The COVID-19 pandemic has made it clearer than ever — healthy small businesses make for a healthy economy.
As we’ve collectively faced the challenges presented by COVID-19 together, small business owners and entrepreneurs have demonstrated their strength, resiliency, and community leadership. That’s why, as we celebrate Small Business Week this year, Westoba Credit Union is making sure we give back by providing help and advice for small business owners and entrepreneurs.
If you’re interested in starting your own business, the process may feel overwhelming at first. After developing your business idea, there’s a lot to unpack between finding the best banking solution for small business and figuring out payroll, finances, etc.
“By setting up accounts designed for businesses, you will simplify your finances, both personal and business.”
One of the simplest ways to streamline your finances is to establish separate bank accounts for your business — this way you aren’t blurring the lines between your personal and business finances. At Westoba, we offer business chequing and saving accounts with these very reasons in mind.
By setting up accounts designed for businesses, you will simplify your finances, both personal and business. Most importantly, it will allow you to better understand the cash flow of your company. Successful businesses need healthy cash flow to pay for the things that keep the business running. These include things like employee wages, operating expenses etc. At the end of the day, it’s critical to ensure that there is more money coming in than there is going out.
If you process all of your business’s income and expenses through separate bank accounts, you’ll have an easier time understanding your business’s fiscal health. A financial plan can help greatly and is central to making sure your business will run smoothly, especially in the context of the public health pandemic we currently find ourselves in. By utilizing a small business financial plan while also using separate bank accounts, it will make it easier to:
1. Create a Budget
This is an estimate of the revenues you expect to make and expenses you expect to incur over a certain period, normally a year. This budget will help you make important decisions like whether to hire more employees, purchase equipment, cut expenses or improve efficiencies in other ways.
2. Balance Your Books
This is where you take a close look at your bank accounts and credit cards to add up the debits and credits of an account, usually either monthly, quarterly, or yearly. When you tally up the accounts and credits, the totals should match, making your books balanced. Ensuring your books remain balanced can help you months into the future and alert you to any problems or gaps in your finances.
3. Manage Your Accounting
People often confuse accounting with bookkeeping. Accounting involves the reviewing, analyzing and interpreting your business’s books to provide the financial status of your businesses. If you have hired an accountant, they will often offer advice for your business based on the information you have provided them.
“A financial plan is essentially a guide or forecast. 2020 has forced businesses to re-evaluate their plans and look at the “what if” scenarios. Not many businesses or individuals could have ever planned for what we have experienced the last six or more months, but it will definitely be a priority moving forward,” says Rhonda Oakden, Manager of Westoba Financial Solutions Ltd.
Just like budgeting and planning is important in your personal life — it’s important for your business too. Small business financial planning allows you to set long and short-term business goals, which is a crucial step in mapping out the business’s financial future.
When a business has a financial plan, it’s easier to make financial decisions, stay on track to meet your goals, and become a profitable small business. When they don’t, a business can run into serious trouble including the risk of overspending, the inability to balance books and an overall mess for the accountant.
In business, your goals, priorities and the market change all the time. For this reason, your financial plan should be a living document. The best practice is to revisit it every so often to make sure the data is still relevant.
If you’re looking for where to start, our team at Westoba Credit Union is happy to assist you with a plan — we have the best banking for small business.
The first step is starting the conversation with us, so our team gets a better understanding of your situation. We then collaborate on a plan that best suits your situation – taking into consideration tax planning, cash flow needs, asset management and risk management. Then, we’ll make recommendations based on our analysis.