If you have just started your business, you are probably pretty focused on making sure it succeeds. This means that your days are spent ensuring that your products and services are top of the line and that your marketing efforts are paying off. However, this sole focus can prevent you from protecting your financial future. Therefore, these are a few financial planning tips you may consider.
Set and Prioritize Your Goals
Your first step in financial planning for small business owners is to set both personal and business goals. Include your immediate priorities in each area as well as short- and long-term goals. However, separate your personal and business goals. Money should never cross from your personal finances to your business, especially if its purpose is funding a personal goal.
You also need to prioritize these goals so you always know what is most important. For example, is it more important to fund your family vacation or a new product line? What about your child’s education?
Build an Exit Plan
Your next financial planning step is to evaluate the values of other similar companies at least once per year. Look for those that have recently been purchased. Determine what it would take for you to sell. For example, will you require that the purchasing company keep your management staff?
If you plan to create a family business that will be passed down through your generations, you need a succession plan. This plan should include training, and you will need the assistance of an attorney and tax professional to set everything up properly.
Create a Retirement and Estate Plan
Most experts state that you should save at least 15% of your pretax income to prepare you for retirement. You should save this money in an individual pension or retirement account, such as an SEP-IRA.
Your estate plan should reduce your tax exposure and that of your heirs. It includes future business instructions and a power of attorney statement should you be incapacitated.
Small business owners require customized financial plans. If you need to create your plans, consider working with a reputable financial planner or attorney.