Financial Planning Tips Every Business Owner Needs

Financial Planning for Business Owners

Shekeidra Booker

As business owners, we work hard for two reasons:

  1. We love what we do and who we do it for

  2. Money

There’s always some website or some advertisement telling us how to spend and make money. I’m here to give you some tips on how to manage.

Don’t Mix Business & Personal Expenses

Not only is this confusing when it comes to filing taxes, but it is also a bad habit you don’t want to get used to. The money you make from you business is better spent if you reinvest it into your business, not shopping online for cute clothes. Yes, I know it feels like extra money, but it’s not. Don’t lose site of why you started your business in the first place. “Financial freedom. savings account, buy a house…” Sound familiar? Create a personal budget and a business budget and be very disciplined about adhering to both budgets separately..

Charge What You Are Worth

It might not seem like it as first but discounts and “favors are costing you a lot of money. Charge what you are worth. You can’t discount the quality of your service or depth of your knowledge, so why discount your prices? small discounts throughout the year could end costing you thousands of dollars and add up to countless hours of free labor. The next time you think of discounting, think about how many hours of free labor you will be giving away. Also, be sure to properly calculate how much it will cost you to complete a project. Before I complete a project, I calculate time, software/application use, workspace I might have to rent, travel and any supplies I might need.

Keep Your Books

Aside from creating a budget and allotting money to expenses, you also need to track these expenditures. A profit/loss sheet and a balance sheet will help you see exactly how much money you have available to you and how much money you’ve spent. There are many apps that can help balance your money for you like FreshBooks or Wave.

Get Educated

A lot of people have money management problems. So take some time and learn how to become better. The FDIC offers a Money Smart tool complete with modules and exercises that will keep you on top of your business expense management. Your local Small Business Administration may also offer free or low cost classes that will help you manage money like a boss!You can also search for accountants in your area that offer seminars, classes and money management services.

Get a Bank Account

Get a bank account. Paypal is a not bank account. Showing regular deposits and normal spending in your bank account is great way to attract investors or buyers or partners for your business. You can also get a business line of credit. Remember that business credit cards offer a lot less buyer protection and usually come with higher spending limits which means the possibility of accumulating more debt is very possible. If you don’t have the best restraint when it comes to using credit cards, you might want to wait to open a business line of credit.

There are so many different DIY money management techniques and so many free resources that you can use to become more educated on the subject. I always recommend reaching our to a financial advisor or accountant to get the most accurate money advice for your financial situation.