Seven tips for getting your financial house in order

Seven tips for getting your financial house in order.

1)     Get some advice. If you’ve never been in business for yourself or if you struggle with managing your finances, get some advice. It’s an investment that could prove crucial to your survival and one of the smartest investments you can make. It may be as simple as meeting with an accountant to get advice or finding a seasoned, successful business owner who can give you advice on how to run a profitable business.

2)     Create a budget. When starting a business, your income may fluctuate. Therefore it is very important to have a budget both for your business expenses and your personal expenses. Use your lowest income or your average income, rather than your highest income, to base your budget on. In your business budget, you’ll want to include items such as tax payments, marketing, education, Internet service, your cell phone, and so on.

3)     Manage your expenses. While you want to avoid carrying debt, you may find it necessary to incur some debt, especially when getting started.

For example, you will need to invest in marketing materials to show the world you are open for business and looking for clients, customers or patients.

If you need to incur debt, don’t take on more debt than you think you can reasonably pay off. The key is to manage your debts by paying on time so that you avoid additional charges, using the lowest interest rate credit cards or loans possible, paying off debts as soon as possible and only incurring debts that are absolutely necessary.

4)     Use financial management tools. Keeping track of expenses, income, invoices and past due invoices, estimated taxes, etc. can feel daunting at times, especially if you’re a new business owner. However, not keeping track of these can cause your business to fail or even put you in hot water legally.

5)     Put money aside every time you make a deposit.  Setting a percentage of your income aside for both savings and charitable donations each time you get paid is important.  There are multiple reasons for doing this. The obvious reasons are that you have money “for a rainy day” and you get into the habit of saving. But even more important are the psychological benefits you get from this habit. Knowing that you have something to fall back on in case things go wrong!

6)     Track whether you are “on schedule.” Track day by day whether or not you are on schedule to hit your income and wealth targets for the week, month, quarter and year. By assessing where you are frequently, you have an opportunity to correct when you fall behind. If you wait until July to see if you are on schedule to hit your financial goals, you may already be too late to correct your course to reach your financial goals.

7)     Plan for your retirement.  There is no retirement funded by someone else when you are a small business owner. That means you are entirely responsible for your retirement. On the flip side, setting up a retirement plan can also help you protect your business profit.

Integrating these tips will help you get your financial house in order making the financial end of your business more profitable and less stressful.