As an entrepreneur or business owner, you take on challenges that many people don’t realize or cannot relate to. Acting as your own boss, accountant, and planner can be quite an undertaking. Although your career and business require much of your time and attention, it’s important to plan for the future and continue to look at the big picture. By taking the necessary steps to set yourself and your business up for success financially, you can put yourself in a more secure place especially during these uncertain times.
1. Be knowledgeable of your financial situation
Entrepreneur or not, you should know the details of your financial situation as a working adult. If you own or help run a business, it’s even more critical to have your finances in gear before you start making larger financial decisions or investments. It’s recommended that entrepreneurs maintain separate personal and business accounts exactly for that reason. Should something happen to the business that causes you to lose money, you will still have the financial support to keep yourself afloat while you figure things out in terms of the business.
Creating a personal emergency fund before you start your business endeavors can be a great place to start. It can be tempting to allow yourself to borrow some money for a business venture and promise to reimburse yourself later. The problem is once you start doing that, you can easily lose track of your spending and you risk putting yourself in financial turmoil.
2. Protect your future from uncertainty
Insurance is another way that you can protect yourself and your business’s future should anything unexpected happen. As an entrepreneur, you don’t have the option to secure coverage through an employer, therefore it’s your responsibility to purchase insurance based on your needs. Consider your lifestyle, family, and business structure to help you determine what insurance you need.
Life insurance: Most couples rely on all sources of income to protect their family. Should anything happen to you, causing you to be unable to work, your loved ones will not have the financial support they need. Even if you don’t have a spouse or any dependents, the business you create can be put into the right hands if you fall ill, experience a serious injury or death. By purchasing a life insurance policy you can maintain peace of mind knowing you have a plan in place during uncertain times.
Health insurance: From annual appointments to managing illness or medications, health insurance is necessary, now more than ever. Especially if you need regular prescriptions and/or check-ups which can really add up without having healthcare coverage.
Car insurance: Most every state will require vehicle insurance by law and if you don’t have it there will likely be a penalty should you get in an accident or pulled over at any point. Car insurance is a no-brainer as it provides liability, collision, and comprehensive coverage. This way if you get into an accident or need a repair, you can avoid a lawsuit and afford to fix whatever is needed.
Business insurance: This set of protection will be different based on your style of business. For example, if you have an office with employees, you will need business liability insurance, property coverage, umbrella insurance, workers’ compensation, and more. If you work for yourself via the comfort of your home and require no other employees, there might be less of a need to maintain all these coverages. It’s best to meet with an insurance professional who can outline each of these business insurance options to protect your business and employees if applicable.
3. Challenge yourself within reason
You likely started your own business by yourself or with a business partner because you wanted to challenge yourself and make a living based on your passions. In order to continue to set yourself up for success and keep your ideas new and fresh, it’s important to continue to challenge yourself. There is always room for improvement, especially as an entrepreneur. Whether that means getting more organized financially, becoming a better problem solver, or being more productive with your time. Setting small, attainable goals is a great way to grow and challenge yourself within reason. This way, you force yourself to be motivated and move your business forward without feeling like you are giving up something in the process.
4. Take calculated risks
There are many reasons why entrepreneurs should operate outside of their comfort zones to learn, grow, and shift. As we know staying the same is comfortable and easy to maintain during times of stress or uncertainty. When there are reasonable opportunities, entrepreneurs must take some calculated risks to scale their business. You need to plan for certain risks that could impact your business, and the first step is becoming aware. Market risk, credibility risk, technology risk, financial and competitive risks are all associated with entrepreneurship.
There are many reasons why entrepreneurs should take risks in their business and studies prove this can be rewarding. A major reason being the more risk you take, the more opportunity there is to create something new and better meaning you can give yourself a more competitive edge within the market. As a business leader, you must become comfortable with the idea that risk is the cost associated with innovation. In addition, being well-informed and taking calculated risks is a key component to a growing business structure.
5. Have a backup plan
As an entrepreneur, you can expect to face some ups and downs when it comes to your profitability and success. As you approach business pivots and growth it’s a good idea to always have a backup plan. Typically, this means having some extra financial cushion that might help you through a time where profits or production are lower. In addition, you might want to map out some alternative ways to make money during a business shift so that you are not suffering and still able to keep your customers engaged and satisfied. There is a happy medium between going with the flow and allowing your business to grow naturally and having strategic goals that will push things forward.
As an entrepreneur your work is never done and it’s easy to get lost in all that you have yet to accomplish. Although the daily grind can be all-consuming, it’s important to focus on setting yourself up for future success and financially planning for the future. With a solid foundation, financial stability, and opportunities to grow, you have a much better chance of reaching your goals as an entrepreneur without giving up your peace of mind.
