Financing is one of the many challenges of a small business. However, it doesn’t have to be the source of your anxiety or frustration. Finances are more like a science than an unpredictable up-and-down of your market. You just need to figure out how to set your small business up for success.
There’s no better time to revamp your financing plan than at the start of a new year. This is the perfect time to re-evaluate how your small business is doing and what you could be doing better. If you’re a new business owner, you may not even know where to begin – you’re already trying everything you know. Don’t let this intimidate you. There are many easy ways to get your finances on the right track.
Below are the top 5 tips for your small business in the new year.
1. Seek Help From a Professional
Finances are a tricky thing to navigate, especially for a small business and especially during the coronavirus. You don’t have to handle your finances all on your own and you definitely shouldn’t try if you know you need help. Do what you can but don’t be afraid to seek out a professional.
Accountants can help keep records and interpret the numbers for you. They ensure accuracy on statements, prepare tax returns, inspect your books, and recommend the best ways to manage your finances. This means an accountant will let you know when it’s time to look for a lawyer such as a bankruptcy lawyer in Philadelphia.
It should be noted however that hiring an accountant is a financial factor you’ll need to consider. As a small business, you may not have the means to have help from a professional. If that’s the case then you’ll need to learn about financing on your own. There are many resources online that can help you better understand how to manage the money for your small business
2. Build or Update Your Budget
No matter what stage your small business is at, a budget is crucial to your overall success. It’s the foundation of any solid financial plan. Budgets will allow you to set goals as well as fixed and recurring expenditures. With this in place, you can always plan for and track your finances.
If you’re just starting your business, this is where you should start. If you’re already operating and have a budget in place, you may consider an update. Whether you’re in the first group or the second, you should do research into your market, find areas to cut costs, and evaluate future forecasts.
Creating a budget isn’t a one-time effort. You should evaluate your budget every month and update it accordingly. If priorities or fixed expenditures have changed, you’ll want to reflect that in the documents. By consistently reviewing your budget you can stay on top of spending habits and focus priorities in an effort to reach long-term goals. Without a budget, your small business’s finances will be hard to manage which will result in a hazardous mess in the end.
3. Find Investors
Investors are vastly important to financial stability. While you may be operating on loans, investors can help you acquire even more funds, oftentimes more than you could ever receive in loans. If your small business is stuck in rough times, the support from your investors can be crucial to staying afloat. These are just some of the reasons that you need to focus on investors in the new year.
However, there are different types of investors. Some will want decision-making control while others only want to fund your business efforts. These are called angel investors and they can be found on different online networks or at investment firms. Acquiring investors usually involves business and marketing plans, so be sure to have this ready to go before you start your investor search.
4. Plan for Unexpected Situations
After the coronavirus hit, it became eye-opening how important it is for small businesses to plan for unexpected situations. While you may feel like your small business has a solid foundation and a foot in the market, unexpected situations can take a significant toll on your business. The pandemic forced many businesses to close down and the situation is continually changing, even now, which is why planning is essential if you want to stay afloat.
To plan for unexpected situations, one of the best steps you can take is creating an emergency fund. You’ll want to continue adding to this fund until you can use it to stay operating for 6 months to a year. This will give you enough time to find your financial stability once again.
It’s also important that you have a wide variety of clients. If you only have one or two, your security isn’t permanent. If one would leave, your financial stability would suffer greatly. These precautions may seem small but they will make a huge difference when something unexpected hits your small business.
5. Automate Your Bill Payments
One area where you don’t need your focus at all times is paying your bills. Doing this task manually not only takes time but it becomes easy for you to forget. One of the best financing tips for your small business in the new year is to automate your bill payments.
This ensures you’ll never miss a payment. The last thing that’s going to help your finances is penalties and late fees because you forgot to pay the bills on time.
Automation is also good for adding funds to your savings account. If you do this manually you may be tempted to just spend it. By automatically having a certain percent of your budget into savings is how you will have enough for your emergency fund. Automating your bill payments and savings takes out the human error and ensures your finances stay on track.
Financing your small business can feel intimidating but if you try these five tips in the new year, you won’t just have stability but an outlook for success. Just remember, financing isn’t about the short game, but the long term success of your small business.
About the Author: Veronica Baxter is a writer, blogger, and legal assistant operating out of the greater Philadelphia area.