Easy Ways for Entrepreneurs to Build a Nest Egg
It’s no surprise that many people across the nation struggle to save money. Whether it’s for retirement or a rainy day, many Americans don’t put money away because other duties get in the way. Entrepreneurs are, unfortunately, in the same position. Many business owners lack retirement funds and have not put enough money aside to meet emergencies. Whether you have an established business or are a start-up, it’s critical that you set aside money as a financial cushion. Here are some tips to help you do just that.
Aim to set aside two months’ worth of working expenses, eventually increasing it to six months’ worth. Putting away six months’ worth can be incredibly intimidating to do in one go, so start small and then work your way up. Easing into saving money will help you to make it a sustainable task. Take care to avoid spending more than you make unless you have sufficient funding.
Stay aware of your company burn rate
Many entrepreneurs see their business as their retirement fund. As a result, these entrepreneurs keep a watchful eye over the company ROI and work to make financially smart decisions. Pay close attention to how much you make or lose during a period and learn from it. Was it seasonal? Is there more competition in your area? Did you get a boost from a great sale or partnership? Study the driving factors for success and failure so that you can understand what to do and what not to do.
Meet with a financial advisor
Sometimes you need a professional’s advice on how to handle finances. A financial consultant can help you figure out a financial strategy for saving up towards a nest egg, provide tips on how you can regularly contribute, and determine a retirement plan that suits your needs.
Pay yourself first
The first payment your business should make every month is to its own savings account. You may have to start making comparatively small contributions when you begin saving for the future. However, your contributions should increase as your return on investment increases. Make it an aim to contribute not less than 5% and not more than 50% of your income to your future savings.
Monitor your stock portfolio
Although you do not want to stress yourself out by monitoring every fluctuation in the stock market, it is good to evaluate the performance of your investments at least once a year to ensure that they are working effectively. As a result, you can identify poorly performing assets and move your money out of those.
Make secure investments
You may need instant cash when a business emergency hits, so it is good to save some funds in a money-market account for a quick withdrawal. Mutual funds, cash deposits and other low-risk investments can help you build funds quickly, eventually helping you grow your business’ financial nest egg.
Reassess your needs
Your expenses will grow as your business grows. Therefore, it is essential to review your monthly expenses regularly and adjust your savings accordingly.
Looking for no-cost financial consulting? Contact the professionals at Economic Development Collaborative. Our qualified business advisors can work with you to support business financing, growth, and more.