Be a Successful Business Owner with these Financial Planning Tips
In today’s still unstable economy, it is just as important for a small business owner to have a financial plan as only to focus on cash flow, revenue and company earnings. If you do not take care of your finances, this will not enable you to reap the rewards of a successful business.
So here are some tips to for an effective financial planning:
Concentration is the key. Though jumping at every opportunity that comes across your path is a good philosophy, bear in mind that opportunities often could become wolves in sheep’s clothing. So, avoid getting side-tracked. Your business is not a circus, where juggling multiple ventures will lead to your success. But rather, this will spread you thin and limit both your effectiveness and productivity. It’s better to do one thing perfectly, than things poorly.
Avoid deferring your taxes. Business owners usually tend to love the idea of deferring taxes. But, with the high likelihood that the direction of taxes over the long term will be going up, consider that if you’re successful in growing your business, you’ll only end up paying higher taxes on a bigger number. Even if tax rates stay the same, deferring your taxes, it is estimated that you’ll ultimately end up paying 10 to 20 times more in taxes over a 30-year period., So, make sure to pay your taxes up front.
Do what you know and love best. Starting a business simply because it seems sexy or boasts large hypothetical profit margins and returns will usually tend to failure. So, before you start your business, make sure to learn and be familiar with the business you have chosen to build and what it entails. Make sure also that the business you have chosen is what you love. By choosing a business built around your strengths and talents, this will bring you a greater chance of success. Take note, creating a profitable business is not all and ends all. It’s also important that you’re happy managing and growing your business day in and day out. If your heart isn’t in it, you will be doomed to failure.
Don’t invest to save. Saving and investing are not the same thing. There is a big difference. The money you have in savings is money you don’t want or can’t afford to lose while the money you invest tends to be subject to loss. There are a good number people today that make the practice of investing in order to save. And as a result, they tend to have no idea what their nest egg will be worth when they plan to tap into it. So, avoid putting money you can’t afford to lose into stocks, real estate or other traditional investments. Before making an investment, make sure to ascertain within yourself if it’s acceptable and if you could afford that your money won’t grow for 20 or more years.
Be open to learn under fire. There’s nothing, even a business book or business plan, that can predict the future or fully prepare you to become a successful entrepreneur. There is no such thing as the perfect plan. Though, you should not jump right into a new business without any thought or planning, don’t also spend months or years waiting to execute. It is when you’re tested under fire that you’ll learn to become a well-rounded entrepreneur. So, make sure that you are open to learn from your mistakes and never make the same mistake twice.