The prospect of becoming a small business owner can be very intimidating.
When you’re the big decision-maker and the success or failure of the company hinges on what you do, it’s easy to become overwhelmed. One mistake can lead to another, and before you know it, your once promising business has to close down.
You obviously don’t want that potential outcome to come to pass. In order to give your small business the best odds of success, be sure to follow the tips included below.
1. Make it a point to keep personal and business finances separate
One of the common mistakes made by small business owners is mixing their personal finances together with the company’s money.
Some people out there may think that combining personal and business finances is relatively harmless, but the potentially adverse effects of doing that can actually be quite damaging.
According to Fundera, failing to keep your business and personal finance separated can result in the emergence of legal troubles and accounting nightmares. You can also effectively turn yourself into a candidate for an IRS audit if you handle your finances that way.
Even if you manage to avoid all those issues, combining your personal and business finances can still work against you. It’s hard to look legitimate to your customers when your business is taking up residence in your personal bank account.
Separate your personal and business finances if you want to give your company a better chance of succeeding.
2. Give yourself a salary and save it for future plans
As the owner of the business, you may not feel completely comfortable with accepting a salary, but this is absolutely something you need to do.
By giving yourself a set salary, you can profit from the work you’re doing while not handicapping the company. You can also effectively avoid the issues that may arise if you just take random amounts of money out of the business at random times.
It’s now up to you how to spend that salary. You can save it up and create a retirement fund for yourself or reinvest it in your company if you’re eyeing expansion.
3. Maintain a good level of liquidity
The unfortunate reality of the professional world is that many small businesses will fail. Not every venture can succeed even if they are being led by smart and capable people.
You need to protect yourself as a small business owner and one of the ways to do that is through maintaining a collection of liquid assets. With liquid assets always ready, you can protect yourself and your family against unforeseen events.
The need to convert company assets into cash will not be quite as urgent because you still have liquid assets remaining.
According to The Balance, most financial planners recommend having liquid assets that can support you and your family for at least six months. At a minimum, set aside liquid assets that will cover your family’s expenses for at least one month.
4. Take advantage of loans to get out of rough spots
Rough spots are inevitable for small businesses. You are still in the process of establishing yourself in the market. Not everyone may be willing to work with businesses that lack extensive track records.
A rough patch doesn’t have to spell dome for your small business though.
To get out of that tough spot, you can take advantage of the loan options that are available to you. There are several options available including self employed loans, nontraditional loans, conventional loans, and numerous other alternatives.
Secure one of those if an infusion of cash will be able to help out your small business.
5. Bring in the experts
If you’ve managed to weather the early storms that come with being a small business owner, that means you have a real chance of growing your company and becoming a real presence within your chosen industry.
Expansion is on the horizon, but this is where you need to be more careful. As your business grows, more things will be thrown on your plate. You may not have the time, energy, and knowledge necessary to deal with all of those things correctly.
Don’t hesitate to bring in experts who can help you out. Hire an accountant who can handle your company’s finances and managers who can oversee departments.
Focus on the things you do best and let other knowledgeable people help out so that your business continues to trend upward.
Success can be hard to come by for small business owners, but it is possible to obtain. Follow the tips mentioned above and you will effectively give your own company a better chance of remaining viable and profitable long-term..
