As an entrepreneur, you’re a master of living in the moment and juggling everything you must do to keep your business successful. You’re also an excellent predictor of near-future evolution, staying up-to-date on your industries.
What you might struggle with, though, is planning for the future future. You know, the one where you’ll have to retire, or where you could get sick or injured and be unable to work.
This part of planning for the future is vital, and it only has to be done in detail once. Follow these steps to create your entrepreneurial roadmap, and then tweak them as necessary as you go.
1. Step One: Take Charge of Your Finances
The money is coming in, but expenses are going out. Do you know exactly how much of a profit or loss you’re taking? How are you controlling your income stream? Are you actively reading your expense reports, or do you pay someone else to do it for you?
If you want to be as financially successful as possible, you need to take an active role in all aspects of your money. Sit down with the monthly expenses and income reports, and figure out where your working capital is going.
Getting Proactive With Your Business Expenses
Every thriving business works off of a basic budget. Small businesses, in particular, must keep an eye on their incoming and outgoing cash. This eagle-eye helps you stay focused on your business objectives, determine what’s working and what isn’t, and adjust future decisions as necessary.
With a budget, you have a financial plan for your personal and business resources. The budget is used to estimate these resources over a set period of time (daily, weekly, and monthly are the most common periods).
Expenses too high? Rework them to fit your budget. Income more than you expected? Revisit your budget and see if you can start paying off debt.
Pay your taxes quarterly instead of waiting until the deadline and getting hit with a hefty bill (and fines for late fees and penalties if you wait too long). Get active with your business expenses.
This interactive system becomes the action plan by which you move forward to tackle your goals. Without it, you won’t grow intentionally.
2. Step Two: Structure Your Business
Now that you have more money coming in than going out (aka, a profit), how are you working to protect your assets?
Unless you have a passionate love for paperwork and government bureaucracy, this part is never fun. But it is important. Each of these levels of protection are included in most financial planning portfolios.
Business Structures
Let’s start at the first level of protection: your business structure status. As an entrepreneur, you’ve seen a few ways of setting up your business with the Internal Revenue Service.
If you haven’t chosen a specific structure, you’re operating under a sole proprietorship right now. This leaves you unprotected from financial liability in a lawsuit. So, if your business is sued, your personal assets can be used to pay the damages, and vice versa.
To eliminate this concern, head over to your CPA and talk to them about switching to a limited liability corporation (LLC). This will separate your business and personal bank accounts completely.
3. Step Three: Get Insurance Coverage
The next level of asset protection includes insurance policies. Any damage to your business or your health directly impacts your finances. Even if you have a nest egg saved for a rainy day, an insurance policy cushions the blow and keeps you from breaking into that emergency fund.
Entrepreneurs need health insurance at a minimum. Your business may also require general liability coverage, comprehensive auto insurance, or cyber liability.
And if your family relies on your income to keep them fed and a roof over their heads, you may need life and disability insurance, too. This article by Gigly gives you more info on getting a disability policy as a small business owner.
Conclusion
It can be hard enough to do the things that must get done in the workday when you’re an entrepreneur. Planning for the future is always a “someday” thing, but that day is now.
Put aside some time in your schedule to tackle your budget and protect your assets, and you’ll see how those “later” goals will guide your daily actions now.