Have a Healthy New Year – Four Ways to Fix Up Your Finances
We know, we know—‘tis the season for “New Year, New You” style articles. And yes, we’ve already covered some best practices for being physically and mentally healthy as a small business owner in 2018…but have you considered your small business health even more holistically? Including, for example, financial health? This final installment in our three-part New Year health series will focus on getting your finances into tip-top shape throughout 2018.
Financial health can be a scary subject to discuss. It can be awkward, overwhelming, and a bit daunting to talk about. As uncomfortable as it may be, however, ignoring your finances can lead to major problems, including growing debt, bad credit, and/or government fines. These tips, though not exhaustive—if you’re looking for a personalized analysis of your current finances and advice on where to go, be sure to consult your accountant or financial advisor—will help you understand how you are starting out the New Year and what you can change as the year goes on.
Calendars – For More than Remembering Birthdays
Mapping out important due dates is crucial for financial health. Missing a payment on a credit card or loan can result in hefty late fees and ultimately hurt your credit. If you have multiple recurring monthly payments for your small business or personal life, it really helps to set up an auto-pay feature so you can be sure the date doesn’t slip by. You’ll still want to keep track of when the money will be pulled so your bank account doesn’t turn to red.
Don’t Put Off That 401(k)
Similar to already knowing you need to look at both diet and exercise when being healthy, you know that you need to have a 401(k) to round out your personal and professional financial health. While you are clearly passionate about your small business, there will likely be a day when you are ready to take a step back. You may want some time off to spend with loved ones, do some traveling, or even just chill out doing things you haven’t had as much time for. When that time comes, you won’t want to be worried about your financial health; you’ll want to be focused on having fun and living your life. By starting to save now, you can make that possible.
If you already have a 401(k) for yourself, you are a step ahead, but you may want to consider extending this benefit to your employees. There are many benefits to offering 401(k) to your employees, including higher employee job satisfaction. Still not sold on why you need to start now? Take a look through our two-part series on the myths surrounding 401(k)s and get saving today.
Have a Financial Back-up Plan
For many, 2017 was a challenging year in terms of unexpected, natural disasters; from hurricanes to fires, Mother Nature did not shy away. These storms caused a lot of damage, including impacting local small businesses. Natural disasters are just one reason why you need to have a backup plan, insurance, and an emergency fund handy. Having an emergency fund is standard practice in saving money and something you will want to have for both your small business and personal life. As these destructive natural disasters showed this year unexpected, serious issues can randomly pop up and not leave you with a lot of time to prepare for the worst. Even smaller-scale issues can pop up in your business that you aren’t prepared for, such as electrical or plumbing work; these jobs can become quite costly. Don’t let the unexpected catch you off guard – build that emergency fund.
Keep the Cash Flowing
Cash is king, yet it might not always be as readily available as you’d like. There may be times when you are strapped for cash and struggle to pay certain bills, or even make payroll. It’s never an ideal scenario to find yourself in the red, and when it happens unexpectedly it can have even more severe consequences. Depending on your business structure, you may need more cash in the spring and summer months versus fall or winter, or vice versa.
If you end up really strapped for cash and get to the point where you can’t pay your employees, there are steps you can take. Maybe a simple budget would be a good way to kick off the New Year, and mapping out when all of your bills are due. Perhaps to save you adopt “no spend days” when other bills are due (if possible). Keeping your cash flow moving along can be a challenge, but it’s definitely not impossible.
Finances are scary, we get that. But you don’t have to figure them out alone. Knowing exactly where you stand is crucial for the success of your small business.
Do you have tried and true tips that you put to use to evaluate your financial health? We want to hear them! Tweet us @SurePayroll.
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