Those who want to start their own business and find success in 2017 must have a plan established to gain financial independence and stabilize the business. For many people, it can be easy to make mistakes that can lead to financial disasters due to a lack of experience or resources.
To ensure that you start your business on the right financial foot in the new year, there are a few important tips to follow that will prove to be effective long-term.
1. Save an Emergency Fund
Those who are attempting to start their own business should try to have another source of income to help fuel the business. You’ll also need to save at least six months to two years of income to give the business time to begin to earn money, which will make it easier to avoid having stress if the work doesn’t pick up right away or is slow in certain seasons.
If the owner is struggling financially once the business is started then it likely won’t succeed. Avoid using the funds and live frugally to allow the money to only be used when it’s absolutely necessary to give the business time to grow without rushing anything.
2. Get the Right Insurance
Obtaining adequate insurance is essential to starting your business on the right financial foot because there are a long list of events or accidents that can go wrong in the beginning stages. Disability will protect your ability to earn an income and is crucial to securing your financial future.
The insurance that you obtain will depend on the type of business that you’re starting with policies that are available if you’re working out of your home. Errors-and-omissions policies should also be obtained to cover damage that is related to professional advice with legal action that can be brought against the business.
3. Talk to a Tax Expert
A tax professional can help you start your business by offering their advice on how to create the right business structure and the best ways to maximize your business’ deductions.
Although the rules that are enforced by the IRS can be difficult to understand as a new business owner, a tax expert can help you to avoid costly mistakes and save money, which includes failing to pay yourself a salary in the first year or two. Unfortunately, you may be audited if you’re not paying yourself because the government is losing out on money and will come back for the tax dollars.
4. Diversify the Investments
You can obtain financial stability with your business by diversifying your investments and avoiding loading up on investments in a specific area that you’re an expert in.
Make investments that are conservative and put your money into stocks, bonds, commodities, and real estate to reduce your risk of loss that can occur, especially in poor economic conditions. This will allow you to avoid having all of your eggs in one basket to ensure that you have a better chance of succeeding financially long-term while funding your business.
If you begin to suffer loss, respond positively and retain a sense of perspective to recover and move on.
5. Evaluate Your Budget on a Regular Basis
One of the most important steps to take as a business owner is to evaluate your budget regularly while adjusting your expenditures.
Your budget should continue to evolve over the year as your business grows and develops, making it important to eliminate certain costs that are no longer necessary and aren’t bringing in money, which can include promotional products or ads.
Photo: MIKI Yoshihito / CC 2.0