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Financial Tips for Small Business

Small businesses have consistently played a major role in economic growth because they create so many jobs — many more than large businesses. In the first three fiscal quarters of 2014, small businesses added 1.4 million new jobs, 39% of which were from very small businesses (with fewer than 50 people).

As you can imagine, small business was key for the nation’s recovery from the recession. Between the middle of 2009 and the middle of 2013, 60% of the jobs created were from small businesses.

There’s a bit of a Catch-22 about being an entrepreneur. Most of the time you’re the big picture person, the idea person, the visionary who created something out of nothing. Along with this wonderful and valuable quality though, is often a lack of financial savvy. Solving big problems and imagining new visions for the long term don’t mesh so well with spending hours entering numbers into spreadsheets.

But whether we like it or not, finances are an integral part of being a business owner.

Being a new entrepreneur can be a huge challenge and a stressful endeavor, but it can also be incredibly exciting and rewarding. There is no end to the many financial, legal, staffing, marketing, and customer issues that will come up as you grow your business.

Hopefully the following tips will help you navigate the journey of self-employment:

Do it Now

Creative types are often accused of being unproductive until they aren’t. And that may be an effective approach while waiting for inspiration to strike when you have a wealth of time on your hands. Unfortunately for the rest of us, we don’t have time to procrastinate. Making a list of all the little mundane things that need to be done and then doing them right away will buy you time to kick your heels up and think big.

Monitor Your Finances

Reduce your debt, scrutinize your spending habits, and stay on top of your budget. Your income and expenses need to stay balanced to maintain a growing venture. Invest wisely, save your profits, and keep your overheads as low as possible. Learn to live on a frugal budget until your hard work pays off and you start to see bigger revenue streaming into the company.

Human Resources

Hiring the wrong people is one of the biggest mistakes made by entrepreneurs. Employees, partners, collaborators, etc. need to fit into the company culture you are trying to build. They need to be hard-working and flexible, as employees in startups often have to function in multiple roles‎.

Don’t just hire someone because they’re a friend or because you seem to like them. You must do thorough reference checks on them. And make sure your offer letter says they are “at will” employees and can be terminated at any time. Don’t forget the old quote, “Hire slowly. Fire quickly.”

Never rush into hiring a prospective candidate. Use diligence, not desperation.


Your contacts are a web of potential prosperity. Keep growing your list of people. Networking can land you a new investor, a great employee, a new customer, or a great mentor. Attend industry and startup events. LinkedIn can be a powerful tool to help you network, so make sure both you and your company have profiles on LinkedIn and that you are constantly adding new connections. When someone does a Google search on you, your LinkedIn profile will usually show up at the top of the search results, so be sure you’re making a good first impression.


No matter what else you are known for, be absolutely certain that no one could ever say anything bad about your services. Focus your efforts on providing top quality service that satisfies the needs of your customers and then some. You will want your early customers to be ambassadors for you, spreading the good word about your company, singing your praises, and giving many referrals. Thank your customers personally. Go the extra mile. It will pay off.

Get your business in order

You need a savvy business lawyer for your company, one who has regularly formed and advised many other entrepreneurs and who specializes in startups. An experienced startup lawyer can help you:

– Incorporate

– Draw up contracts with any co-founders

– Prepare key agreements for the business

– Set up a stock option plan for employees


Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Some of this material has been provided by Broadridge Investor Communications Solutions, Inc.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC

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