The Entrepreneur’s financial checklist

In my experience, the typical ‘financial advisor’ just doesn’t understand entrepreneurs or business owners. They’re used to the archetypal employee structure where there is a guaranteed income every fortnight and a predictable projection.

In honour of all the entrepreneurs out there living out their dreams to own and operate successful, profitable and fun businesses, we thought we would take a few moments to write up key questions you need to be asking yourself along the way.

• Is your business structure protecting your liability and taxes?

A sole trader or a Pty Ltd, you need to ensure that your personal wealth is not at risk with your business ventures.

• Are you using the proper tools and techniques to effectively manage the finances of your company?

A good accounting system, tracking your spending and a good old fashioned spreadsheet can make the difference between a sink or swim.

• Are all financial tasks accomplished on time and with great accuracy?

If you are no good at managing your book keeping or accounts, that’s ok. Not everyone is. My advice – outsource immediately. A good entrepreneur is one that is ahead of their own game.

• Are you fully aware of your year-end tax liability?

Ah! The old “I didn’t see that one coming” has hurt many small business owners who find themselves paying double-tax. Again, if you are not good at this stuff, outsourcing the planning can save you a fortune in the long run.

• Have you increased your compensation lately as an owner?

Paying yourself is important. But paying yourself extra when it cuts into things like tax and retirement planning isn’t smart. Make sure you can really afford it before you give yourself a pay rise.

• Have you reduced your debt – no debt is preferred?

Debt management or lack thereof can seriously cripple a business. How are you planning to get out of debt and thrive as an entrepreneur?

• Have you eliminated unnecessary operational expenses?

Seriously, do you really need all of those subscriptions or are they just nice to have? Think about it this way – an Adobe membership might cost you $100 per month and you might use it every second month. For $150 you can outsource the work and pocket the spare $50. List everything and question their worth.

• Have you increased your rainy-day savings? Perhaps greater than three months’ operating expenses?

The war-chest. For when the down-turn happens. For when the boat is leaking. I think you know what I mean here.

• Do you enjoy a healthy work/life balance?

All work and no play isn’t great for a number of reasons, most importantly your health and long term passion for your business. Planning for holidays and breaks is just as important as planning your work day.

We know that all entrepreneurs are people who love to win. Having your financial house in order is THE critical element to long term success. You can have great people, amazing services and products and out of this world customer service, but if you are not keeping an eye on how well you are managing finances it will all be over quickly.

Good luck out there and reach out if you need a trainer to get you in financially fit shape.

7Wealth Pty Ltd ABN 44 609 210 246, is an Authorised Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706
This blog contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/ or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.