Being a small business owner can be rewarding but also may bring a lot of stress. You may be experiencing the pressures of trying to grow your company while providing a solid future for your employees. On top of all that, you will also need to focus on building financial independence for yourself and for your business. There are many paths to financial independence; below are a few directions to get you started.
Optimize Your Current Assets
One of the first steps toward financial independence is optimizing your current assets. This could take the form of increasing the profitability of your business by increasing your marketing, reducing your current costs and expenses, finding ways to reduce your tax burden, or continuing your education. You will need to take an inventory of your current assets and expenses and develop a strategic plan to optimize these factors and help your company reach its potential.1
Pay Down Debt
There are two primary types of debt: productive and reductive. Productive debt is debt that helps nurture your financial growth and puts you on the path toward financial freedom. Reductive debt, on the other hand, is debt spent on items that will depreciate in value and not provide boosts to revenue or income. It is similar to credit card debt, and eliminating or at least reducing it can put you and your business on a path toward overall independence. Assess all of your debt and develop a plan to pay it down aggressively until it is eliminated.1
Beef Up Your Savings
Savings are vital for yourself and your business since they will help you build wealth and financially prepare you for unexpected expenses. One way to increase savings as a business owner is to take advantage of your company’s savings plans. This can include IRAs, 401ks, and health savings accounts. You may also want to look at the various investment options for your personal and company funds that can create long-term returns.2
Give Your Insurance the Once Over
While growing company assets is crucial to achieving solid financing, so is insuring them. Without proper insurance, you risk losing what you’ve gained through your hard work. Review your insurance policies to make sure that you not only have all of your assets covered but that you have proper coverage limits. Policies you should consider reviewing include life insurance, disability, business, long-term care, health, and property and liability coverage.2
Follow the above tips to put yourself on the path to financial independence. Assistance from a financial professional can assist you in your wealth management efforts and overall financial goals.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) or insurance product(s) may be appropriate for you, consult your financial professional prior to investing or purchasing.
Investing involves risks including possible loss of principal.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
Footnotes
1 “The 4 x 4 Financial Independence Plan for Entrepreneurs,” Entrepreneur.com, https://www.entrepreneur.com/leadership/the-4-x-4-financial-independence-plan-for-entrepreneurs/306064
2 “How Entrepreneurs Can Safeguard Their Financial Futures—And Work Toward Financial Freedom,” Forbes, https://www.forbes.com/sites/forbesbusinesscouncil/2023/02/14/how-entrepreneurs-can-safeguard-their-financial-futures-and-work-toward-financial-freedom/?sh=123c28f17a65
