4 Financial Planning Tips for Small Business Owners

April 20, 2023

Being an entrepreneur is demanding in terms of the time and sweat you put in alone. The upside is that it can be extremely rewarding, as well. In addition to the freedom of being your own boss, you can actually better some people’s lives by training them as employees.

However, your number-one motivation for starting a small business is the potential for greater take-home pay. This is generally why anyone gets up to do any job in the morning, no matter how much they love their occupation.

So, what if I told you that it may be possible to bring more money home, even after taxes? It all starts with smarter financial planning.

Discover tips for optimizing your success, including:

  • Why sticking to your budget is as important as making it
  • How celebrating small victories can make a big win more attainable
  • The importance of connecting with financial goals emotionally
  • Why continuing your education doesn’t have to put you in debt
  • How utilizing financial planning small business owners can give you an edge

Make Your Income Count

As a small business owner, you understand the value of hard work. That’s why, if you aren’t following an optimized financial plan for your business (and, ideally, your personal finances, also), you need to know: You are wasting money.

In other words, if you aren’t consciously progressing toward your financial goals—and tracking that progress—daily, you may be working hard for less money than you should be clearing. At Ironclad, we hate seeing entrepreneurs in this situation, so what follows are concrete steps for making the most of your earnings.

1. Budgeting for Business Owners (The Fun Stuff!)

Ok, maybe it doesn’t sound like too much fun, forgive me. Most business owners that I know do have a well-thought-out business plan that includes a budget for their business. However, once that budget results in real profits, they don’t have a personal plan and that’s where things can get muddy.

Unfortunately (and maybe ironically), as they gain ground and then success keeps them busier, many opt to back-burner the crucial specifics of their financial plan.

One of the most common things that I see is a business owner living month-to-month off of their fluctuating profits. One month, they may make $20,000 and then not have a plan. Maybe they remodel their bathroom. In another month, they make $7,000 and don’t take on any big projects but still spend most of the money.

Instead of living month to month, a strategy that I love is smoothing out your income and recreating a paycheck for yourself. Instead of living off of $20,000 one month and $7,000 another month; pay yourself $8,000 each month. Then you can thoughtfully apply the overages to savings or projects while still moored to a long-term financial plan.

2. Make a Plan for Your Short-Term and Long-Term Financial Goals

This step is a little more involved than it may sound. The good news is that it really only requires a little more of your focus. Once you have your living expenses taken care of – it’s time to invest a little of your entrepreneurial heart and mind, as well.

I say this because on any given workday, a financial goal that you don’t feel some emotional connection to probably won’t survive the do-I-have-time-for-it-now test. That is why we set both short and long-term financial goals (and mid-term ones, when applicable).

For example, don’t just set June 4th, 2032, as “Retirement” on your calendar. Instead, think about what you most want to do that day. Next, expand the goal to read something like, “On June 4th, 2032, I will buy a cabin bordering the Chattahoochee-Oconee National Forest and spend my retirement as a seasonal bird-watching guide.”

Do you see how this deeper degree of personal investment creates superior motivation? People generally do far better pursuing their long-term financial goals as a result. It doesn’t hurt to incentivize yourself, either.

By “incentivize,” I am referring to setting short-term goals along the way. Ideally, these should work in agreement with your long-term plan, yet they can serve as milestones, as well. For instance, paying off a business credit card within a couple of years is 100% in keeping with retiring not just debt-free but with wealth. At the same time, it is a victory worth celebrating in the here and now.

Positive reinforcement along the way tends to encourage better adherence to a long-term monetary plan. So, as the saying goes, “Celebrate the small stuff.”

3. Invest in Yourself by Taking Courses and Learning New Skills

Investing in yourself, as an entrepreneur, is investing in your business (and its odds of success in the long run).

Investing in yourself, as an entrepreneur, is investing in your business (and its odds of success in the long run). A master’s degree in Software Engineering is great if your company, for example, designs schematics for a niche of the technology sector.

Expanding your knowledge and certification does not have to be as time-consuming or expensive as graduate-level education, though. Many industry professions have state professional associations that offer courses relevant to their field (sometimes for free).

Sometimes it even helps to cross-pollinate by learning from people in an adjacent professional field. For instance, an electrician specializing in the installation and repair of solar panels might benefit from online courses from a state developer’s association.

Deepening your knowledge of programming occasionally over a weekend could eventually help you to better diagnose problems between industrial solar arrays and the computer servers running them. With sincere respect and appreciation for higher education, take an objective look at what you really need to know before committing to years of tuition.

If, after a critical assessment of your options, that still seems best, go for it. Just avoid rushing into the financial commitment before you are 100% certain it is necessary. Consider networking online with your state organizations, as well. In addition to courses, some have forums through which you might connect with a potential mentor(s).

4. Get a Financial Advisor

There are actually more steps than I had room to list here, but this is one I could not leave out: The right financial planner can sometimes be an entrepreneur’s best professional friend.

This is because the difference a fiduciary can make in your business life can be stark. At Ironclad Wealth Management, we have the knowledge and experience to save you (possibly surprising sums of) money on taxes, insurance, expenses, and more. Contact us today to start seeing for yourself.

MGO One Seven LLC ("MGO One Seven") is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training. All titles listed for individuals associated with Ironclad Wealth Management represent the individual's role with Ironclad Wealth Management, and not their role with MGO One Seven. Services are provided under the name Ironclad Wealth Management, a DBA of MGO One Seven. Investment products are not FDIC insured, offer no bank guarantee, and may lose value. Please visit our website www.WeAreOneSeven.com for important disclosures.

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Nothing provided in this presentation constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

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