Where are You on the Path to Financial Freedom?
When you became a business owner, one of your goals was likely financial freedom, but you may now be more immersed in the day-to-day activities of running your business. You are likely focused on sales goals, production timelines or providing great customer service.
All these things are important for the success of your company. It is easy to get caught up in a particular area of the business rather than looking at the big picture, especially when things are going well.
It’s crucial for your success, however, to understand every part of your business. Once you have a better understanding of what’s going on you’re more likely to achieve financial independence and succeed.
There are eight steps to review to determine where you are on your path to financial independence.
Do you have the financial reporting systems and reports you need to really understand the health of your business? Can you identify break-even points and Key Performance Indicators (KPIs)? Do you have a succession plan? You may need to focus on every step in the process, or you may only focus on two or three. Every business lands on a different place on the path, and that’s OK.
Eight Steps on the Path to Financial Independence:
- Explore Business Owners' Goals
- Start with reviewing the goals for your business and identify operational strengths and weaknesses that may impact those goals.
- Effective Financial Reporting
- It’s important to have a tailored accounting procedure, even a customized approach. This requires appropriate software selection and proper management and staff training.
- Evaluate Financial Reporting System
- Will your system grow with your business? If you aren’t getting the customized reporting you need, it may be time to upgrade your financial reporting system.
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- Strategic Tax Planning
- Are you making the most of tax credits, income deferral and deduction acceleration techniques? Establishing regular tax planning reviews will ensure you are utilizing all the options available for your business.
- Value Building
- How valuable is your business in comparison to your competitors? Have you done a cash flow analysis, identified your break-even point and identified your Key Performance Indicators (KPIs)?
- Succession and Exit Planning
- Have you reviewed the market for potential merger and acquisition opportunities? Do you have contingency and succession plans established?
- Estate Planning
- Do you have an estate plan in place? Make sure you are utilizing tax-saving strategies and coordinating your estate and business exit plan.
- Retirement Planning
- What will you need in retirement? Analyzing your retirement plan options, combined with financial planning strategies, will help you meet your retirement goals.
Consider each of these areas. Do you have strategic business goals and a deep understanding of how all these steps fit together? Which areas do you need to focus on first? The path to financial independence is about starting a dialogue.
It’s important to remember that your instinct and grit as a business owner can make you successful, but achieving true financial independence and success is something very few business owners can do on their own. It is learned and it does not happen overnight.
This article can also be viewed on biztimes.com.