How strong are your financial pillars of your business?
A business owners daily concern is taking care of business. They are committed and consistently working in their businesses instead of on their businesses. There are some financial pillars that need to be put in place, and also revisited quarterly, semi annually, or annually depending on how the business is structured, and/or how the pillars are structured to make sure that the business' financial footing is solid.
Incorporation
It may be in the business owners best interest to move from being a private owner to the business becoming a S corp, C corp, or an LLC. Working with your Financial Planner, Accountant, and Attorney can help you make this very important decision, see you through the process of doing it, and keeping it structured the way you intend.
Banking
The business banking relationship is a critical one. The bank you use can open major opportunities for a business. Establishing a checking account, savings account, and/or a money market account at a banking institution that a business relationship has been established, and the fees have been researched, a business can save on monthly, annual, and transactional fees. If a business accepts credit cards the some banking institutions can provide this service at reasonable fees. Also sometimes businesses need to take advantage of lending opportunities, and your relationship with your banking institution can definitely get you the amount you need to borrow, and the terms you need to repay them.
Employee benefits
Open enrollment for employee benefits takes place at most mid and large size companies annually. However sometimes small business owners do not do this, and need to give this event energy, thought and time. Benefits help acquire new talent, and it retains talent. Statistics state that if an employee has good benefits on their job they are 75% likely to remain at their job. We need our employees to remain so the business remains in business. Benefit aren't always expensive. Some benefits like long term disability, short term disability, and other hospital plans are cost optional to employers, and employees would be thrilled to have the benefits because they need the benefits for themselves and/or their family.
Financial Reserves
For an individual's personal reserve it has been expressed they need 9- 12 months of their monthly expenses placed in a liquid account in case of need. Businesses need to have the same. Business fluctuates. These fluctuation can happen seasonally or because of a major event. Sometimes business fluctuations can not be timed. However when it occurs payroll, taxes, vendors, and other financial obligations still need to be met.
Transition plan
Succession planning or transition planning as it is sometimes called is a major necessity for any business. Most businesses become the life of the business owner, their spouse and family. They don't do all of this work for it to just go to waste and the business not last, and they can't leave a legacy. This is why succession planning is so important. If and when the business owner decides to retire or slow down, or maybe because of injury or illness they had to retire or slow down, a plan needs to be put in place long before this takes place. However most business owners are busy working on their business daily affairs and do not sit down with their financial team to think things through, and to put a well written plan together. If a succession plan does not happen that means the business suffers.
Contingency Plan
And when all else fails a business should go to plan B. However most business owners may have a plan B in their head, but don't write it out and structure it so if one of the financial pillars are in jeopardy, the business is still a viable entity.
Regardless of what path a business owner is on, what business you are in, how long you have been in business, and how much revenue a business has generated a financial planner is a key business partner, along with an accountant, and attorney. These professionals along with others offer their expertise to the business by fees or commission and they insure that the business and its owners are on the correct trajectory for success.