By Jeffrey J. Buonforte, CERTIFIED FINANCIAL PLANNER TM
If you’re a small business owner, chances are you have a sales and marketing plan. But do you have a financial plan? If not, it’s important to make that a priority.
Even a one-person entity needs a financial plan. A financial plan allows you to compare forecasts to actual results and to make smarter decisions on future spending or investments.
Financial plans are especially helpful in tough times, such as when a business loses a large customer or confronts a challenging economy. If you have a good handle on the finances in your business, it’s easier to make adjustments to respond to those situations.
Here are the steps to smart financial planning for a small business:
- Put financial support in place. Hire an accounting firm who will keep your financial records and provide financial guidance for your business. As your business grows you may consider hiring a bookkeeper or treasurer. It is important to choose a trusted financial advisor and bank
- Create a financial plan. List your income and expenses, including projected figures for the year to come. The key is to understand what part of your business drives your income and what part is creating expense. Then you can create a plan to ensure your business will be profitable. Thereafter you should revisit the document quarterly so you can compare forecast numbers to actual results, and prioritize expenses accordingly. A quarterly review also will give you a seasonal perspective on your business.
- Determine your tax strategies. This is how you are going to manage your taxable income to ensure you paying the least amount of taxes.
- Set up a retirement plan and employee benefits. A competitive benefits package is key to attracting good employees.
- Get a valuation on your business. This is the value of your business, should you be in the position to sell. You can also use business valuation in securing credit and loans.
- Protect your business with an insurance policy. Whether it is a general liability or business interruption insurance it is important to have adequate coverage. This precautionary measure can be a valuable safety net if the need arises.
- Create a succession plan. A succession plan increases your business’ worth to a potential investor and lender.
It’s never too late to start planning and your community bank is a great resource. Lakeland Financial Services consultants are available to offer one-on-one counseling. For more information or to set up an appointment, visit lakelandbank.com, call 866-224-1379 or visit any of our office locations.
*Securities are offered through Essex National Securities, Inc., member FINRA & SIPC. Insurance products are offered through Essex National Insurance Agency, Inc. Neither are affiliated with Lakeland Bank.
Products are not guaranteed by the bank, not FDIC insured, not a deposit, not insured by any federal government agency, and we may lose value including loss of principal.