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Finances Can Sink A Business: Business Consultant Corey Shader Explains How to Manage Your Finances Optimally for Success

Starting a new business takes a lot of grit, sacrifice, dedication and a great idea. Yet, many new businesses fail because they fall shortly in a completely different area, according to business consultant Corey Shader.

A big reason why so many new businesses fail within their first few years of opening is finances. Managing the finances of your new venture is critically important if you want to build a long-lasting company.

Here are four tips to remember as you manage the financial risks of operating a small business.

1. Separate Finances

It may be enticing to clump all your finances when you’re just starting. After all, You likely have a personal bank account and credit card, so why open new ones?

There are many benefits to separating your personal and business finances and many downfalls of not doing so. For one, separating your finances will make it easier to track how much you’re spending and brining in instantly.

It’ll also make it easier for you to file taxes, including deducting expenses directly related to the business, and prepare for an audit if the IRS comes knocking. Having separate business financial accounts also helps you establish legitimacy with customers.

2. Pay Yourself Immediately

It could be tempting to not pay yourself an official salary from the beginning, waiting instead for the profits to roll in. That’s a mistake that many entrepreneurs make.

When you pay yourself a salary from the get-go, you’ll be helping to pay your personal expenses and building your personal savings. These are both very important to help you weather potential future business storms.

In addition, putting yourself on the payroll at the beginning means that you won’t have to add a completely new expense line item down the road. It’s easier to increase your pay over time as the business succeeds than it is to work a new salary in.

3. Organize Your Finances

Every business, no matter how small, should generate the basic financial documents. This includes a balance sheet, profit and loss statement, and cash flow statement.

While you may not need these formal documents at first, they help to set you up for long-term success. When taken together, these three financial documents will give you great insight into the financial health of your business.

And if you ever want to grow the business through outside investors or funding, you’ll need to have these documents in place.

4. Set Aside Money for Investment

Corey Shader says that all businesses should save money specifically geared toward investments. You never know when a great growth opportunity might come along, and you want to be able to jump on it so you don’t miss out.

Having money set aside just for this purpose will allow you to continually innovate and grow, which is important to attracting top talent and consistently meeting the needs of your customers.

About Corey Shader

Corey Shader is a self-made entrepreneur, consultant, investor, real estate developer, and founder of several companies, notably Insurance Pipeline. Operating primarily out of Ft. Lauderdale, Corey’s endeavors span across the nation, consulting for start-ups, and sitting on the board of digital media and senior healthcare agencies. As a consultant, Corey helps young businesses develop sales funnels and maximize profitability. Shader takes pride in challenging others to push themselves to be their very best — he believes in constant self-improvement, inspiring others through sharing his own life experiences.

Alex
 

Alex is a small business blogger with a focus on entrepreneurship and growth. With over 5 years of experience covering the startup and small business landscape, Alex has a reputation for being a knowledgeable, approachable and entrepreneurial-minded blogger. He has a keen understanding of the challenges and opportunities facing small business owners, and is able to provide actionable advice and strategies for success. Alex has interviewed successful entrepreneurs, and covered major small business events such as the Small Business Expo and the Inc. 500|5000 conference. He is also a successful entrepreneur himself, having started and grown several small businesses in different industries.