If you own a small or a medium business (SMB), having a comprehensible financial diet plan will go a long way in becoming smarter with your money. It’s good to keep in mind that the word ‘diet’ may require you to take less than happy financial choices to grow your bank account. The unpleasant steps vary from reassessing your spending habits, analysing your budget, and adjusting your business plan.
Adopting smart money habits early on can offset potential headwinds that most SMBs often find difficult to weather. As an SMB owner, that also means you’ll be saved from the immense headache that typically ensues when you notice your bank account is running low. In order to help you out, we’ve listed out a few ways to have you get started on your financial diet plan.
Separate Personal from Company Finances
One of the big mistakes that SMB owners are prone to making is not separating their own finances from that of the business. While the money you earn from the business can be spent on your personal life, it is unwise to merge the two accounts.
The separation of these two accounts eases the accounting process as well as provides a clearer idea when it’s time to pay your taxes. Moreover, as your company grows, a separate company account makes your business approach look more professional, which makes obtaining bank loans easier.
Avoid losing excessive amounts of money by implementing a clear, measurable, and realistic budgeting plan. However, the first step is to ensure that you have created a budget given most business owners fail to have one at all.
As an SMB, it can be easy to lose track of your spending, but with a budgeting plan, it’ll be easier for you to manage how much money has been allocated on key areas such as maintenance and repairs, marketing, and capital expenditures.
Since having a budget plan also requires daily updates, it will reinforce financial diligence on your part. It also helps that you can see which business activity you’ve spent the most money on, therefore, making way for a financial plan readjustment.
Don’t Skimp on the Retirement Plan
As you’re busy focusing on keeping the business afloat for many years to come, the thought of saving up for your retirement may be placed in the back of your financial priority list. The hope is that in several years, your business will grow, but so will you hence why it’s so important to include your retirement savings in your financial planning.
SMB owners don’t have the benefit of an employer offering pension savings and unfortunately, there are fewer companies who do. Then there’s also the issue of growing inequality which makes it harder for people to contribute to retirement savings. Nevertheless, it’s good to remember that it’s less about how much you can save, but when you can start. Aging is inevitable and with life expectancy increasing, you want to make sure you don’t run short on retirement funds.
Get Smart on Marketing
Having a marketing plan is as essential as having an overall business plan whereby both aspects contribute to the longevity of a company. Graphic designers are becoming more skilled, art designs are becoming more unique, and consumers have maturing preferences for advertisements. It’s understandable how an SMB owner can be prone to getting carried away with the many conventional and digital forms of marketing available on the market.
To scale back on your marketing budget, you can opt for generic marketing collaterals that can be reused for upcoming events. Branded merchandising goods such as umbrellas, different pull up banners, and a backdrop, are an excellent way for you to buy in bulk at a low-cost. These collaterals can certainly be reused over the course of many events and promotional activities. Marketing collaterals for one-time campaigns can still be made, whenever necessary, but the costs do add up after several events; that’s definitely something to keep in mind.
Pay Your Debt(s)
Debts often carry high interest rates, and missing a payment can have harsh consequences on your next billing statement. There are several unpleasant situations that you can find yourself in if you default on a payment, be it a lower credit score, constant encounters with debt collectors or a jeopardised job. You’ll be better off avoiding those circumstances.
Business owners typically have debt resulting from the purchase of new equipment to service payments, but recurring debt can have hidden costs. In-line with a financial diet plan, you should work towards getting rid of ineffective debt like those that bear high interest rates or your standard credit card payments. The faster you pay off your debt(s), the quicker you’ll achieve financial freedom, which for SMB owners can mean a vast difference in your stress levels.