When you’re starting a new business, you need to ensure financial stability and independence. If you have enough assets to cover your costs and earn some money, your business will thrive and grow.
Still, it’s not easy for SMB owners to make ends meet and generate enough revenue to make things move.
There are different strategies and steps for their implementation so it’s vital to know which ones to apply.
In this article, we’ll explain the five main strategies for becoming a financially independent and progressive business owner.
1) Make a financial plan
Every business success story starts with a plan. In addition to a general business plan that contains all your goals and their features, you need a financial plan.
Here’s what a proper financial plan for a small business needs to contain:
- Calculate the expected income to see how much money you’ll be making, at least in the first few months. Make estimates for all arranged projects and sign contracts with your clients to make sure that all interested parties know what to expect.
- Learn your costs to understand what share of your income will go on various expenses. Take into account the overhead costs, taxes, contributions, website hosting, and contributions you’ll pay for your pension plan.
- Consider the variable costs on time and add them to your financial plan. They can include any one-time expenses, like buying a new computer or subscribing to a course.
- Visualize where you want your business to get in three months, six months, etc. Write down the desired thresholds in terms of income, client reputation, and investments in your business.
- Break down the income, costs, one-time expenditures, and the expected profit month after month.
2) Set your short-term and long-term goals
Setting business goals is necessary because they’ll serve as milestones and points of orientation for your business.
For starters, you need to decide how you want your business to grow. If you’re eager for rapid development to become a visible player in the niche, you need to work fast, bring effective decisions, and hire freelancers and full-time workers.
In that case, think about finding angel investors to help you build a strong business. Some people are willing to invest in small businesses if they like the business idea in question. So, you’ll have to make a compelling and persuasive presentation to prove that your idea has potential.
Bear in mind that entering such partnerships means that a fair ownership share will be divided between you and the angel investor. Depending on the amount of money they decide to invest, this percentage can vary. Define everything you arrange with this investor in a contract to protect all interested parties.
On the other hand, if you want to grow slowly, you’ll probably be able to make it on your own, without financial injections in form of investments. For gradual but steady growth, accept only as many business projects as you can handle on your own. If you don’t want to hire employees, stay rational and put everything on paper before you accept a project. That way, you’ll avoid biting more than you can chew. Your growth will be slow, but you’ll finish all your tasks on time and build a good business reputation.
3) Learn more about tax deductions
Every business owner has the right to require tax deductions.
These categories differ from country to country, though. In the US, for example, you can deduct dozens of different things and get your money back.
If you had lunch with a potential angel investor, keep the bill and you can get a tax deduction because it was a business meeting.
If you came to that meeting by plane, you can ask for a tax deduction on it, as well.
Basically, every cost related to business is eligible for tax deductions.
When you’re writing a tax return, make sure to include all the tax deductions and attach copies of all bills that prove their purpose. That way, every business owner can save a significant amount of money that they can use for further investments.
You can read more about SMB tax deductions on the IRS website.
4) Put the savings aside
The formula is pretty simple here: the more money you can put aside in the first few months or years of your SMB endeavor, the more financially independent you’ll become.
The point is to save enough money to avoid running to the bank or the local business administration to get a loan in case of emergency.
For instance, if your computer breaks down or your business needs have outgrown the current office or warehouse, you can take money from your savings and solve the problem.
Additional two cents: separate the long-term savings from the emergency fund assets. What we’ve described above is an example where you should spend money from the emergency fund. Long-term savings refer to the assets you can save for a longer time to make bigger investments.
5) Apply marketing hacks
There’s no financial success without proper marketing. SMB owners who want to attract enough clients and followers to become financially independent need to apply a wide range of marketing hacks, like the following ones:
- Use LinkedIn. While Facebook and Instagram are common places in everyone’s marketing campaign, it’s important to highlight the importance of LinkedIn. Connect with other businesses, find your new employees, and see how your rivals handle financial matters.
- Build an email list. Offer freebies, discounts, vouchers, e-books, and other incentives to inspire your potential users to sign up for your business and leave their email addresses. The larger the email list, the more potential it has to generate leads, customers, and money.
- Make your website shine. An SMB business website needs to be shiny and smooth to make visitors want to stay on it. The longer you keep them on your website, the more likely they are to buy something. Still, this doesn’t mean packing the website with too many elements. As explained by the web design experts from a Houston web design company, a simple but informative and well-designed website will convert more visitors into customers.
- Turn to SEO. Search engine optimization (SEO) can significantly improve the quality and relevance of your website and blog content. So, use keyword planners to check out what words and queries the competition is using to attract new customers.
Building a financially independent small business is no cakewalk. It takes patience, knowledge, and constant improvement to make a self-standing venture. The tips shared in this article will help new SMB owners cope with their finances effectively and ensure financial independence from day one.