10 Effective Financial Planning Tips for Small Business Owners

As a small business owner, you’re expected to wear many hats. You’re the CEO, the CFO, and the Chief Marketing Officer all rolled into one. You’re responsible for the day-to-day operations of your business, long-term planning, and strategic decision-making. And while you might be the jack of all trades, there’s a good chance you’re not a master of all.

There are over 30 million small businesses in the US, accounting for 99.9% of all firms in the country. If you’re like most small business owners, you probably didn’t get a lot of professional training in business finance. Don’t worry. Financial planning for small business owners is surprisingly easier than you think.

We’ve laid out 10 effective financial tips for small business owners to help you get started.
What is Financial Planning for Small Businesses?
Financial planning for business owners is the process of creating a roadmap for your business’s financial future. It involves setting financial goals and developing clear strategies to achieve them. Financial planning is essential for businesses of all sizes but vital for small businesses.

Why? Because small businesses have limited resources and unlike larger firms with large cash flows, they must be extra strategic about how they use these resources. Without a financial plan, it’s easy to run into money problems, or worse, make poor investment decisions that may hurt your financial health in the long run.

Why Should a Business Do Financial Planning?

The US Small Business Administration reports that 27% of businesses surveyed by the NSBA were unable to receive the funding they need to grow. One of the reasons echoed for the shortage is the lack of effective financial planning. But that’s not all.

82% of businesses fail due to cash flow problems. Financial planning enables small business owners to swerve away from crippling debt. If you think about it, small businesses face overwhelming challenges from financial risks in debt and inflation to uncertain market conditions. A financial plan can help your business steer clear of avoidable financial risks, optimize resources, and pave the way for a bright financial future.

business planning

On that note, a financial plan is a holistic document that includes your business’s financial goals and a plan for how to achieve them. It includes a review of your company’s current financial situation, such as current cash flows and debt, and a strategy for maximizing your financial growth while minimizing liability.

Financial planning requires discipline, which is why you need to get a financial planner involved. Creating a financial plan is something you can do on your own, but an expert can help you prepare for unpredictable situations, like a drop in demand for your products or a significant increase in expenses that threaten your financial future.

10 Tips for Small Business Financial Planning and Budgeting

The primary reason many small businesses undertake financial planning and budgeting is to cushion against risk and uncertainty. As promised, here are 10 tips for small business financial planning:

1. Create a Budget and Stick to It

A budget is a great way to stay on track with your financial goals. It can help you save more, pay down your debt, and even become better at saving for the future. Even better, you don’t need complicated, expensive software to set it up. Simplified accounting and budgeting solutions such as Mint and QuickBooks can help you figure out where every last cent goes.

What’s more, a budget also reveals which expenses you can cut back on, and how much money you need to pump into your insurance to shield your business from risk. Eventually, unforeseen risks fall on the business owner’s shoulders. So, strive to create separate budgets for business and personal needs.

create your business budget

2. Track Your Expenses

All your financial planning efforts will narrow down to how well you keep track of your expenses at some point. The key is to keep watch of your spending with a system that works for you. There are several ways to track your expenses, from keeping a detailed manual log to using commercial software and consumer apps. Experiment with a few different methods to find one that suits you best.

Keeping track of personal expenses is surprisingly easy. Remember all the receipts you discard the moment you step outside the store? Keep them for the next month. You can record the purchase information on a spreadsheet or on paper to see how much you spend. See if you can spot any patterns. Maybe you tend to spend way more than you should on new items that don’t add value to your financial future.

The point is, keeping track of every cent enables you to cut down on waste and optimize your resources. Cutting down on unnecessary items and saving as much as possible even if you have unexpected wealth streaming in can help pave the way for a brighter financial future.

By the way, a sudden wealth planner in Portland can help you manage and spend your sudden wealth wisely.

3. Make a Financial Plan

Once you’ve created a budget and set up a way to track your expenses, it’s time to craft a financial plan. What are the most essential components of a financial plan you ask?

  • Short-term and long-term goals
  • Income
  • Expenses
  • Investments
  • Current assets and liabilities

Your financial plan should include how much you need to save each month, how much revenue your business needs to earn annually, and how long it will take you to reach your goals.

make a financial plan

There’s no one-size-fits-all financial plan. Every business and its owner has their own unique needs and challenges. Ensure that your financial plan fits your personal and business needs. Don’t forget to factor in your personal risk tolerance.

While one person’s best investment option may be a diversified portfolio, another may feel more comfortable with a more conservative investment option, such as guaranteed fixed income products.

4. Re-Invest in Business

Don’t pour all your money back into personal needs. For most business owners, these would be retirement savings, insurance (e.g., health, life, etc.), savings for major life events (e.g., college tuition, a new home, vacations), investments (e.g., stocks, mutual funds, real estate, etc.), and debt payment (e.g., student loans, mortgage).

Every certified financial advisor in Portland will tell you that reinvesting a little bit of the revenue is good for your financial future. For instance, why not purchase new equipment? Fresh equipment can help you run your business more efficiently. A good rule of thumb is to put back 20 – 30% of the revenue back into your business.

5. Save for Lean Times

The future is not guaranteed, but the one thing we know for certain is that anything can happen. Something always happens; changing market conditions, changing weather and climate, politics – you name it. It’s a good idea to put money away for a rainy day.

An expert financial advisor for small business owners will recommend saving 20% of your income. This could be as little as $5 a day or $200 a month – whatever works for you. You can put that money into a savings account that pays interest, or a money market account. While at it, cut expenses where you can. It might not seem like much, but every little coin adds up to something more in your savings.

Saving money can be easy if you make it a habit. The sooner you start saving, the more time your money has to grow.

6. Manage Your Debt

If you recall the Asian financial crisis of 1997, hundreds of businesses almost collapsed due to overwhelming debt. If that doesn’t ring a bell, then you might recall the Great Recession of 2008, where hundreds of businesses went under. At that time, many borrowers were unable to pay their loans.

A decade later, debt still remains an inevitable part of the business. In fact, small businesses borrow for several reasons, with the average loan size for small businesses reaching $663,000 across the country. Debt is almost always inevitable in business. It’s an essential source of funding. What you need to worry more about is overwhelming personal debt.

If you’re like many entrepreneurs, you’re probably carrying around student loans, credit card debt, mortgages, and money borrowed from family and friends. Debt can be very hard to pay off and can eat away your profits. Fortunately, there are several ways to manage your debt. Debt consolidation is one way to get started.

Debt consolidation is a process of taking multiple debts and rolling them into one loan to ease the strain of paying off multiple creditors. Ensure that you’re not slipping back into the debt trap by taking on new loans without a strategy to pay them back. If you’re not sure how to determine how much debt you can take on, talk to a financial advisor for small businesses.

7. Plan for Retirement

This is a big one; planning for retirement can seem like a far-off dream if you’re in your 20s or early 30s. The good news is that it’s never too early to start saving for retirement, and there are a few things you can do to put yourself in the best position to have a healthy retirement.

PERS and social security

A retirement plan may include a SEP IRA, one-participant 401(k), or traditional and Roth IRA. Choosing a retirement plan, setting goals, and working with a financial advisor are essential steps toward retirement security.

Planning for retirement also involves planning for succession. You could choose to sell your business and retire, continue to run the business and retire at a certain point in time, or choose to pass on the business to the next generation. As a small business owner, you have the flexibility to choose when and where to retire. You may want to relocate or buy a vacation home in a different location.

Need retirement planning in Portland, Oregon? Learn how Interactive Wealth Advisors can help you build a safe future.

8. Build Good Spending Habits

Spending wisely is the basis of every essential part of every successful financial plan. It’s not just about saving money – it’s also about making smart moves about how you spend it. And the best way to do this is by developing good spending habits.

As you may know, good spending habits don’t happen overnight. They take time and effort, but you must work if you’re serious about improving your financial situation.

9. Manage Your Taxes

Taxes are never fun, but they are even more important to remember when running your own business in order to stay compliant with the IRS and keep your company on the right track.

Tax financial planning doesn’t have to be a nightmare. Stay on top of your taxes by tracking your expenses thoroughly throughout the year, and ensure you’re taking advantage of all available deductions.

10. Seek Professional Help

If you’re having a hard time with business financial planning, you need professional financial advice for small businesses after all. Many financial planners, accountants, and business coaches would be happy to help you plan for your personal and business needs.

Before hiring a Portland investment advisor, accountant, or business coach, ensure they are the right fit for you. Ask them questions about the work they do and how they work with clients. A little research should help reach your ideal professional.


Are you as confident in your ability to manage your money as you are in your ability to manage the company? If financial planning isn’t exactly a passion of yours, that’s okay. It isn’t something that everyone loves, but it is something that everyone needs if they want to succeed with their business.

How Can We Help?

Interactive Wealth Advisors is a fee-only financial planning firm offering wealth management services in Portland. We work with business owners in the tech world offering business owner planning, estate planning, wealth management, retirement, and transition planning services.

At Interactive Wealth Advisors, we uphold our fiduciary duty to our clients; to help you align long and short-term goals with your financial plan and make the most out of your investment opportunities. Book a call with us and let us know how we can help!

Interactive Wealth Advisors is a Registered Investment Advisory firm in the State of Oregon and Washington. The Adviser may not transact business in states where it is not appropriately registered, excluded or exempted from registration. Individualized responses to persons that involve either the effecting of transaction in securities, or the rendering of personalized investment advice for compensation, will not be made without registration or exemption.
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