Whether you’re planning to launch your new business or recapitalize an existing one at the start of the new year, financial fitness should be top of mind. The ability to maintain your small business’s finances in a healthy way can make or break the company’s success.
How you choose to finance your small business plays a huge role in your overall financial fitness. There are lots of financing options out there—from SBA loans to investors to Rollovers as Business Startups (ROBS). However, not all of these options will give you an even footing to grow while staying financially fit.
When planning for the new year, take time to consider your business’s financing options and how they play into your overall financial fitness plan.
The importance of small business financial fitness
To be financially fit in your small business, you should have the money you need when you need it. Essentially, financial fitness ensures that your company has enough money to stay in business, pay your employees and suppliers and build a long-term strategy for growth.
If your company is bogged down by large loans or credit, consistently late on vendor payments or not bringing in enough money to stay stable from month to month, your financial fitness could use some work.
There are many ways to maintain financial fitness within your business—making and sticking to a budget, reducing debt, building a cash reserve and tracking cash flow are just a few. But one strategy that many entrepreneurs don’t consider comes into play at the very inception of the business: What financing method you use.
The financing method you choose to help launch or recapitalize your business will factor into almost every financial decision you make moving forward. For example, if you take out a loan, you’ll have to plan for monthly payments and interest. Choosing the right financing method can make financial fitness much easier over time.
How ROBS can keep you financially fit
One financing method that can help your small business maintain financial fitness for years to come is ROBS. ROBS allows you to finance your business using your own retirement funds—a creditor protected asset—with no penalties or collateral.
Perhaps the biggest benefit of choosing ROBS is that it’s a form of debt-free funding. You can choose how much of your retirement savings to put into your business and access it quickly. It’s not a loan, so you won’t need to worry about including debt in your overhead or meeting a repayment deadline.
ROBS funds can also be used on almost any business expenses, including salaries (employees’ and your own), equipment, supplies, property and more. You can put your money to work where you need it most, rather than go into debt to purchase your business’s location or get the startup supplies you require. This can free up a lot of cash each month that you can put into a cash reserve or invest back into the business.
If your new year plans involve recapitalizing or launching a small business, turn to Tenet Financial Group to learn more about ROBS. Over time, the money you save by investing in your own business from the start can help you achieve a more stable, financially fit future—both personally and professionally.