Running a small business means constantly balancing the demands of daily operations with the need to plan for long-term success. Small business owners often wear multiple hats, leaving little time for big-picture thinking. You’re juggling everything from servicing your customers or managing orders, processing payments for payroll, and overseeing marketing, all while trying to plan where you should invest your next dollar and asking yourself, “What’s the best way for me to position my cash for the future?”
Having a solid financial plan in place can help guide you through any future financial challenges and allow you to maximize every dollar you earn. Here are a few considerations to ensure you create a secure and stable future for you and your small business.
Effectively Plan for Taxes
Proactive tax planning is so valuable. Who doesn’t want to minimize their expenses and maximize profits? Set up quarterly financial reviews and address issues throughout the year to prepare you well before tax season. Tax planning becomes easier when you have accurate financials so you can set aside the right amount of money each month to pay your quarterly taxes - and not accidentally spend that money.
Getting ahead of your taxes and any “tax surprises” alleviates a huge amount of stress and can save you money down the road.
Build a Small Business Succession Plan
What is the plan for your small business, and if something were to happen to you, would your clients be taken care of? Succession planning is important for your business’s longevity and potentially for that smooth transition when you step down or sell.
Think about the financial value of your business, taxation, and any inheritance issues that could arise. Develop a clear roadmap for succession in advance to not only protect your business’s legacy but also provide peace of mind for both you and the future leadership.
Focus on Long-Term Growth and Financial Stability
Running day-to-day operations can be consuming, so maintaining a vision for long-term financial growth is crucial to keep you focused on the “why.” Start by setting specific growth goals and creating a roadmap that aligns with those objectives. Invest in market research and continue to analyze trends to help you identify new revenue opportunities and plan for sustainable growth.
Prioritizing financial stability is also essential to prepare for the unexpected. A business emergency fund, appropriate insurance, and risk management strategies can help to protect your small business’s financial health. Do your best to prepare yourself ahead of time for any challenges and keep the door open for opportunities.
Save for Retirement
According to a 2023 study by Fidelity, about 75% of small business owners don’t know if they’re saving enough. Open a retirement account that will help you defer income today, or you can maximize your Roth (after-tax) contributions to a retirement account to have tax-free wealth.
Consider opening a Solo 401k – a retirement vehicle for small businesses with one owner that allows for both employer and employee contributions and allows you to better maximize retirement savings compared to other plans.
You may be putting off planning for the future because it seems so far away, or you’re not sure where to start, but the longer that it takes to start the more work it will take on your end. The power of compounding is so crucial here, as you may know! The sooner you start planning, the more time you have to get better at it and time for it to work to your benefit.
Not sure how to begin or feeling overwhelmed by trying to manage it all by yourself? A CERTIFIED FINANCIAL PLANNER® professional can provide the guidance you need. They can help you create a personalized financial plan, optimize tax strategies and review succession planning options, among other services. With their expertise, you can spend less time worrying about finances and more time doing what you love – running your small business!
Get started on securing your financial future today
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