Personal Investment Tips For Small Business Owners

Personal Investment Tips For Small Business Owners More than 627,000 new businesses are opened yearly in the U.S, according to the estimations by  the Small Business Association. Unfortunately, only half of them make it to the 5 year mark, and only a third to the 10th year. While there are many reasons for this, the biggest one, according to U.S Bank study, is cash flow problems.  Marketing your small business using social media  and print, having an efficient risk management plan, and creating quality products and services are important, but none of it matters if you cannot properly manage your business finances. With that in mind, here are some personal investments tips to consider as a small business owner if you want to keep your SME running. Diversify Your Investment Diversification is one of the most crucial concepts as far as investment is concerned. According to a report by the New York Times, small businesses have greatly been left behind when compared to the large businesses. Most of the small business owners tend to invest all their assets solely in their businesses. This is to mean all profits made are redirected back to the business, which could be risky if anything were to happen to it. Make no mistake, things happen: fluctuation, fire, vandalism, natural disasters etc.  Should there be such an occurrence, your SME will be left crippled, and your household’s financial security will be in jeopardy. The wise move to make is to use a portion of your profits to invest in other projects. For instance, you can consider  making a savvy real estate investment  by taking out a buy-to-let property mortgage with a cash deposit. Once you buy the property, you should, however, not forget to make your mortgage payments later. The best part is that it is so cost effective and easy to become a buy-to-let landlord. Rental housing was listed among the  7 best 2019  investment options  by Forbes. You could also invest in bonds, peer to peer lending, REITs, and high yield saving accounts. Separate Your Business And Personal Finances It may be difficult for you as a small business owner to separate your personal funds from your business funds. From your inter-connection with your business, you might well think that your business is you and you are your business. It is, however, crucial to separate business and personal finances. You can consider  opening a business banking account, as well as applying for a credit card for your business. This will help you better manage your business expenses. It will also help stop you from using business earnings on personal needs. Come Up With An Emergency Fund There are those times of the year when your small business will fare better than other times. The income may vary from month to month, or even from day to day. Not to worry: this is normal, since all businesses are cyclical. In preparation for such times, it is important for you to set aside  an account with emergency funds. This will help you during the crisis moments in your business. An emergency fund prevents you from borrowing or taking high-interest loans. With an emergency fund, you will also not have to rely on your credit cards. Keep in mind that you should always separate the emergency fund account from your business and personal account. Starting a business is easy. Keeping it running, though, is where the challenge lies. If you want your SME to grow, then learning how to properly manage your finances is key. Nevertheless, if you are too busy or not financially savvy, consider seeking help from experts in the field who will help you with handling your investments. You can also usefinancial management software for small businesses.Growing your wealth and your business is a process that requires patience, dedication and, more importantly, wise investments.