Small businesses are intertwined with our economy. How so? There are 30.7 million small businesses in the United States, accounting for 99.9% of all businesses. Nonetheless, 82% of businesses fail due to cash flow issues, which can be avoided with the right financial plan. Dr. Jack Kavanaugh wishes to see the success of all small businesses in our community. Here are some financial tips from him for small business owners to help them succeed:
Create a Budget and Stick to It
Developing a budget to keep your small business from going into debt is critical. It will assist you in distinguishing the "must-haves" from the "wants" in all aspects of your operations. While 59% of entrepreneurs who apply for a loan use it to grow their business, make sure you're not just opening business loans and credit cards left and right with no idea how much you're spending. Creating and sticking to a business budget, then using loans to pay down unnecessary expenses, allowing you to focus on lengthier investments in your company, such as investing in staff and technology.
Save for a Rainy Day
Save for an emergency fund to ensure you are prepared for any seasonal fluctuations or market downturns. It will also provide peace of mind if setbacks or obstacles arise, as many business owners do at some point. It's not so much whether you have a setback as it is how equipped you are to endure the storm when it arrives.
Reinvest in Business
Celebrate your small business's successes when it experiences rapid growth and increased profit! However, don't lose sight of your long-term objectives. Make sure to reinvest wealth into the company so it can continue growing. Reward yourself and your team for your efforts, but don't overdo it. Instead, hire more people, spend more money on marketing, or investigate new platforms or technologies to help your company succeed (and keep the momentum going).
Don’t Overlook Your Personal Finances
It takes a lot of hard work and dedication to run a business, so it's easy for small business owners to become so focused on growing their brand that they neglect their personal finances. Many companies provide 401(k) plans to their employees, but as an entrepreneur, you must plan for your own retirement. Many self-employed individuals and small business owners should be worried about their retirement savings slowing down later in life. However, very few people save for retirement; only 13% of tax filers partake in a workplace retirement plan. Similarly, instead of pouring all your money back into the business, ensure you're saving for your own personal rainy day fund.
Bottom Line
You put in a lot of effort as a business owner. Don't let finance be the reason that sinks your boat. Follow these tips from Dr. Jack Kavanaugh to keep your business stay afloat.