Small Business Coaching, Resources & Tools | EMyth Blog

4 Unhealthy Financial Behaviors That Destroy Your Small Business

Written by Kirstin Fulton | February 28, 2021

Business owners aren’t finance experts. It’s a sweeping statement, but as a business coach and business owner myself, I know the truth of it. One of the beautiful things about owning a business is that you don’t have to be an expert in everything—you just need to have the right experts at your fingertips. This is maybe truer for finance than any other area of your business. If you want to sustain, grow, pass on or sell your company, you need to build key financial alliances.

 

A lot of different circumstances drive business owners to finally seek help with their finances, like taxes, economic crises, expansion or retirement. For me, it was a moment of growth: I wanted to hire an employee. I’d been doing the majority of our company sales, and I needed to bring in more sales people so I could stop carrying that responsibility. But I didn’t know how to plan for that financially. When was the right time to bring that new salesperson on? What kind of capital would I need? What should a compensation plan look like? 

 

All those questions forced me to start looking at the administrative and accounting sides of business. And I didn’t want to look at that—that’s not what I got into business to do. 

Many business owners stall here, choosing to avoid or abdicate their finances rather than getting the help they need. But I knew that if I didn’t find the right support, I’d never grow. As you find yourself in a potentially tricky tax season (the downside of the PPP), invest the time and effort to build the strategic relationships. Work with a certified professional accountant (CPA), business banker and financial planner that you can trust, so you can set the stage for a successful year. And if you don’t have these connections yet—or don’t trust the ones you have—go find new ones.

 

[Graphic CTA: Finance Guide]

Certified professional accountant (CPA)

Business owners often make the mistake that their CPA is a contract chief financial officer (CFO). They’re not. Most commonly, your accountant focuses on tax planning. But if you’re not as a big fan of budgeting as I am, then you’ll also rely on your CPA to support you with budget management—though I don’t recommend it. To really be in financial control of your business, you need to understand your finances on a level that allows you to make strategic decisions without always consulting your CPA. If you’re not at that point yet, don’t worry. Start conversations with your accountant where you’re willing to dig in and ask questions, so you can get to the point where your key financial indicators make clear sense to you.

 

So where do you find a CPA you can trust? The short answer is: not Google. Your best bet is through a professional association that you belong to, either for business owners or specific to your industry. If you don’t have a big professional network or aren't a member of a professional association, talk to a few other business owners, vendors or possibly even clients in your town or state. In my case, I reached out to a handful of contacts within my homebuilders association and simply asked who their CPA was. And if I heard the same name twice, I called that person and set up an interview.

Business banker

If you have a business account at a bank, you more than likely have an assigned representative whose job it is to manage your account. This surprises most of my clients, who respond, “Well I go to the bank to deposit money, then write checks. That’s it. When in the world would I have an opportunity to make a relationship in that process?” They’re not aware that someone at the bank is dedicated to supporting their funding options. In my case, having a line of credit as a backup to working capital was a standard way of business. And keeping a good relationship with my banker meant I was talking to them often about what was happening in my company. 

 

So, find out who your business banker is, then go into the bank and talk to them—like an information session. Ask what banking services are available to you, and what kind of assistance your banker is there to provide because, frankly, they’re role is to help you. And if nothing else, meeting face to face can be incredibly helpful when you need quick support with something like the PPP loan. 

 

You may discover that you have a banker assigned to your account who’s never contacted you, perhaps because you’re a small business and they’re not taking enough interest in you. That can happen. If you feel that your bank doesn’t support small businesses well—or your small business specifically—start asking other small business owners in your area or contacts in your professional network where they bank. Find one that gears their services toward your kind of company and who will give you the attention you want.

Financial planner

As business owners, we have the business side of finance, but then of course, there's also the personal side of it. A financial planner recognizes the overlap of your business and life, and how things you do in one area can have an impact on the other. For example, a trusted planner could run your company’s 401k program and also manage your own retirement account. This is how I’ve chosen to do it, and I believe in the benefit of having a planner who can see your entire financial picture (personal and professional), rather than only having visibility into one side or the other. More vision and more information makes for more complete and accurate decision making. Of course, you may opt to have a planner who specializes in retirement programs for businesses, but isn’t necessarily going to do your personal financial planning. That’s fine—just make sure you have people handling both. 

 

And having both a CPA and a financial planner can be incredibly helpful when dealing with issues that seem to straddle the line, such as the tax implications of IRAs for yourself and employees. It’s a relief to take a question to your financial planner, hear, “That’s a question for your CPA,” and have that direction and resource available to you. 

 

Again, the best way to find a great financial planner is through referral. Speak with colleagues, friends and/or family members—anyone you trust to have a good handle on their own finances—for recommendations.

 

I’ve owned my current business for 25 years now. The other day someone asked, “What's the one thing you’d have done differently?” The answer is easy: I’d have educated myself about the finance side of the business many years sooner than I did, because it’s such a critical piece. Today, I’ve learned the fundamentals of managing my Finance System, but I still lean heavily on my trio of experts. Having experts is part of your financial system, so don’t let fear or aversion of getting close to your numbers get in the way of building those relationships.

 

If you’d like to learn more about managing money within your business, download our free Finance System Guide, or reach out to speak with an EMyth Business Coach.