{"id":4799,"date":"2021-02-05T09:30:00","date_gmt":"2021-02-05T09:30:00","guid":{"rendered":"https:\/\/blog.kylas.io\/?p=4799"},"modified":"2021-12-16T12:05:58","modified_gmt":"2021-12-16T06:35:58","slug":"financial-planning-small-business-owners","status":"publish","type":"post","link":"https:\/\/kylas.io\/en\/sales-effectiveness\/financial-planning-small-business-owners","title":{"rendered":"How Small Business Owners Can Create an Effective Financial Plan"},"content":{"rendered":"\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Many of us have dreamt of starting our own business and making it a household name. We look up to successful entrepreneurs like Steve Jobs, Jeff Bezos, Jack Ma, and Elon Musk who have made it big. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Quite often, though, we forget that they started as small business owners before becoming industry disruptors. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Many small business owners encounter challenges such as lack of access to consultants like financial advisors, limited funding opportunities and lack of trained resources; these factors can often become an impediment to their growth plan. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Small &amp; growing businesses try and create financial plans to counter these challenges and to be financially prepared for volatile and unpredictable market conditions.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">According to industry statistics, <a href=\"https:\/\/www.amanet.org\/articles\/message-to-small-business-owners-don-t-neglect-personal-finances\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span style=\"text-decoration: underline;\">91 out of 100<\/span><\/a> small businesses in the US have failed within a decade of initiating operations. It is unfortunate that most small business owners forge ahead without effective financial planning and find themselves failing in the long run.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">This article aims to help small business owners understand the big \u2018financial\u2019 picture and embark on creating a comprehensive financial plan to survive and thrive; even in a competitive marketplace.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-ht-block-toc  is-style-outline htoc htoc--position-wide toc-list-style-plain\" data-htoc-state=\"expanded\"><span class=\"htoc__title\"><span class=\"ht_toc_title\">How Small Business Owners Can Create an Effective Financial Plan<\/span><span class=\"htoc__toggle\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"16\" height=\"16\"><g fill=\"#444\"><path d=\"M15 7H1c-.6 0-1 .4-1 1s.4 1 1 1h14c.6 0 1-.4 1-1s-.4-1-1-1z\"><\/path><path d=\"M15 1H1c-.6 0-1 .4-1 1s.4 1 1 1h14c.6 0 1-.4 1-1s-.4-1-1-1zM15 13H1c-.6 0-1 .4-1 1s.4 1 1 1h14c.6 0 1-.4 1-1s-.4-1-1-1z\"><\/path><\/g><\/svg><\/span><\/span><div class=\"htoc__itemswrap\"><ul class=\"ht_toc_list\"><li class=\"\"><a href=\"#htoc-what-exactly-is-financial-planning\">What Exactly is Financial Planning?<\/a><\/li><li class=\"\"><a href=\"#htoc-the-critical-components-of-a-financial-plan\">The Critical Components of a Financial Plan<\/a><ul class=\"ht_toc_child_list\"><li class=\"\"><a href=\"#htoc-financing-the-business\">1. Financing the Business<\/a><ul class=\"ht_toc_child_list\"><li class=\"\"><a href=\"#htoc-debt-financing\">a. Debt Financing<\/a><\/li><li class=\"\"><a href=\"#htoc-equity-financing\">b. Equity Financing<\/a><\/li><li class=\"\"><a href=\"#htoc-working-capital\">c. Working Capital<\/a><\/li><\/ul><\/li><li class=\"\"><a href=\"#htoc-cashflow-planning\">2. Cashflow Planning<\/a><\/li><li class=\"\"><a href=\"#htoc-p-amp-l-forecasting-amp-periodic-evaluations\">3. P&amp;L Forecasting &amp; Periodic Evaluations<\/a><\/li><li class=\"\"><a href=\"#htoc-tax-planning\">4. Tax Planning<\/a><\/li><li class=\"\"><a href=\"#htoc-risk-management-amp-insurance-planning\">5. Risk Management &amp; Insurance Planning<\/a><\/li><li class=\"\"><a href=\"#htoc-asset-planning\">6. Asset Planning<\/a><\/li><\/ul><\/li><li class=\"\"><a href=\"#htoc-be-a-a-growing-business-that-defies-the-odds\">Be a Growing Business That Defies the Odds<\/a><\/li><\/ul><\/div><\/div>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">So, let\u2019s start with the basics-<\/p>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"htoc-what-exactly-is-financial-planning\" style=\"line-height:1.6\">What Exactly is Financial Planning?<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Financial planning is the prioritization of your business\u2019 finances as well as your personal finances to help your business grow the right way, be as prepared as possible to face risks, and ensure that you manage cash flows effectively.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">In effect, Financial Planning can play a key role in helping small businesses secure a spot among the top disrupters in your industry.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Effective Financial Planning helps you with these aspects-<\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/How-Small-Business-Owners-Can-Create-an-Effective-Financial-Plan-Inblog-1-1024x860-1.png\" alt=\"Financial planning icon\" class=\"wp-image-4890\" width=\"252\" height=\"212\"\/><\/figure><\/div>\n\n\n\n<ul style=\"font-size:20px\"><li>Assessing your financial situation- income, liabilities, and assets.<\/li><li>Understanding your investments and tax situation.<\/li><li>Prioritizing your goals and setting realistic timeframes.<\/li><li>Implementing strategies and financial tools to leverage strengths and addressing weaknesses effectively.<\/li><li>Restructuring your business plans, when required.<\/li><\/ul>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\"><em>So, how does a small business owner start a financial planning exercise?<\/em><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">As an owner of a startup or an existing business, you should understand the critical components that form a part of any comprehensive financial plan before putting pen to paper.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<div style=\"height:40px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"htoc-the-critical-components-of-a-financial-plan\">The Critical Components of a Financial Plan<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-financing-the-business\" style=\"font-size:22px;line-height:1.6\">1. Financing the Business<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Business financing (a.k.a. capital) is what a business owner uses to start a business or infuses into an existing business when the need arises.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">It can further be divided into three categories\u2013<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"has-vivid-cyan-blue-color has-text-color has-medium-font-size wp-block-heading\" id=\"htoc-debt-financing\" style=\"line-height:1.6\">a. Debt Financing<\/h4>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/How-Small-Business-Owners-Can-Create-an-Effective-Financial-Plan-Inblog-2-1024x860-1.png\" alt=\"Debt financing icon\" class=\"wp-image-4891\" width=\"252\" height=\"211\"\/><\/figure><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Nothing says \u2018skin in the game\u2019 like Debt financing. Debt financing is where business owners invest in their businesses by borrowings from banks, infusing savings, selling assets, and such. When planning for debt financing, figure out (approx.) how long it will take your business to hit break-even.<\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"has-vivid-cyan-blue-color has-text-color has-medium-font-size wp-block-heading\" id=\"htoc-equity-financing\" style=\"line-height:1.6\">b. Equity Financing<\/h4>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">After debt funding, you can look at equity financing. Equity is the amount infused into the business by investors and business partners. Equity comes into play after a growing business shows sustained growth and can approach venture capitalists to invest in the business.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Usually, equity funds stay in the business permanently.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h4 class=\"has-vivid-cyan-blue-color has-text-color has-medium-font-size wp-block-heading\" id=\"htoc-working-capital\" style=\"line-height:1.6\">c. Working Capital<\/h4>\n\n\n\n<div style=\"height:20px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/How-Small-Business-Owners-Can-Create-an-Effective-Financial-Plan-Inblog-3-1024x860-1.png\" alt=\"Working capital icon\" class=\"wp-image-4892\" width=\"244\" height=\"205\"\/><\/figure><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Regardless of the industry or niche, you will need working capital for everyday operations of your business such as everyday overheads and maintenance. Working capital can also include asset financing such as buying equipment and motor vehicles for business use.<\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator is-style-wide\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\"><em><strong>Kylas Pro Tips<\/strong><\/em><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ol class=\"is-style-checkbox\" style=\"font-size:20px\"><li>Always start financial management with a budget.<\/li><li>Want to know \u2018How to Build Business Resilience in Times of Crisis?\u2019 Check out our <a href=\"https:\/\/blog.kylas.io\/leadership-growth\/business-resilience-crisis\/\" target=\"_blank\" rel=\"noreferrer noopener\">blog<\/a>.<\/li><\/ol>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator is-style-wide\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-cashflow-planning\" style=\"font-size:22px;line-height:1.6\">2. Cashflow Planning<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Cash flows can be defined in two ways:<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ul style=\"font-size:20px\"><li>Cash inflow<\/li><li>Cash outflow<\/li><\/ul>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">In other words, cash flow planning is an estimation of the amount of money that flows into the business as income and flows out as expense over a specific time period. <\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/How-Small-Business-Owners-Can-Create-an-Effective-Financial-Plan-Inblog-4-1024x860-1.png\" alt=\"Cash flow planning icon\" class=\"wp-image-4893\" width=\"250\" height=\"210\"\/><\/figure><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">To create such estimations, you will need to check if projected cash receipts (cash inflow) can cover projected expenses (cash outflow) like working capital.<\/p>\n\n\n\n<p class=\"has-white-color has-text-color\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Unless inflows can cover the outflows properly and then some, your business will be deemed unprofitable. Cash flow planning is a great starting point to set sales goals and reconsider expenses.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">A cash flow projection however will help you arrive at projected timelines, analyze your investment requirements, and plan for the future.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator is-style-wide\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\"><em><strong>Kylas Pro Tips<\/strong><\/em><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ol class=\"is-style-checkbox\" style=\"font-size:20px\"><li>If you are a startup, don&#8217;t expect to reach break-even right away. Business investments are a long-term game and require patience to realize goals.<\/li><li>You will need a bookkeeping software to help keep track of all cash inflows and outflows by way of periodic Profit &amp; Loss (P&amp;L) accounts.<\/li><\/ol>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator is-style-wide\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-p-amp-l-forecasting-amp-periodic-evaluations\" style=\"font-size:22px;line-height:1.6\">3. P&amp;L Forecasting &amp; Periodic Evaluations<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Your financial plan provides you with a snapshot of your business. Remember, your plans need to change as per situations, and it isn\u2019t any different in financial planning. <\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/How-Small-Business-Owners-Can-Create-an-Effective-Financial-Plan-Inblog-5-1024x860-1.png\" alt=\"Forecasting icon\" class=\"wp-image-4894\" width=\"253\" height=\"213\"\/><\/figure><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Update your financial plans periodically to understand how your business has performed and what you can expect in the future.<\/p>\n\n\n\n<p class=\"has-white-color has-text-color\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">A common saying, <em>\u2018the future can be planned only to a certain degree\u2019<\/em>.<\/p>\n\n\n\n<div style=\"height:1px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">But plan, you must!<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">On the topic of planning for the future, here are a few questions on forecasting that you can ask to arrive at the best answers.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ul style=\"font-size:20px\"><li><em>Business Finance Forecast 1-<\/em> What will my expenses be?<\/li><li><em>Business Finance Forecast 2<\/em>&#8211; How much can I expect as revenue? (with credit)<\/li><li><em>Business Finance Forecast 3<\/em>&#8211; How much profit can I make?<\/li><li><em>Cash Flow Forecast 1<\/em>&#8211; How much cash inflow can I expect? (without credit)<\/li><li><em>Cash Flow Forecast 2<\/em>&#8211; What can I expect my working capital to be?<\/li><li><em>Balance Sheet Forecast<\/em>&#8211; What will my Profit &amp; Loss situation look like?<\/li><li><em>Liquidity Forecast<\/em>&#8211; What is my business liquidity situation? What are my top sources to maintain liquidity?<\/li><\/ul>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-tax-planning\" style=\"font-size:22px;line-height:1.6\">4. Tax Planning<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Taxes are an everyday part of life for businesses and individuals. Tax planning is a must to keep the business in the clear by following regulations, and planning for tax-saving. <\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/How-Small-Business-Owners-Can-Create-an-Effective-Financial-Plan-Inblog-6-1024x860-1.png\" alt=\"Tax planning icon\" class=\"wp-image-4895\" width=\"234\" height=\"196\"\/><\/figure><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Also, one must know what type of business they are creating or investing in to expect rebates based on the same.<\/p>\n\n\n\n<p class=\"has-white-color has-text-color\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\"><em>For example<\/em>&#8211; Limited Liability Partnership (LLP) or Limited Liability Company (LLC)<\/p>\n\n\n\n<p class=\"has-white-color has-text-color\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">While tax planning normally requires the help of consultants, many organizations offer online tax services at affordable prices.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator is-style-wide\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\"><strong><em>Kylas Pro Tip<\/em>&#8211;<\/strong> Start the exercise early to ensure that you keep on top of tax dates, rates and procedures.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator is-style-wide\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-risk-management-amp-insurance-planning\" style=\"font-size:22px;line-height:1.6\">5. Risk Management &amp; Insurance Planning<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Unlike large corporations, a small business needs to properly assess and respond to risks, internal as well as external, as there is little leeway for mistakes. While it is impossible to identify all risks, it is possible to stay as prepared as possible to mitigate them.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">What an owner of a growing business needs in a risk assessment plan is-<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ul style=\"font-size:20px\"><li>Identify potential <em>internal <\/em>risks. Ex.- Key resources leaving, paying salaries when the market is down, etc.<\/li><li>Identify potential <em>external <\/em>risks. Ex.- Low demand for your products or services.<\/li><li>For <em>growing businesses<\/em>&#8211; Develop worst-case crisis scenarios based on your past experience.<\/li><li>For <em>startups<\/em>&#8211; Develop worst-case crisis scenarios based on industry case-studies.<\/li><li>Identify <em>warning signs<\/em>. Ex.- Customer behavior, etc.<\/li><\/ul>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/How-Small-Business-Owners-Can-Create-an-Effective-Financial-Plan-Inblog-7-1024x860-1.png\" alt=\"Risk management icon\" class=\"wp-image-4896\" width=\"253\" height=\"213\"\/><\/figure><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Once done with risk management, go on to insure your business. Many startups and growing businesses don\u2019t buy insurance for reasons like &#8220;My company is too small\u201d or \u201cInsurance costs a fair bit. It would be better if I invest it back into the business.\u201d<\/p>\n\n\n\n<p class=\"has-white-color has-text-color\">,<\/p>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">The thing is, you never know what the economy will throw at you and which part of your business needs saving. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">This will require your business to stay protected with these common insurance policies like-<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ul style=\"font-size:20px\"><li>Liability insurance<\/li><li>Asset insurance<\/li><li>Insurance for extended overheads<\/li><li>Worker compensation and health insurance<\/li><\/ul>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator is-style-wide\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\"><em><strong>Kylas Pro Tips<\/strong><\/em><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ol class=\"is-style-checkbox\" style=\"font-size:20px\"><li>Rule of thumb: Always set 10% aside to cover unexpected requirements.&nbsp;&nbsp;<\/li><li>Try to identify risks as well as opportunities (ideation, innovation, and commercialization).&nbsp;&nbsp;<\/li><li>While you probably will not need any of them, it is better to prioritize the ones you need for sure like Workers\u2019 compensation and health insurance.&nbsp;<\/li><\/ol>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator is-style-wide\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"htoc-asset-planning\" style=\"font-size:22px;line-height:1.6\">6. Asset Planning<\/h3>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Unless you are a startup, you will have at least a few valuable assets linked to your growing business. Could be anything, from as small an asset like a printer or furniture to something a bit larger like a tractor, or even larger assets like property and land.<\/p>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"alignright size-large is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/04\/How-Small-Business-Owners-Can-Create-an-Effective-Financial-Plan-Inblog-8-1024x860-1.png\" alt=\"Asset plan icon\" class=\"wp-image-4897\" width=\"240\" height=\"202\"\/><\/figure><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">There will come a time when you might want to sell them advantageously, keep aside for the next generation to take over, or even pull the proverbial shutter down and retire.<\/p>\n\n\n\n<p class=\"has-white-color has-text-color\">.<\/p>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Regardless, allocating and setting up an asset plan to reduce taxes, plan for liquidity, and a rainy day as well is a necessity.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator is-style-wide\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\"><em><strong>Kylas Pro Tips<\/strong><\/em><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ol class=\"is-style-checkbox\" style=\"font-size:20px\"><li>Pay close attention as you plan this and ensure that you keep revisiting the plan every quarter to keep it updated.<\/li><li>You will need a lawyer to make your asset plans legal with documentation like a will, medical directive, creation of a trust, and a power of attorney.<\/li><\/ol>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\"><span style=\"text-decoration: underline;\">Ratios (for Reference)<\/span><\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">It is very easy to go wrong if you start on it just for the sake of it. A financial plan will provide you and business investors with your business performance and liability.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Add some commonly used ratios for quick references like working capital ratio, liquidity ratio, debt ratio, and margin percentage.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator is-style-wide\"\/>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"htoc-be-a-a-growing-business-that-defies-the-odds\">Be a Growing Business That Defies the Odds<\/h2>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">All this information can be a bit much. Still, it is best to stay prepared in every way possible.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">If you are a small business owner or planning on launching a startup, download our financial planning template and get going.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-fill\"><a class=\"wp-block-button__link has-vivid-cyan-blue-background-color has-background\" href=\"https:\/\/kylas.io\/wp-content\/uploads\/2021\/03\/Small_Business_Financial_Plan_Template-1-3.xlsx\" style=\"border-radius:15px\" target=\"_blank\" rel=\"noreferrer noopener\">Download Template<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">While it is super easy to fall down the rabbit hole and become a part of the crowd, small businesses like you can secure your spot in the top bracket by prioritizing business finance. <\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Moreover, you can also improve your chances of success with a <a href=\"https:\/\/www.kylas.io\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span style=\"text-decoration: underline;\">FREE CRM software<\/span><\/a> like Kylas, designed to help startups and growing businesses manage sales better.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p class=\"has-medium-font-size\" style=\"line-height:1.6\">Ready to try out Kylas CRM?<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button is-style-fill\"><a class=\"wp-block-button__link has-vivid-cyan-blue-background-color has-background\" href=\"https:\/\/www.kylas.io\/signup\" style=\"border-radius:15px\" target=\"_blank\" rel=\"noreferrer noopener\">GET FREE CRM<\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many of us have dreamt of starting our own business and making it a household name. We look up to successful entrepreneurs like Steve Jobs, Jeff Bezos, Jack Ma, and Elon Musk who have made it big. Quite often, though, we forget that they started as small business owners before becoming industry disruptors. Many small &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/kylas.io\/en\/sales-effectiveness\/financial-planning-small-business-owners\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;How Small Business Owners Can Create an Effective Financial Plan&#8221;<\/span><\/a><\/p>\n","protected":false},"author":23,"featured_media":4898,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"ub_ctt_via":"","footnotes":""},"categories":[12],"tags":[53,57],"acf":[],"featured_image_src":null,"author_info":{"display_name":"Shagun Sharma","author_link":"https:\/\/kylas.io\/en\/author\/shagun"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Small Business Owners Can Create an Effective Financial Plan<\/title>\n<meta name=\"description\" content=\"This article aims to help small business owners understand the big \u2018financial\u2019 picture and embark on creating a comprehensive financial plan.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/kylas.io\/en\/sales-effectiveness\/financial-planning-small-business-owners\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Small Business Owners Can Create an Effective Financial Plan\" \/>\n<meta property=\"og:description\" content=\"This article aims to help small business owners understand the big \u2018financial\u2019 picture and embark on creating a comprehensive financial plan.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/kylas.io\/en\/sales-effectiveness\/financial-planning-small-business-owners\" \/>\n<meta property=\"og:site_name\" content=\"Kylas Growth Engine | Sales CRM Software for Small businesses\" 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