Owning a small business is a dream for people looking for the freedom to be their own boss and work to better themselves. Owning a small business can be very rewarding yet challenging at the same time. To succeed in the current economic climate, an equal amount of effort must go into a small business owner’s financial planning alongside running the business itself. As we have seen, especially in recent years, times can change in an instant and have lasting effects on people and companies. Understanding what it takes to plan for not only running the daily operations of a business but planning for any potential circumstances is required for small businesses.
Small Business Owners Financial Planning is a foundational part of business
Richardson Miller LLP works hand in hand with clients of all shapes and sizes to help them strategize, prepare and manage all aspects of their financial needs. We wanted to share our experience with those individuals looking to do it yourself when beginning the adventure of creating their businesses.
Our 9 steps for small business owners’ financial planning will help you to make sure your business succeeds in the present while preparing for the future.
1. Draw the Line Between Personal and Business Goals
Before you begin to create your financial plan, you have to set clear boundaries for the goals you have in mind. Small business owners have a detrimental tendency to go all-in when trying to create their own business from the ground up. While it is important to put extra effort and time into your new venture, financial goals need to be separated.
Be prepared for the possible outcome that you will not operate your business indefinitely. All good things come to an end. Business ventures are not immune from this fact. Separating your business and personal finances and business finance will protect yourself and your family. Protecting both personal and business finances is a key part of small business owners’ financial planning.
2. Set Your Long Term and Short Term Goals
Business goal setting requires you to look to the future while understanding the steps you need to get there can be even more valuable. A proper business plan will set quarterly, yearly, and future goals beyond.
- Quarterly goals or 90-day goals are the small steps that will lead your business down the path to future success.
- Yearly goals are set to make sure you are on the path you want to be on to reach your financial plan.
Whether you want to build your business into a franchise, build to sell, or provide a specific service to a localized area, creating and meeting the goals you set are the markers on the map to make sure you are on the road you want to be.
3. Build Liquid Assets
Business assets are important for your financial health. While accumulating assets, you should be careful to keep a large number of assets in liquid options. Liquid assets are assets that can easily and quickly be converted into cash on hand.
Having the majority of your assets in liquid form buffers your business from any short-term emergencies that might arise. Whether it be an unexpected cash shortage or unexpected bills, having a cash cushion available to cover you and your business is crucial to keep your business alive.
4. Track your Cash Flow
Understand the nature of your business. Taking time to analyze your cash flow and using the information to plan what to expect each month will save you time and stress in the future. Businesses work in cycles. Taking the time to sift through your cash flow histories, you will eventually be able to build a pattern so you can prepare both how to staff your business and understand when short weeks might occur.
For example, a lawn care business is a typical seasonal business where the incoming cash flow will inevitably slow down during the winter months. Understanding the cash flow, the owner can plan and set aside money from high-grossing months to cover costs and expenses during the winter months. This is an extremely high-level example, however, you can see the point to be made.
5. Prepare for Tax Season
Tax planning is one of the two inevitabilities in life as the old saying goes. Unfortunately, they can be very complicated for small business owners. You can take the DIY route for preparing your taxes, but our recommendation is to seek the services of a trusted and reliable certified public accountant. Outsourcing tax preparation and planning saves you hours and hours of accounting while also protecting yourself knowing all your tax documents are backed by a qualified professional.
Certified public accountants are trained and continue education on tax laws for your area. Tax laws can constantly change and have a major impact on your business’s financial situation. Richardson Miller LLP. offers tax and other financial services for any size business.
6. Identify Potential Risks
Business risks can lurk around every corner. Preparing for financial risks will protect you and your business from potentially major incidents. Besides cash flow shortages, there are several issues that might arise without warning. Common business risks to plan for include:
- Employee injury
- Legal Action
- Property Damage and Theft
Having emergency funds and contingencies prepared for any possible outcome will keep your business afloat and running smoothly no matter the situation. A risk management plan does not have to be a pile of conspiracy theory outcomes, but a general plan set aside for instances covering multiple risks can be the best option at times.
7. Have Plans for Emergency Situations
Sometimes a situation can be more than a small bump in the road. These unfortunate outcomes can lead to business closure or even be caused by the death of the owner. Having a business succession plan and exit plan will be sure you are prepared for even the worst possible outcomes.
A business succession plan is a strategy set in place for the transfer of business ownership in extreme circumstances. You may want the business to transfer to a family member or trusted partner. Having a plan to make sure your business ends up in the right hands will help your business survive no matter the outcome.
People change and so do their goals. Small business owners might decide it is time to move on from their current business venture or lose passion for operating their current field. Developing and maintaining an exit plan will protect your financial situation despite parting ways with your business.
8. Plan for Retirement
Retirement planning is not only for small business owners, but can often be overlooked by them. Small business owners tend to put everything in their business without considering retirement savings. A structured retirement plan will make sure when the time comes to retire you will be able to live comfortably.
9. Review your Plans and Goals
Once you have created your complete business plan, the planning does not simply end. You need to constantly review and reassess your goals and plans regularly to take into account any changes in the economic climate and your business. Time for reflecting on if your goals were met will help light a fire or set you at ease so your business is on the track you envision. These comprehensive reviews are suggested yearly, at minimum, if not every quarter.
If this sounds overwhelming, don’t worry – Richardson Miller LLP is in your corner. Give us a call and we can help you get set up.
We’re happy to answer your questions, clear up any confusion and get you on the right path. Having clean, up-to-date books will make tax time so much easier for you!
Richardson Miller LLP is here to keep you on track and ensure that your taxes and accounting needs are met. Contact us today!

Angela Richardson is a Chartered Professional Accountant (CPA, CGA) with more than 17 years experience working in public practice with small to medium sized businesses. While financial statements and tax returns are part of the occupation, consulting and assisting clients to achieve their entrepreneurial dreams is her true passion.