Did you know that there are over 30 million small businesses in the United States? New businesses are started every day, but there are also a number of businesses forced to shut their doors each day due to a lack of capital and wealth. Don’t lose your business because you’re not sure how to begin building wealth. Follow these strategic tips to get the capital you need for your business to grow and thrive:
1. Building Wealth Starts With Building Reserves
One of the best things that you can do is to build reserve money and implement proper money management. You never know when your business might be hit with something unexpected such as a pandemic that forces you to close your doors for an unknown period of time.
Besides that, other issues can arise such as an issue in your building, an issue in your machinery, or the sudden loss of an investor or big client.
2. Be Strategic With Your Salary
As business owners, we have to develop a strategic formula for determining salary. You want to ensure that you’re setting aside enough money for everyday business expenses and for your reserves, while also determining a fair share for your income.
There are common formulas out there like the 40-30-30 plan: 40% to the business, 30% as salary, and 30% into savings, though this may not be feasible for every business. A financial advisor or capital lender can help you determine which formula is right for your business model.
3. Determine Your Capital Needs Early
You need to be thinking about both the short and long-term for your business, such as catering to the current market but planning for that market to change.
82% of businesses that fail do so because they do not manage their cash properly and don’t have cash ready for an emergency. Rather than desperately scrambling to find the cash you need once it’s too late, take time now to plan for future capital needs.
The earlier you begin the better, this will give you time to find solutions for potential issues before they ever arise.
4. Know the Tax Breaks
One of the most underrated ways to have efficient small business financing is by recognizing every tax break that you are eligible for.
An example of this is that the Qualified Business Income allows you to deduct up to 20% of your business income from taxes for that year. Of course, this depends on what type of business you own and how big it is but it is possible to do this.
Other examples include deducting a certain amount of money for home office space if you work from home, internet and phone bills primarily for business, retirement contributions, and more.
If you take a proper look at your books and the tax rules, you could end up keeping thousands of dollars that you can invest back into your business and your reserves.
5. Seek Capital Lending Solutions to Grow Your Wealth
Wealth building isn’t always easy, especially if you’re not sure where to begin. Let CAB Capital offer financial advisement and capital lending solutions so you can take your business to the next level and continue to build your wealth.
Are you ready to get started? Schedule a call with us today to go over all of your business financing needs.