Many small business owners understand all the details of their daily business operations, but don’t know much about financial planning for sustained growth over the long-term.
Whether you’re just starting out, or looking for opportunities to expand, talk to your business financial advisor and legal counsel to make sure your vision of a brighter future doesn’t turn into an unanticipated (and costly) surprise.
1. Get good advice from a trustworthy source. You can read some blogs on growing a business to profitability, but you don’t know how sound that advice is. Who wrote it? Where did those stats come from? The Internet is probably not the best place to find financial and legal business advice.
Know your sources. Know their areas of expertise. And if they don’t have expertise in your business sector, find a resource who does.
2. Risk assessment is always an area that can be troublesome for Small Business Owners (SBOs). Risk management is expensive, especially for a small, growing business. Contact your commercial insurer, who will usually perform a workplace risk assessment at little or no cost. The federal government’s Occupational Safety and Health Administration also provides risk assessment and mitigation services at no cost.
3. Access capital before you need it. You may not need business capital in the near-term, but somewhere down the line you just may. Many business experts encourage SBOs to secure a business line of credit before you need it. You may never use it, but it can give you quick access to cash if you do. A business line of credit can be a valuable safety net for unanticipated expenses or cash flow problems.
4. Tax planning is another aspect of small business financing that may require some outside advice. You don’t need to have a qualified CPA or attorney on your payroll. Find an expert who can provide the information and services your business needs.
If you’re at the start-up stage, ask business associates for recommendations for financial advice. A tax attorney may be able to help set up your business to deliver the most tax benefit. For example, should you structure your business as a sole proprietorship? Is an LLC a better choice, and if so, under what circumstances? The key is to get advice early from a specialist you trust – one who has your best interests in mind and has experience in your business sphere.
5. Run lean. With basic Internet technology you can collaborate online instead of flying to the client’s office. You can outsource everything from website construction to online marketing using professionals who bid on your job posts.
You can create a virtual office in a spare room. Hire a virtual assistant to answer the company phone and forward important information while you’re out of the office. You can outsource just about any task these days, paying only for delivered services – and in many cases, those services are much less costly when secured online.
6. Investment planning is another area that SBOs should focus on with the help and guidance of a sound financial advisor.
Small business owners may be tempted to invest any company profits back into the business, with little thought given to diversification of assets. An SBO who puts all discretionary capital back into the company, with the expectation of enjoying the benefits of business growth, may be in for a rude surprise if business takes a downturn.
The principles of investment planning still apply to small business owners. Putting all of your eggs in one basket – even if it’s your basket – may not be the best long-term investment strategy for the business owner or the business.
7. Estate planning may not seem important when a business is in its early stages of growth, but as that business grows, it may become a valuable family asset. Will you pass the business on to the next generation? Sell it? A financial strategy that accounts for a range of contingencies can help prepare your heirs and your business for what’s ahead.
Once again, find a resource experienced in business estate planning. You may need several different legal and tax experts to establish a succession plan, or a plan to sell, long before you put the company up for sale.
The key is to get the advice you need before moving ahead. A CPA, a business attorney, a knowledgeable business banker, a business insurance broker – it’s important that you focus on your areas of business expertise and let these experts keep company growth on track.
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The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.