Whether you have owned your small business for many years or are an entrepreneur who has just gotten started in the business world, you know today's business environment is more competitive than at any point in history. Because of this, it is vital that you make ongoing financial education for yourself a top priority. This can include reading books, taking a class or two, and of course relying on the advice of a CPA you know and trust. As to why it is so important that you learn as much as you can about the financial side of business, here are some key reasons to keep in mind.
Make the Best Choices for Your Business
The most important reason why you need to make ongoing financial education part of your life as a small business owner is that doing so will allow you to make the best choices for your business now and in the years ahead. Whether it's trying to decide about hiring more employees, buying new pieces of equipment, or which type of advertising campaign you should pursue, knowing how each of these will impact your bottom line can be the difference between your business making money or losing money.
Understanding Your Taxes
As you keep yourself up-to-date on all things financial for your business, this will help you gain a much better understanding of the taxes you as a business owner deal with on a regular basis. However, don't assume you need to become a tax expert. After all, that's why you have a CPA with whom you can consult and ask advice when needed. Yet by staying abreast of the latest changes and developments regarding today's economy, you can learn how income taxes, self-employment taxes, payroll taxes, sales taxes, and others may impact your business. When you combine self-knowledge with the years of experience and training possessed by your CPA, you can often learn how to save money on your taxes, which is always something you should strive for as a business owner.
Creating and Modifying Your Business Plan
When you continually educate yourself about finances as a small business owner, this helps you have the knowledge needed to create and modify your business plan. Since change is inevitable within today's business world, knowing how to make short and long-term plans for your business can have a huge impact on whether or not your business will become profitable and sustainable. If you are a new small business owner, understanding more about finances can make it more likely you will create a business plan that will be realistic and manageable.
Helps You Feel Empowered
Remember, knowledge is power. Thus, as you educate yourself more and more on business finances, this helps you feel empowered in terms of understanding your company's finances. When you meet with your CPA, you'll quickly see how much more comfortable you are when discussing such things as cash flow, taxes, profit and loss statements, and other key components of business finance. The more educated you are about business finance, the easier it will be for you to ask key questions when meeting with your CPA and to have a better understanding of what you are being told.
Helps You Learn How to Use Debt
One of the biggest mistakes many beginning entrepreneurs make is assuming that debt is a four-letter word they should try to avoid as much as possible. While that is true to some extent, it is also important for you to remember that when used properly, debt can actually help you grow your business. Because of this, you should educate yourself on how to use your newfound knowledge to consolidate high-interest debts, develop a plan to pay off debt in a timely manner, and work with your CPA to understand how leveraging debt to your advantage can give your business a competitive advantage.
Makes You a Better Negotiator
As you become better educated regarding business finance, this can help you become a much better negotiator when meeting with your banker and others from whom you are trying to secure loans and other financing for your business. For example, as you educate yourself about the financial aspects of today's business world, you can learn more about the importance of credit scores in helping you get approved for loans. Once you have a better understanding of both personal and business credit scores, this will let you negotiate higher loan amounts and lower interest rates, both of which are important for the success of your business.
Become a Better Budgeter
Ongoing financial education as a small business owner will over time make you much better at not only creating budgets for your business, but also help you stick to the budgets you create. Of all the skills you will need to be successful as a business owner, budgeting is arguably the most important. By learning everything you can about how to budget for your business, you can track your company's expenses, see what areas are taking most of your money, and learn how you can cut various expenses without sacrificing your company's quality and profits.
Learn About Technology
When you as a small business owner prioritize financial education, you can then learn about how various types of technology may or may not be beneficial to your business. For example, you may come to realize that a new type of accounting software can help streamline some of your company's operations, while it may also help you decide that a certain piece of equipment you were thinking about buying won't maximize your profits as much as you originally thought.
Small business owners like yourself need every advantage they can get, especially if they want to stay ahead of the competition. Once you begin to combine your own ongoing financial education with regular consultations with your CPA, you can make decisions about your business that are well-informed and will help you achieve your goals. As a result, you lay the groundwork for long-range success and profitability.