Many small-business owners put everything they have into their businesses, and in doing so forget to make a plan for their own personal finances. That’s a big mistake. No one could have predicted the worldwide spread of COVID-19 and the disastrous economic impact it is having on all businesses alike. In today’s rapidly changing and unpredictable economic landscape, small businesses are under constant pressure.
Small-business owners tend to be hardworking and highly focused. However, if they’re not, they’ll end up part of the 91 out of 100 small businesses that fail within a decade. To secure a spot among the 9% of successful small businesses, you should prioritize both business finance and personal finance. Even if your company does everything right, there are many risks and factors that contribute to its success or failure. For instance, if a business owner takes on too many distributions to support their lifestyle, they won’t be able to supply the necessary capital to grow the business.
Financial tips for small-business owners
Saving money outside of your business prevents you from placing all of your eggs in the same basket. Personal investments and emergency savings are a critical part of ensuring you will have all of the personal requirements necessary to continue to lead your business. Even when life presents unfortunate or unexpected events.
Many small-business owners consider their business as a part of their life. Unfortunately, this can be a self-sabotaging practice. It leaves out the crucial, complementary benefits of personal finance. Investing in a diversified portfolio and saving throughout your life ensures you can enjoy the same, or an even better quality of life. At least when you decide to retire.
While assessing your spending, it is highly beneficial to go through an introspective re-evaluation of your values and goals. Spend an hour by intentionally writing all of the values that are important to you. Family, education, social impact are good examples. Then, whittle the list down to the top 10. Do it once again, but now selecting the top five in order of importance. If the expense doesn’t align with your goals or values, cut it from your budget.
It can also be valuable to go through this re-evaluation with a trusted financial adviser. Working with an adviser to handle your personal finances can free up time. Thus, you will be able to better handle your business needs. You can do that by cutting costs in the long run and ensuring you make the best possible financial moves. Even in our current unstable economic state, it’s more important than ever for small-business owners to focus on bolstering their personal financial planning.