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This is a guest post from Brenda Cagara.
Running a small business is a tough job but, if done with proper planning and management you can make a huge fortune out of it. For us, unluckily the scenario was the opposite. We started a small business of our own with the help of a startup company, managed to come to a good place in the global market but unfortunately, we couldn’t stay at the top for much long. Our workers started to leave us and, our style and trend become outdated. We tried our best to revive the spirit of our business but in vain. Are you wondering what went wrong?
Read our guide on “5 Reasons You Should Start A Side Business“
We suppose that our lack of managing our finances lead us to this terrible situation. Being so excited by the overall progress of the small business, we forgot to make managerial and financial changes side by side. Our workers worked hard and we did appreciate them. However, we failed to support them by increasing their pay. Our lack of having the right financial plans ultimately made us suffer. Are you wondering if running a small business is risky?
We have learned from our mistakes and decided to share our lessons learned. You can run a business however you want, but you need to decide the steps you are going to take. Several things are important to run a business, but the most important is the financial planning. While on the subject, we’d like to share eight of the best financial resolutions you can have for your small business.
Eight Financial Resolutions for a Small Business
Below are the eight best financial resolutions that every business owner must have.
1: Work Within Your Budget
The first step in every business startup is the confinement of the budget. Fix the budget you are willing to spend on the business and work accordingly. You’ll definitely find many interesting and attractive things you want to buy or get into a contract with for your business but, trust us, it’s a bad choice to make. You are supposed to focus on the essential things first and then make space for extra expenditure.
2: Do not Mix Personal Expenses with the Professional Ones
Like we said in the first resolution, you need to keep your personal expenses and business budget aside. Manage your family and friend’s expenses from a separate money account. Make sure you do not take a portion of your business’s budget and spend it on your personal needs. This will only make things difficult for you. Thus, make a resolution to respect your financial savings and accounts.
3: Have a Plan Regarding the Tax Bills
Every business setup has to pay tax. Thus paying the tax bills must be in your good books. Although the business owners have in mind that they have to pay in once in a year but, they fail to plan for it. You need to save money monthly for the tax payment or extract it from the last month’s profit; it’s your choice. But, adding it in the financial resolution is a must thing to do!
4: Get Accounting Software to Keep Records
The accounting software will make your life as a business owner easy. You’ll have a complete record of the expenditure, sales made and the profit earned by the company. The monthly report of the business’s finance will give you a panoramic view of the level where the business stands and the improvements it needs to make in order to fly to the top.
5: Come Up with a Plan to Pay your Debts
Are you among those who are under debt? You might have taken money to start the business or there might be any other reasons. Whatever the reason is, make sure your financial resolutions include the one which requires coming up with a plan to pay the debts. As the severity of each debt is different, you need to prioritize them. The debt with the highest interest rate comes at the top and you need to get rid of it as soon as possible.
6: Focus on Business Reconstruction
Here comes the mistake that we made!
So excited by the many years of success, we forgot that the people and things are advancing while we kept serving the same business products and services. Do not make this mistake. I repeat, do not make this mistake! Keep yourself up to date with the latest trends and reconstruct your business, time to time, according to those trends.
7: Consider Pension Enrollment/ Retirement Planning
Every company tries to hold on to their good employees and then the time comes when they are liable for pension enrollment. Pension enrollment funding is another financial issue that the business owners must keep in mind. The elderly employees spend their lifetime working for your company; they do expect a pension reward in return. Thus, whether you have hired the elderly experts for your small business or not, do keep the pension funds in mind.
8: Put Aside Rewards/ Bonus for Good Performers
Business setups which reward their employees with yearly increment, promotions and bonuses are more likely to survive. While running our business company, we hired few best workers, paid them on time but failed to offer bonuses and rewards. This made us face the music which is why we recommend every business owner to include this resolution in their yearly financial plans.
The eight financial resolutions mentioned in the article pretty much cover all aspect of financial planning of a small business. Following them and fulfilling them will definitely bring a treat for you.