Peter Dunn, a.k.a. Pete the Planner, is a writer, radio host, and personal finance expert. His company provides Financial Wellness programming for organizations worldwide. Check out Pete the Planner’s helpful tips to avoid some small business financial pitfalls.
Five Tips for Small Business Owners:
- Understand the differences between revenue and income- One of the biggest mistakes a small business owner can make is confusing business revenue with personal income. Revenue is what flows into your business, via sales. Your personal income is a derivative of revenue, but the two numbers aren't the same. As silly as this may sound, if your personal finances aren't solid, you will put undue pressure on your revenue.
- Pay yourself a salary- Life gets easier with a budget. Not only do you need to know your regular expenses and revenue from a business standpoint, but you also need to have a solid grasp on your household budget. It's hard to budget at home when you don't have a steady stream of income. At the minimum, calculate your household break-even point, and then set that as your new salary. Consistency is the key.
- Use a tax accountant- You cannot risk accounting errors brought about by DYI accounting. Hire a professional. They should be able to lower your tax burden and reduce your risks.
- Stay calm during great months- You will have amazing months. Expect them. When you have a great month, raise the bar of your expectations. You can't do this when you rob your company's revenue for personal gain. Your business can't grow if you are constantly slingshotting between financial success and business survival. Don't necessarily pay yourself a higher income during higher revenue months.
- Identify specific ways in which you can invest in your business- Short of securing a regular salary, the most important thing you can do for a growing business is to identify a list of expenditures that will help your business grow. Make a list, prioritize the list, and as revenue flows in, take action. You must plan to grow, and you need to be strategic with your business expenditures.
Learn more at www.PeteThePlanner.com.