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Retired Military Finances: 4 Steps to Prepare Your Business Financially for 2020

Managing Your Finances

I've run into more than a few retired senior military officers and NCO's that have started a business. If that applies to you and with 2019 coming to a close, it’s time to reflect on all you’ve done this past year to build, grow and move forward with your business. And as you do, it will be natural to also start thinking about what’s to come in 2020. Just like your personal finances, it’s important to take some time to sit down with your business finances and evaluate what worked, what didn’t, and what you’ll need to do to thrive next year. Below we’ve outlined a few next steps you can take in preparing your business’s finances for the new year. 

Step 1: Review Your 2019 Budget

Now’s the time to sit down and review your business's 2019 budget it line-by-line. While this might sounds like a tedious task, understanding your expectations versus realities of the past year can offer crucial insights into what you can expect for the new year. Figure out just how close you were able to estimating the year’s costs and take note of where things seemed off. This is a crucial first step to building a new, 2020 budget for your business.

Step 2: Begin Building Your 2020 Budget

After assessing 2019’s expenditures and gaps, you can begin building your 2020 budget.

Project Your Revenue For the Year

Begin by doing your best to estimate how much income your business will bring in during the next year. If you’ve been in business for a few years and have seen steady growth, it may be easier to project future earnings and create a more accurate estimation. If you are still in the early-stages of growth or have irregular income, it may be more difficult to project.  If that’s the case, do some research and speak to other business owners in the area. Find a general range you can pull from that’s realistic for your business type and location. Most importantly, it is almost always better to be conservative and project lower revenue than higher. 

List Out Your Fixed Expenses

As a business owner, there are a few fixed expenses you just can’t avoid. But in terms of building a budget, these fixed expenses can make it easier to estimate how much you’ll be spending month after month. These could include the cost of rent or mortgage, utilities, insurance, association dues, employee salaries, or any other fixed expenses you know will be standard. 

Consider Additional Expenses

Don’t forget to leave room in your 2020 budget for costs you may know are coming, but don’t know how much they’ll be. Cushioning your budget for some flexibility now can alleviate financial concerns throughout the year as you look to replace older equipment, replenish office supplies, host employee appreciation events and more.

Step 3: Rethink Your Long-Term Commitments

We’re turning into a subscription-based society. Think about your personal life and the long-term commitments you’ve signed up for - gym memberships, music streaming services, cable packages, even home gourmet meal kits. Now think about your business. Are there any software subscriptions, technology renewals or other long-term contracts coming up for renewal in the new year? While there’s still time, sit down and consider what you’ve really utilized in the past and what you’ve continued paying for only because you were stuck in a contract.

When possible, think about searching for flexible options, paying for services on an as-needed basis or switching to a month-by-month contract you can cancel at any time. These options bring about flexibility to your business, which can help lessen the stress of cutting back when times get tough.

Step 4: Build Up Your Emergency Fund

We’re all in the same boat - nobody wants an unexpected event to lead their business into financial turmoil. And while you should be padding your emergency fund regularly, take advantage of the new year to concentrate on setting aside what you can for worst-case scenarios you could face in the coming months.

In 2020, like any other year, you and your business need to be prepared  for a natural disaster - think hurricane, wildfire, flooding. Or, if your business relies heavily on technology, a cybersecurity attack. According to the U.S. Small Business Bureau, cyber-attacks are always evolving, and they can come in the form of malware, viruses, ransomware and phishing.1 Should you need to hire an outside agency to help gain back control of your systems or rebuild from a natural disaster, you’ll be thankful you took the time now to prepare.

With the holidays here, you have a lot on your plate. But getting your business and its finances ready for the new year is a gift you can give to yourself. And if you’ve evaluated your finances for 2019 and wondering if you’re doing everything you can for yourself and your business, you may want to consider working with a financial advisor or CPA who can take a closer look into the specifics and help you plan for the future. 

  1. https://www.sba.gov/business-guide/manage-your-business/small-business-cybersecurity

If you found this article useful, you might like the following blog posts:

Retired Military Business Owner?  What Type of Business Insurance Do You Need?


6 Estate Planning Tips for Retired Military Business Owners


Top 6 Bookkeeping Tips for Retired Military Business Owners


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