Owning a small business is an adventure – whether you’ve bought the business from someone else, or crafted it yourself, there are many mistakes that small business owners tend to make. If you’re wanting to ensure your business is operating as well as can be, read on to learn more about my personal finance tips for small business owners:
1. Don’t Mix Personal Finances and Business Finances
When you’re a business owner it can be challenging to make distinctions between your own money and your business money. However, having a clean line between the two will be one of the best financial decisions you can make for yourself and for your business, too. It can be easy to bleed over money from your personal account to your business, but this can prevent you from seeing how well your business is really performing. If you haven’t already, I suggest having separate business banking accounts, credit cards, and anything else you can separate!
2. Know When to Invest in Expert Advice
If you’re wanting to scale your business but not sure how to move forward, it might be time to invest in the services of a CFO. In order to scale you’re going to have to do some serious analysis to see the best approach. Scalability depends on repeatable processes and an optimised workflow. Sometimes we’re so far invested into our business we can’t step back and take a bird’s eye view at the whole picture. This can prevent us from scaling as we want to and that’s why bringing on a CFO can help position us better to scale our business and transform our profits to new heights. If you want to get an expert onboard to maximise your turnover, check out CFO services at Entreflow.
3. Don’t Allow Things to Be Stagnant
Focus on your motivation to grow and focus on that. Think about your “why” – why you want to take your income to the next level. Maybe it’s so that you can eventually hire someone to take over your role in the company so you can be a business owner instead of employee, freeing up your time to spend with your children. Maybe you want to transform your income so you can help out your ageing parents. Whatever your motivation is, you’re going to have to focus on it to help ensure that you don’t get too comfortable at a certain income level and keep pushing forward. As a business owner, the greatest limitation to your income level is your own decisions. Mesure your income and profit and ensure that each year you’re growing.
4. Have an Emergency Fund
While it’s important to reinvest profits into the business to help ensure it grows, it’s also very important to have a financial buffer. Covid-19 has meant a lot of business have had to shut down for weeks, or months, without any warning. Unfortunately many businesses are in the process of closing down because they’ve not been able to adapt or sustain such a long period closed down. We all know it’s important to have an emergency fund for our personal expenses, but it is also important to maintain some easily accessible cash for unforeseen business expenses, too.
Hopefully these tips help ensure you can get on the right path with your small business finances, all while learning to take your business to the next level.