Whether you’re a small business owner entering your 20th year in business or kicking off a grand opening, a sound financial plan is essential to any businesses’ success and profitability.
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Whether you're a small business owner entering your 20th year in business or kicking off a grand opening, a sound financial plan is essential to any businesses' success and profitability.
Here are some tips to help you achieve your financial goals this year and beyond:
Manage your debt
The start of a new year is an opportune time to review your debt. Refinancing or applying the “snowball” strategy — making larger payments toward the debt with the highest rate — are solutions to consider.
Track your credit
Fostering a good credit score as an individual and a business is imperative for your company's growth. Lenders will look at your personal score when it comes time for possible business ventures, and building business credit can lower insurance premiums or help you get approved for low-rate loans. Assess your payments, loans and accounts to identify where you can make changes that will bump your score to the next level.
Know your options
Looking to apply for a new loan or invest in growth financing? Small Business Administration (SBA) programs are specifically designed for the small business owner, offering longer terms, lower payments, interest rate caps and flexible repayment plans.
Keep personal and business finances separate
Maintaining separate financial plans for your individual and business expenses is crucial when it comes to tax-planning purposes. The easiest ways to keep these entities separate include opening personal and business checking accounts, getting a business credit card, or establishing your company as an LLC. You'll be grateful you took these steps when it comes time to file.
Have a rainy-day fund
All business owners, no matter the size of their company, should plan for the unexpected with a rainy-day fund. Small business owners (especially those within their first few years of operation) should try to lower their expenses, save more often during high-earning periods and assess their investment options beyond the stock market.
Create a budget for greater return on investment
Keep an eye on your expenses to ensure a greater ROI for your business. By continuously tracking and evaluating expenses, a small business owner will be able to identify where they can make a change. If you're able to keep your expenses low, you'll find higher margins and greater returns.
Treat yourself as an employee
While retirement may seem far away, small business owners should take great care to plan for their future. Small businesses have a range of retirement plans to choose from, whether they're a partnership, LLC or corporation. Once it's time to pack up shop, you'll be ready to enjoy a well-planned and well-earned rest.
Allison Standish-Plimpton is KeyBank's senior vice president and business banking team leader in the Connecticut and western Massachusetts markets.
