Did you know that your business can help you achieve your personal financial goals?  As a Small Business Owner seeking to grow your business, you more than likely have personal goals you would like to achieve as well.  Most often these personal goals are directly impacted by the financial success of your business.  This is particularly true if your income comes primarily from what your business pays you.  In this case, it becomes a necessity that you understand your business' finances and gain control over how you use the most important asset in your business - cash!

Below are steps you can take to free up some of your business cash flows, you can then use to help you reach your personal financial objectives. 

Step 1: Gain an understanding of your business' finances.

It is important that you know where you are, in order to create the necessary steps to get where you want to be.  Utilizing your business to help fund your personal financial success begins with being able to assess how well your company uses its resources to generate cash flows.  One way to accomplish this is by having good accounting records.  There are many inexpensive software packages that allow small business owners to easily track their revenues and expenses.  If you are not savvy in this area, you should consider hiring a bookkeeper or CPA firm for acquiring bookkeeping services and accounting services.  A good CPA can help you understand your financial records, which will help improve your business decisions.

Step 2: Make a commitment to being more financially responsible.

Getting your business to the point where it helps you to create financial independence will not be an overnight task and will require a change in your thoughts, attitude, and beliefs you have about money.  Due to the time and dedication it takes to achieve any goal, it requires individuals to commit to the process and make a decision that you want and WILL obtain your goal by any means necessary.  Once you make this self-proclaimed promise to yourself, begin doing the following tasks:

1. Educate yourself about finances, investments, etc.
2. Meet with your CPA to gain their professional insight about your finances and what you could do to improve them.
3. Stay compliant with your tax filings and make it a habit to meet with your CPA periodically throughout the year to better control the amount of taxes you pay to the taxing authorities. There are often significant savings in this area you can greatly benefit from, plus it gives you peace of mind when running your business.
4. As best as you can, pay your bills on time. Doing this helps you avoid paying out extra money in late fees, etc. that could be put towards savings or investing.
5. Avoid creating more debt, especially until you can get your current debt under control.

 
Step 3: Analyze your personal finances and create solid goals and objectives.

At this step, you should understand your entire financial picture and be charged with specialized financial knowledge to be able to create realistic goals you can achieve.  Write down the debt you will eliminate and what amount of monies each week or month you will pay towards it, the amount you will commit to savings each month, etc.  For help in writing goals, read our e-book, “Creating Financial Success in 2016.”

Step 4: Institute good business practices that help you reach your personal financial goals.

If the income you earn from your company is the primary source of your personal income, it is even more essential that you employ good financial habits in how you handle the cash flows from the business as well.  Here are some examples of good business practices you can use:

1. Look for ways you can cut your operating expenses.
2. Decrease any high debt levels your business may be carrying.
3. Look for ways to increase productivity of your staff in order to improve the return on investment (ROI) on payroll costs.
4. Institute a savings plan for your business in order to improve the amount of cash available on hand for meeting its short and long term needs.

You can use our cash flow/debt management worksheet to assist you in this step.

In summary, this checklist is a great guide to taking the first steps towards creating wealth for yourself as a small business owner.  Beginning with an understanding of your business' financial situation, making a decision to stay on this journey until you reach your destination, creating goals you will begin working towards, and lastly, making sure to handle the finances of your business responsibly are all key to achieving financial success!

 Defining and prioritizing financial goals for both your business and personal can be complex and challenging, but can be accomplished with the right tools and professional guidance.