Getting your business financially fit should get top billing on your list of New Year’s resolutions. It is now time to start thinking about what you can do to get your financial affairs in top shape for the coming year and get on top of all the things that you let go awry the previous year.
Here are four tips to make sure your business starts the year on the front foot:
1. Understand your cash flow
Understanding business cash flow is the key to running a successful small business. A cash flow forecast can make managing cash flow easier by helping to predict surpluses or shortages of cash. This enables you to make more informed decisions around things like new equipment purchases, or applying for small business finance.
2. Protect yourself (and your business) with insurance
It’s important to protect yourself and your business with the right insurance. At the core of this is a range of personal insurance – Life, Total and Permanent Disability (TPD), Trauma and Income Protection cover. For business owners, there is also Business Expense cover. The right insurance can help prevent debt from accumulating if you’re unable to work, and gives you the option to pay someone to keep your business up and running when you can’t. Be sure to seek the right advice when choosing your insurance – what’s right for one business isn’t necessarily right for the next.
3. Review your investment strategy
In the early years of business ownership, it’s often the case that revenue is channelled directly back into the business for growth. But at some point, you might find that the time has come to start looking at ways to invest profits elsewhere and focus on growing your personal wealth. A diverse investment portfolio can provide added income or lead you closer to your retirement goals. A financial planner can advise on the most effective way to balance investment risk and return, depending on your life stage and personal goals.
4. Think about retirement planning
It’s never too early to start thinking about your retirement, even if it still some years off. Contributing regularly to superannuation not only provides security for your future, it also provides an effective tax strategy as contributions are taxed at a lower rate when compared with your personal income.
Contribution caps were lowered on 1 July 2017 so it is important you stay below the maximum annual cap to avoid the penalty tax. These changes make it even more important for business owners to start planning for retirement early; a financial planner working with your accountant can identify ways of transferring wealth from your business into your super gradually over a number of years.
Book a chat with Vision Property & Finance
No matter what stage your business has reached, it pays to have a game plan and a strong partner supporting you with the right advice, at the right time. A Vision Property & Finance advisor can offer business owners valuable advice on planning for a secure financial future. Give us a call on 02 8354 3000 to reach Sydney’s office or 02 4014 1999 to talk to someone in Newcastle’s office. You can also contact us here.