Financial Strategies for the Small Business Owner

If you’re a small business owner, you know the drill: You likely work long hours (in excess of 50 hours per week) and wear many hats (from sales and marketing, to website design, to product developer, and so on).

One hat you don’t have to wear? That of financial planner or advisor. Outsourcing your financial strategy and the tasks that descend from it can be advantageous in terms of building and safeguarding your wealth, and even ensuring you are optimizing your finances for tax purposes. 

Here are a handful of the financial strategies you should work with a financial advisor to incorporate at every step along your entrepreneurial journey. 

Just Starting Out

Assess your business and personal financial goals, and create a plan that aligns the two.

When you work with a qualified financial advisor, you’ll have the benefit of their expertise to put all the pieces of your financial puzzle together so that it makes the most sense from every angle.  

Get educated about financing options and alternatives.

Starting a business often requires an infusion of capital. You may be looking at asking friends and family to invest, crowdfunding, getting a bank loan, or even approaching equity investors. It can be difficult to sort through all the pros, cons, and financial implications of each, and an advisor can talk you through each available option, as well as present alternatives you may not know about. 

Get set up correctly for taxes. 

You know taxes are complicated, and they can be even more so when you start a small business. Depending on the status you elect — sole proprietor, S-corp, C-corp, and so on — you’ll need to be set up to pay taxes accordingly. Your advisor and CPA can guide you through the process and save you any costly mistakes that can occur when you try to navigate taxes on your own. 

In the Thick of It

Hire and set up employees. 

Somewhere in the first few months or years, your role becomes more specialized, and your growing business requires you to hire employees. It can be a relief to have a trusted outside resource who can advise you on salaries, payroll, benefits, and so on. 

Outsource bookkeeping and other accounting duties.

As a small business owner, you’ll be constantly weighing the costs and benefits of adding headcount for all kinds of roles. Outsourcing bookkeeping and accounting duties is a cost-effective option when you’re not yet large enough as a company to add a full-time position, but you need the expertise to ensure those tasks are done correctly. 

Set up defined contribution and retirement plans. 

Early on in your business, you’re focused on making salary, and while offering contribution and retirement plans may be on your mental roadmap, they’re not yet a reality. However, as you grow, offering ways to allow your employees to save becomes more viable, and can even help you recruit and retain employees. A financial advisor can walk you through the various options for small businesses and help you zero in on the one that is most advantageous for your business.

Maintaining — And Growing — Business Success and Wealth

Mitigate risk.

As you grow, you’ll be exposed to new and greater opportunities, all of which will have inherent risks. Having an advisor at-the-ready to help you identify, manage and reduce certain predictable risks can help you avoid crises, financial and otherwise. 

Invest for growth. 

Knowing how to allocate assets appropriately for growth is the specialty of a financial advisor or asset manager. They can also help you create a plan that includes guidelines for when you might need to make changes to investments or to liquidate investments in order to cover business necessities. 

Plan for business continuation and exit. 

Long before you approach retirement, you should consider proper succession planning. Although the goal could be that your business continuation plan and exit not be effective until you retire, you should be prepared in the case of an unexpected life event that would require someone else to take the reins. The right financial advisor can help you plan for every contingency, as well as prepare the necessary documents for that transition. 

Looking for the guidance of a financial advisor for your small business? Here at Ironwood Wealth Management, small business planning is one of our specialties. Set up an appointment to learn more.