6 Financial Tips for Business Owners in 2023
Business owners face an uphill battle. In 2023, business owners continue to fight against rising overhead costs due to inflation, an ongoing labor shortage, and rising interest rates. A 2022 Goldman Sachs survey found 91% of business owners struggled with economic instability and concerns over inflation. While the economy has seen marginal improvements, many economic experts predict at least a “mild recession” in the latter half of 2023.
This makes financial planning for a business start-up or a well-established organization even more critical until the economy stabilizes and recovers. Financial planning allows your business to remain agile and resilient in the face of these challenges. The following tips can allow you to make the most of 2023 and empower you to thrive in any economic climate.
Simple Financial Tips for Business Owners
1) Stick to Your Budget
Start by creating a revenue forecast, which will give you a clear idea of your expected income. Then, make sure your expenses align with this projection.
Granted, you may need to make course corrections as the year progresses. But the closer you adhere to your budget, the more you can have confidence in your ability to keep your company profitable
2) Pay Yourself First
Business owners face increased pressure from suppliers, utility providers, and more. It’s easy to cover these bills and fail to draw a meaningful salary. But don’t neglect your needs — or the needs of your family. Make sure to draw a monthly salary and cover your other bills from the remainder.
3) Open a Business Bank Account
Many start-ups make the mistake of mingling personal and business bank accounts. Not only does this create complexity during tax season, but it can also leave you liable if your business should fail. It's necessary to open a business bank account as soon as possible.
4) Build an Emergency Fund
Life is unpredictable. But if you face unforeseen business expenses, such as equipment breaking down, you’ll need a way to cover these expenses without taking out a loan or neglecting other payments. Aim to build an emergency fund to ensure you can cover an unexpected expense and continue operating.
5) Plan Ahead for Taxes
When you’re a small business owner, you likely have to set aside estimated quarterly tax payments to prepare for tax season. But throughout the year, you can also plan your business deductions strategically to reduce your future tax liability, which can potentially translate into major savings for you and your company.
6) Invest in New Technology
Even if your budget is tight, consider how new technology might be a worthwhile investment. Invoice automation software, for example, can allow you to get paid faster and even improve your cash flow. It can also help you scale your business at a fraction of the overall cost of hiring new staff.
Payment processing software is also available through companies like Simpay and can allow you to quickly and securely process payments to avoid costly errors and a lack of efficiency.
Setting Your Priorities
When it comes to financial literacy, business plans are a powerful way to keep both you and your business on track. Which of these tips are you making for your business in 2023? Adopting a few will give you more control over your finances and avoid succumbing to market fluctuations and the current conditions.
