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Five Financial Strategies for Self-Starters


Small businesses are the lifeblood of the Canadian economy. According to Statistics Canada, as of 2015, small businesses employed over 8.2 million individuals in the country, or 70.5 percent of the total private labour force. By comparison, medium-sized businesses accounted for 19.8 percent (2.3 million individuals) and large businesses just 9.7 percent of the private sector workforce.
 
For budding entrepreneurs, running your own business promises greater work-life balance, financial flexibility, and enormous self-satisfaction.
 
But launching and operating a young company comes with challenges. For instance, without a lengthy credit history and the necessary collateral, it can be difficult to secure a loan. And many entrepreneurs must rely on family and friends to finance their new businesses.
 
Luckily, there are ways to earn great money without a set salary and a pesky boss. Here’s how:

1. Sign up for a business credit card  

With money flowing in and out of your company, fast access to funds is critical to covering large expenses. But a business credit card is more than simply security. In addition to handling everyday expenses and major company purchases, many business credit cards offer built-in benefits including rewards, insurance, and expense management tools.

2. Create an emergency fund  

Unpredictable cash flow is one of the biggest challenges facing entrepreneurs. To weather financial fluctuations, small business owners must set aside funds in a high-interest-bearing savings account on a monthly basis – an amount that will enable business growth over time. Tip: An emergency fund should cover 3 to 6 months of unanticipated business expenses.

3. Secure a line of credit  

Are you looking for additional funding to grow your small business? Consider a small business line of credit. A much-needed facility upgrade or a ramp-up in production can send small business owners scrambling for financial support. A business line of credit can help by providing funds without high interest rates. Credit limits are based on a business’ unique borrowing needs and borrowers only pay interest on the actual dollar amount that’s used. And with monthly statements providing a consolidated view of account activity, entrepreneurs can focus on driving sales rather than sifting through bank statements.

4. Don’t forget your personal finances  

Overseeing daily operations is tough on busy business owners. Paying employees, managing suppliers, maintaining equipment – they’re all time-consuming activities. But your thriving business shouldn’t distract you from your personal finances. You need to make sure that your money is earning as much as possible without requiring daily oversight.
 
Fortunately, there are financial tools that can automatically monitor chequing and savings account activity. These tools work by transferring funds to ensure savings growth in a high-interest account while maintaining a balance in a chequing account for day-to-day transactions. The result is complete control over your personal finances without the need for constant monitoring.

5. Seek objective assistance  

Credit cards and emergency funds aside, starting a small business can be a challenging endeavour. Seeking the guidance of a small business advisor can provide the neutral third-party advice you need to achieve your long-term business goals.
 
Expert financial advice is only a click away. Meridian Advisors are here to help you plan for all your goals as you’re growing your business. Members are also welcome to sign up for the Meridian Business Academy – your one-stop online shop for courses on financial literacy and business planning.

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