Becoming a successful business owner and being your own boss is exciting and rewarding. Making sure your business survives the first five years is crucial to making it in the long run. This means that business owners must adapt their own financial plans for the new realities of being a business owner.
What is Financial Planning?
Financial planning is the process of whether and how a company can meet business goals through the proper management of financial resources. Some areas to look at for planning are: taxes, risk management, investment, retirement, and estate planning.
In order to maximize your financial planning, following these basic steps will allow you to start laying out a financial plan for your business:
- Distinguish between personal and business goals. You may have a personal goal to save for your child’s education, while you also have a goal to expand your business into a new market. Finding a balance between personal and business goals is key.
- Stay on top of expenses in order to generate a profit. If a company cannot generate revenue that is greater than the costs to operate, it will not be a success. It is essential to carefully track and analyze all costs in order to work toward profitability.
- Focus on cash flow. A company’s liquidity and ability to produce cash from its operations is key to the survival of a business. It is easier to get investors when you have sufficient cash to maintain growth, and to help you ride out an emergency.
- Manage tax requirements for your business. Ensure that you have structured your business properly for maximum tax savings, and utilize a bookkeeper and CPA for your accounting to keep all of your financials in order.
- Investing for retirement, arranging an estate plan, and establishing a business succession plan are important steps for your later years and ensure a smooth transition to new leaders of your business.
We want you to get the most out of your financial planning. Contact us at H&H CPAs for more information and guidance on your business’s financial plan.