Let’s get down to it.
Have you ever felt like your business life and your personal life have no boundary?
That’s because they often don’t. This crossover makes it doubly important to stay present to how you are managing your finances and investments.
In today’s blog, I will cover what you need to keep top-o-mind to play it smart as a business owner.
These are strategies I use with my own investment plans for FWW and that I educate my private clients on.
What’s The Plan Stan?
Work with a financial planner to create a written investment, borrowing and savings plan for your business. This should include a strategy on how you plan to keep steady in case of disability, a turn in the market or general “rough times.”
Build That Cash Cushion, Baby!
You may know to have a cash cushion for you personally or for your family, but what about your business? You definitely need to have a cash cushion in place in case you lose that big contract, you need unexpected repairs to your office space, if that launch under-produces or for many other unforeseen reasons. Of course we never WANT those things to happen but better to be prepared. Set aside at least three to six months of cash flow in a liquid account.
Don’t Get Comfy With What You Know
You likely connect with others in your industry or those symbiotic businesses you collaborate with. It can be easy to invest in other companies you are familiar with but if your industry experiences a down turn, everything can drop at the same time. Better to diversify your investments with large companies, non regional, domestic stocks, as well as international securities and perhaps real estate investment trusts that invest in other regions and industries. Bonds are another important component of a diversified investment portfolio.
Debt Comes With The Territory
The majority of businesses take on debt in order to grow. However, you can be super smart about this. Don’t be conservative when estimating your financing requirements and make sure you factor in unexpected needs. Create a business budget and be clear on the amount required to make your business run successfully. See where you can trim expenses and then borrow accordingly. Before you say yes to financing, weigh all your options: personal savings, loans from family or friends, credit cards, commercial bank loans, personal bank loans, federally backed loans or private investors. See which solution is the best fit for you.
Plan for Uncle Sam
Taxes… don’t let them sneak up on you. Tax planning is a year-round approach. You may have huge financial goals and do not want them inhibited due to unforeseen tax bills and challenges. Depending on what type of business entity you have set up your tax planning will vary. Be in close relationship with your financial planner and/or accountant so that you stay on top of payments, savings, and potential law changes. There may also be hidden tax saving opportunities with your business such as saving in your company retirement account, timing income and expenses, and using charitable gifting strategies.
WHEW! I know that was a lot, but all very important.
Now I’d love to hear from you:
Remember, share with abundance and truth. Your sharing may be THE thing that inspires one of the other beautiful souls that read this blog.
Huge thanks for joining me here, sharing YOU and being a Financially Wise Woman. Every interaction makes a difference.
If you know of anyone that can benefit from the tips and tools here, please spread the word!