deserves.
Intentionally Fund Growth Opportunities
For many people, owning a business is their primary livelihood, which means that one of the first things that they do when profits come through the door is to pay themselves. This is completely fair; everyone has bills to pay. However, it is important that you also set aside some of your income specifically to fund growth opportunities within your company.
Strike a balance between paying yourself and investing in growth, because innovation and a high quality of operation can bolster your earning potential in the future. If you invest in well-compensated employees who enjoy sufficient vacation time and good benefits, for example, they are more likely to produce higher-quality work and customer service that retains more clients—thus, your growth mindset continues to create value that bolsters your potential profits year over year.
Keep Your Credit High, But Do Not Shun Loans
A credit score is one of the most vital tools in finance, and as a business, you will have a credit score as well. Be sure to maintain good credit by quickly paying off debt and keeping any business credit card balances low enough to repay after just a couple weeks.
That being said, loans exist for a reason, and you should not be concerned with carrying a loan for your business operations occasionally. Not only can these bolster your credit after some time, but they also afford new opportunities for your company that may not have been possible with your current capital. Just be sure to make your regular payments each month and never take out a loan that is more expensive than you can afford.
Pay Your Taxes Monthly, Even If Not Required
Businesses have some extra paperwork to do when it comes to taxes as opposed to employees, whose taxes are gone from their pay before they even see the full amount. A business will need to regularly pay taxes (often quarterly), but there is no penalty for paying more often.
Consider paying your business taxes monthly instead of at the latest required intervals so that the balance owed is less at once. Additionally, monthly taxes can be viewed as just another expenditure to go along with your once-a-month electricity bill and other obligations, ensuring that you do not forget this important financial step.
Calculate The ROI On All Of Your Expenditures
Expenditures are unavoidable; no business can earn money without spending some money first. However, it is vital that you continually evaluate the return on investment of your expenditures so that you can quickly and effectively spot which debits are not helping your goals.
You may get the impression that the new forklift that you purchased is indispensable, but calculate how much you spent vs. how much of a ROI you are getting by using it; you may just discover that your intuition was wrong and that you have overpaid for an asset that does not get used enough to justify its cost.
This is true of both material goods as well as services; if your tax preparer is expensive but regularly helps you to fine-tune your taxes to avoid overpayment, they may be worth the cost. If an investment is not paying off, try to dial it back or replace it with a less expensive option that works harder for you.
Work With A Financial Advisor To Reach Your Goals
Making financial decisions for a business is part of being an owner, but that does not mean that you need to approach this process alone. A financial advisor with knowledge specifically of business operations can provide valuable insight into how to reach your goals given your current metrics, as well as warnings against some of the most common pitfalls that business owners encounter.
The experts at Inflection Advisors would be happy to help you achieve your vision for your company. Reach out to learn more or to schedule an appointment to get started with a financial advisor that is right for you.
