6 Financial Habits of Successful Small Business Owners
You can’t run a successful small business without having a handle on the finances. It’s probably not your favorite part of being an entrepreneur but there are steps you can take to make money management less painful. Here are habits to implement sooner than later!
Write a Business Plan
No matter how small, every business needs a business plan to move forward. Even if your plan is just a few pages, it will help you focus on goals and strategies to reach those goals. A business plan helps you get a good overview of your industry, your competition and your own strengths and skills.
Ask for Assistance
If you’re a one-man show, keeping the books can be overwhelming. To avoid the cost of bringing on a full time employee, look into hiring a contractor or remote worker to take over those responsibilities. Small business owners can also find assistance externally. The SBA has Small Business Development Centers nationwide that offer free or low-cost workshops on a variety of topics. SCORE is another organization founded to help entrepreneurs. SCORE mentors are successful entrepreneurs who specialize in a variety of issues.
Plan for the Future
Small business owners wear many hats at work and this makes it difficult to look at the big picture and plan for the future. Creating a financial plan is critical for future success of the company. Small business owners need to set aside time to regularly look at the financial future. This can also help identify new opportunities for growth or ways to improve financial systems and processes that are already in place.
Can you identify the key performance indicators (KPIs) of your business? Measuring KPIs is more than tracking income. KPI review helps you measure performance against the goals you’ve set in your business plan. Without indicators, it’s challenging to set financial goals and move forward.
Manage Credit Cards Responsibly
Maxing out credit cards or failing to pay the bill in a timely manner can lead to a financial disaster and a low credit score. If you’ve taken advantage of a no-interest or low-interest rate, be aware of when that rate will go up. Instead of relying on credit cards, consider applying for a low-cost SBA loan. You can use proceeds from an SBA loan to pay off existing high-interest debt saving hundreds, or even thousands, a month.
Beware of Costly Capital
Getting a small business loan is a great way to fuel growth. Funds from a loan can be used for working capital, to hire new employees, increase marketing efforts, buy equipment and more. However, these days there are many alternative lenders who charge sky-high rates with terms that hamper your financial goals. If you find yourself trapped in one of these loans, an SBA small business loan might be your best bet.
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