Financial Tips for Small Business Owners

Small business owners carry a huge burden on their shoulders. Being an entrepreneur can be a massive challenge and a stressful endeavor, but the rewards can be tenfold.

There is no end to the many financial, legal, staffing, marketing, and customer issues that will come up as you launch your business. And with this overwhelming workload, entrepreneurs sometimes make financial mistakes that can result in wasted resources, balking a startup’s success, and hurting their bottom line as well.

The key to smart financial management is to become knowledgeable about specific finance and accounting principles. Financial literacy isn’t just a good idea for personal finances, but it translates to small business management as well.

Taking your personal vision and turning it into a reality is empowering yet comes with enormous barriers. Still, it is possible if you know the ins and outs of what makes a small business succeed. If you are a small business owner — or plan to become one — you need to familiarize yourself with the most recent trends and statistics so you can create your own success story.

In the US, there are 30.2 million small businesses, 12.3 million of which are women-owned. 50% of all new startups survive five years or more. 

Here are some tips for entrepreneurial newbies that may help in a successful journey towards creating their own empire:

Separation of Church and State

Don’t mix your personal and business finances. As a small business owner, you might tend to be super connected with your business. But, as you mix up your personal and business accounting records, it’ll create a mess when it comes to filing taxes and calculating your company’s valuation. It will also create a burden for your personal accounts when your business is losing money. Keep them separate.

Retirement

Many entrepreneurs plan to rely on their businesses to grow well into their retirement. However, the concept of 'plan for the worst and hope for the best' applies here. Things change, and what works well now may not work so well in the future. Create a safety net by contributing early into a SEP (Simplified Employee Pension) IRA or a Solo 401k account, which provides tax benefits and is designed specifically for the self-employed.

Cover Yourself

It’s sad but true — a lot of startups fail. Therefore, it’s good to safeguard your personal and business assets from disasters by getting insured. Depending on your assets, you’ll need a variety of insurance types.

Investment

Diversification in investing is important, and so is investing in yourself. While many small business owners invest all of their assets back into the business, this increases the level of risk. The trick is to take your profits and invest some of them into aiding your company’s performance while taking some and diversifying so that you have assets, which are building in the background as well.

Marketing

When companies are running short on income, one of the first areas to be cut from the budget is marketing. This is a mistake. If there is one thing that can boost business, it’s a smart marketing campaign.

More often than you may realize, companies still have a "throw it against the wall and hope for the best" strategy when it comes to their marketing. Today there are online tools to help track analytics and digital metrics that give enormous insights into the effectiveness of your marketing online. There are even creative agencies that specialize in digital PR and marketing.

Being able to track things like this helps you along the way with your marketing campaigns and opens up so many doors when it comes to boosting your business.

IMPORTANT DISCLOSURES

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.

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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.