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Financial Tips For Small Business Owners: Set Yourself Up For Success

Financial Tips For Small Business Owners: Set Yourself Up For Success

October 21, 2022

Starting a small business and being your own boss is a very exciting endeavor! It can be easy to get distracted by all the exciting things that go into creating a brand identity from scratch. However, these distractions can easily put a halt to your new small business’ growth if you aren’t careful. It’s important to remain focused on your business’ finances to work toward your ultimate vision of a successful small business. That’s why we’re sharing our own financial advice for business owners getting started.

The Top Two Questions to Ask Yourself About Small Business Financial Management

At Compass Financial, we like to ask the pressing questions about your financial situation and goals to really understand your needs and create a unique plan that fits them. If you’re looking to work with a small business financial advisor, you can expect to be asked two main questions to better understand you and your business:

1. What do you want your business to do for you?

This can have a lot of different facets, but in our years of experience, we’ve found these expectations typically come down to a few fundamental things:

  • Time
  • Flexibility
  • Control

When you’re self-employed, you might work more, but you work on your own terms. So how can you achieve more time to do the things you enjoy? When you work with a financial advisor, you'll spend less time worrying about your business' finances and you’ll have more time to spend doing the things you enjoy and working within the hours you set yourself. This way you can have the advantage of being your own boss while maintaining control of your small business.

2. How do you get money out of the business?

Small business financial advisors want to understand how you use the business to build the personal side of your net worth so that overtime you can become financially independent from the business. There are several ways to build your personal net worth through your business achieve that financial independence:

  1. Pay yourself a wage. Not all small business owners are good at paying themselves a wage for the work they do within the company. A great way to think of it is to imagine hiring someone from the outside to do your job. Then, ask yourself how much you would pay them to do it successfully.
  2. Start a company retirement plan. This gives you as an employee the opportunity to save personally as an employee contribution and get a company match on top of it. This is another great way to get money out of the business.
  3. Add business profits to your personal account. After all the expenses and employees are paid, whatever money is left over is considered profit. We recommend taking some of this profit and moving it over to your personal balance sheet to help grow your financial independence from the company.
  4. Sell your business later on. Not every business is sellable, but it’s important to consider whether you plan to sell or not early on. If you plan on selling, you can create a financial plan that considers a future revenue from selling your company. Our small business financial advisors like to think if you can leave your business for six months, come back and it’s still operating and still profitable, then you might have a business with the opportunity to sell.

Why Work With a Small Business Financial Advisor

When you choose to work with our small business financial advisors at Compass Financial, we’ll work alongside you to create financial goals and plans that work for you and your small business. Our goal is to help you with your unique situation. And as your business grows over time, our team can adjust with your financial needs for your business and for your personal wealth.

Get Finance Advice for Your Small Business From Compass Financial Professional

If you're looking for small business financial management services, our financial team can help! We offer holistic financial planning and wealth management, meaning we help Iowans in all areas of their financial lives. Reach out to us at 515-327-1020, or contact our advisors online today. We even offer a complimentary initial consultation to everyone. We look forward to working with you.

* The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.