Achieving Financial Fitness as a Small Business Owner
Date: October 17, 2023
Running a small business is challenging. You must juggle multiple roles, deal with uncertainty, and face financial challenges every day. You are the unsung hero of entrepreneurship, creating opportunities, driving economic growth, and shaping your community.
But you don’t have to do it alone. There is a way to get valuable support for both your personal and business finances: credit unions.
- Credit unions are not-for-profit financial cooperatives that offer:
- Lower fees and interest rates than banks
- Higher returns on savings and investments
- More personalized service and advice
- More flexibility and options for loans and credit
- A sense of belonging and ownership
Read on to discover how credit unions like Westoba can help you manage your business finances effectively.
Small Business Ownership: A Knife’s Edge
Running a small business is akin to walking a financial tightrope. The success or failure of the business often hinges on a delicate balance between income and expenses, efficient cash flow management, and wise investment decisions. However, managing personal finances alongside business finances can complicate matters.
For many small business owners, the line between personal and business finances can blur. Business revenue may be used to cover personal expenses or personal savings may be depleted to support the business. Such financial mingling can lead to instability and stress. The question is, how can small business owners maintain their financial fitness while nurturing their entrepreneurial goals?
Westoba’s Business Banking: Your Financial Partner
Credit unions are not just financial institutions; they are your financial partners, especially when you’re navigating the realm of small business ownership. As not-for-profit organizations, credit unions prioritize your financial well-being above all else. They offer a range of services and resources tailored to meet the unique needs of small business owners.
Here are some tips and strategies we’ve put together to help you manage personal and business finances effectively with the support of a credit union:
Separate Business and Personal Accounts
We recommend you start with setting clear boundaries. Open separate chequing and savings accounts for your business and personal finances. Your credit union can assist you in setting up these accounts efficiently, often with lower fees than traditional banks.
Develop a Comprehensive Business Plan
A well-crafted business plan serves as your financial roadmap. Work closely with your advisor to create a plan encompassing your business goals, revenue projections, and expenses, amongst others. They can also help you explore financing options if needed.
Don’t Be Afraid to Create a Budget
Budgeting is a fundamental financial skill. Collaborate with your credit union to construct a business budget that ensures you allocate resources wisely and avoid unnecessary expenses.
Susan Alders, Westoba Senior Relationship Manager, says, “Some new small business owners run their businesses in a relaxed way and may not see the need to budget. However, if you are planning for your business' future, you will need to fund your plans. Budgeting is the most effective way to control your cash flow, allowing you to invest in new opportunities at the appropriate time.
Establish an Emergency Fund
Just as individuals should maintain personal emergency funds, businesses benefit from having them too. Credit unions can help you set up a separate business savings account to save for unexpected expenses or economic downturns.
Seek Out Financial Knowledge
Credit unions are dedicated to promoting financial literacy. Take advantage of their workshops, seminars, and online resources designed to enhance your understanding of personal and business finance. Visit Westoba.com regularly for opportunities to attend workshops on topics such as Farm Succession, Economic Overviews, Estate Planning and more.
As Jennifer Dixson Hoff of Entrepreneur Magazine states about small business ownership and continuous learning, “Continuous professional learning is key to staying competitive today. Companies need new skills, and employees want to learn them. With the digital transformation of education and its delivery in recent years, you have more options than ever before when it comes to offering your employees accessible, valuable upskilling opportunities.”
Explore Business Loans and Lines of Credit
When your business requires financial support, credit unions can provide business loans, mortgages, letters of credit, equipment financing, leasing options, lines of credit and credit cards at competitive rates. We’re all willing to work with you to identify the best financing options for your unique circumstances.
Automate Your Finances
To streamline financial management, leverage the automation services offered by credit unions. Automate bill payments, savings transfers, and even payroll to reduce administrative burdens.
Monitor Cash Flow
Regularly review your business cash flow with your credit union advisor. They can help you identify potential issues and offer solutions to maintain a healthy financial flow.
A study by Intuit, a financial technology platform provider, estimates that one-third of small businesses cannot make their interest payments due to cash flow problems. The lack of cash on hand also limits the capital expenditure plans that firms can pursue to sustain future growth and create new products.
Protect Your Assets
Credit unions offer insurance products to safeguard your business assets, including property, equipment, and inventory. Your credit union can discuss your insurance needs to ensure what customized coverage suits your situation.
Plan for Retirement
Feel confident in both building your business and personal retirement plan. Westoba’s professional advice team can help develop in-depth retirement plans, review tax, estate and wealth protection plans, so that you can focus on your business.
Diversify Your Investments
Consider investment options beyond your business. Credit unions can provide insights into diversifying your portfolio to mitigate risk and maximize returns.
Regularly Review and Adjust
Financial Fitness is an ongoing journey in both personal and business circumstances. We recommend scheduling regular check-ins with your business advisor to review your financial strategies, make necessary adjustments, and plan for future growth.
Small business ownership is a difficult yet rewarding pursuit. Navigating the complexities of personal and business finance can be overwhelming without the right support. Credit unions are uniquely positioned to be your financial partners on this journey. With their dedication to your financial wellness, institutions like Westoba can offer a range of services and resources that can help you manage both your personal and business finances effectively. From setting up separate accounts to providing financing solutions, financial education, and insurance options, we’re here to assist.
Remember, success in business is not just about the bottom line; it’s also about achieving financial fitness and peace of mind. Take the first step toward your Financial Fitness by reaching out to our Business Banking team today. Together, you can create a brighter, more financially secure future for your small business and you. Call 1-877-WESTOBA (937-8622) and ask to speak with one of our business experts.
