Whether it is for business or personal costs, financial planning is among the most daunting tasks many Americans today face. Though intimidating, making financially responsible decisions for your business can become routine with some practice.
One of the primary reasons small businesses fail in the short term is because owners are unable to make prudent financial decisions. As such, there is never a wrong time to reevaluate your past financial decisions and plan for a future patterned on responsible financial decisions.
The following tips are designed to help you reign in excessive spending and better plan for future success (as well as unforeseen costs). Keep these tips in mind as you begin down the path towards a financially responsible future.
Tip #1 – Plan and Stick to a Budget
Amazingly, only 1/3 of small businesses with 10 or fewer employees create an annual budget. Such uncertainty can lead to unforeseen financial lose brought on by common issues such as taxes and late payments. As such, a budget for your small business is an absolute must-have.
Your business budget should plan for and anticipate your level of profit, based upon your current profits and rate of growth. This will ensure that you have a firm understanding of your financial footing year to year.
Among other important categories, your budget should also plan for emergencies. This could mean setting aside a percentage of profits as long-term savings or setting up a slush fund for more short-term expenditures. Planning for emergencies in general helps to lessen the burden such emergencies place on your bottom line.
Tip #2 – Know your Resources
In so many words, carefully examine what skill resources your business has (or could gain) and which skill resources it will need but does not yet hold. Knowing the difference can help you better allocate resources, including outsourcing certain types of work such as taxes and marketing.
Remember that you don’t need to reinvent the wheel. Take advantage of the resources available in your network to optimize time spent on each job or task. Time is money, after all, so wasted time translates into a poor financial decision.
Tip #3 – Automate Bill Payments
Running a business involves a great deal of hustle and bustle. Before you know it, the 1st of the month will have arrived and not a single rent, electricity, or internet bill will have been paid. One way to avoid this problem (and the associated interest it incurs) is by automating your bill payments.
One way to do this is by setting up a separate savings account for utility bill payments. This will make accounting for those expenditures easier as well as ensure that your bills are always paid on time.
Tip #4 – Be Prepared for Taxes
Planning for your taxes is among the most financially responsible decisions you can undertake. Doing so helps you plan for mandatory expenditures, which in turn helps you budget for your financial future with certainty.
Benjamin Franklin once noted that nothing is certain in the world besides death and taxes. While it’s difficult to plan for the former, there are trained professionals that can help you with the latter. The Denver Tax Advisors can help ease the burden of tax preparation through their planning, bookkeeping, and payroll services. With their expertise behind you, you’ll have another advocate for financial responsibility in your corner.