As you’ve probably already realized, expanding your company’s size from 7 figures up to 8 takes some different thinking. You’ve seen that your company is a possibility, and you know what you’re selling is a viable option in the marketplace.
However, how do you build upon that success and grow your business until you’ve gone from being an overworked business owner to the kind of business owner experiencing massive growth and success? These are great questions.
In this article, I’ll be sharing three essential secrets that must be in place in your business and life to get you there. These tips aren’t an unbreakable guideline to success. You already realize that nothing is straightforward.
However, your company will struggle to grow without a deep knowledge of these three fundamental principles and not incorporate them into your daily life or business in a meaningful and profound way. It’s as if you’re taking a trip on a tricycle that does not have a wheel, and it’s going to be impossible to function.
Without further delay, Let’s begin.
1. Create a clear, long-term plan.
Entrepreneurs and business owners tend to be innovative problem-solvers. However, this doesn’t necessarily make them excellent long-term planners. Indeed, many business owners have a difficult time when it comes to forming an overall vision for their business.
In the book Vivid Vision: A Effective Tool to Align Your company around a shared Vision of the Future, Cameron Herold outlined this perfectly in the following quotation. “When people in an organization make decisions with the same underlying intuition as their leader, it is an indicator of the success. This is one of the main reasons to train employees to become managers in the first first place. Your role as CEO is to unite and motivate everyone , then let them off the ground to let them go.”
A vision is vital for your team. However, it’s also crucial to ensure you’re on the right path to keep ahead of the game and look forward to the future. Without a clear vision, the majority of business owners fall into chaos. They see their organizations slowly deteriorate and end up moving in circles instead of making moving forward towards a common purpose.
2. Refrain from gratification for a while.
We’re all well aware of the hustle culture. The idea of achieving success with dedication and perseverance is a double-edged sword. On the one hand, it’s a great idea. However, on the contrary, the idea is often discussed without a clear explanation of the context.
Suppose you are willing to delay your desire to be happy to expand your company and make it more profitable. In that case, you will discover the dedication to your business that will take it beyond the horizon.
Elon Musk, Tesla CEO and SpaceX founder, is famous for this. “When my brother and I were starting our first company, instead of getting an apartment, we just rented a small office and we slept on the couch,” Musk said in his commencement address at the end of 2014. (via CNBC). “We were able to shower at the YMCA and we were so exhausted that we had only one computer. The website was running in the morning and I was programming it in the evening all week long every day.” The advice he gave was to “Work all day long.”
At present, Musk is said to work between 80 and 90 hours per working day. It doesn’t mean you have to work the same amount of hours. The idea is that sometimes you’ll need to do “extraordinary feats” to make incredible achievements possible. Delaying the gratification of your efforts is a crucial element of success.
3. Make sure you are maximizing your efforts (and the results).
The third and final trick to take your business from its current state to rapid expansion in the future is taking the value you can create as a business owner and multiplying it to produce even more benefits. What can you do to achieve this?
It is essential to delegate key business processes to highly skilled and innovative talent through your team, an external company, or freelancers. If you’ve attended an event for business and you’ve heard several presenters talk about the necessity of being able to assign tasks and develop procedures.
Well, they’re right.
Many entrepreneurs still have a hard time with this. You may be shocked that business owners are typically the most significant bottlenecks within their own business. But the reality is that you’re limited as an individual. Therefore, it’s essential to reproduce the results of your creative thinking by utilizing outside assistance and internal resources to design procedures that will yield effects over time.
The three secrets listed above are essential to increase the growth of your business. Once you’ve learned the essentials, you’re ready to put them into practice. You’re sure that you have what you need.
Types Of Business Bank Accounts.
Learn how checking, CDs, and money market accounts work
You may know the ins and outs of managing your personal checking accounts, but what about doing the same for your business? When thinking about different types of business bank accounts, you obviously want to know which ones may best fit your company.
While there is not a one-size-fits-all solution, having an understanding of the different accounts, banking requirements, and when they might be necessary can make your choice much simpler.
Is It Necessary To Have Separate Bank Accounts?
While separate bank accounts are not a requirement for sole proprietors and small businesses that are not incorporated, they can be crucial when it comes to scaling your business.
Though business bank accounts function in the same way as personal accounts, owners gain more protection when designating these transactions. For example, if your business was facing a legal claim, having a business bank account may further protect your personal finances versus having them intertwined with your entity.
You can also accept checks and credit card payments for your business, add employees as authorized users, and start to open business lines of credit. Having a business bank account is also required when applying for many types of loans.
Chances are you’ve already had one or several personal checking accounts, so business checking accounts shouldn’t be a drastic change. One of the main differences, though, is that the account will be in your business’s name, which means more professional invoicing, statements, and checks when issuing payments.
You can make deposits, transfers, and withdrawals just as you would with your personal account. There may be limits on certain types of transactions– for example, with a Bank of America ATM card, users can only withdraw $700 per day depending on the state.
When you’re opening your business bank account, make sure to read all of the details on the financial institution’s site to ensure any limits align with your anticipated transaction volume.
The checking account may or may not come with maintenance fees. Some come with optional services like Positive Pay, which helps prevent check fraud, typically for an additional fee. Generally speaking, business checking accounts will require an opening deposit or a monthly minimum. There are free business checking accounts that waive monthly fees or exclude them altogether.
Business savings accounts do allow your business profits to grow at a set interest rate but compared to checking accounts, the funds are not usually as accessible.
These accounts also come with set guidelines on deposits, concerning both methods and amounts. With Chase Business Total Savings, for example, users are allowed up to 15 deposits and $5,000 in monthly cash deposits at no charge. This means that fees are incurred once maximums are reached.
Minimum deposits for business savings accounts may also be higher than checking accounts and the amount deposited may impact your annual percentage yield (APY).
Certificate of Deposit Account.
Certificate of deposit (CD) accounts may be attractive because they can earn you a higher APY and therefore a bigger return.
The caveat is that you are agreeing to put away money for a specified time and penalties will be levied if you need to withdraw before the maturity date. Terms will vary from bank to bank but can range anywhere from 28 days to 10 years.
Rates are also variable, but typically the higher the minimum deposit required the higher the APY offered will be.
A few additional aspects to keep in mind are that though all CDs issued by Federal Deposit Insurance Corporation (FDIC)- insured banks are protected, not all banks are covered. There are also different types of CDs that you can open depending on your long-term financial goals for your business.
Money Market Account.
If you’re stuck between the idea of business saving accounts and CDs, money market accounts (MMAs) may be an option worth considering.
These interest-bearing accounts may offer higher APY than your traditional savings accounts and permit users to issue checks depending on the bank. MMAs can come with fewer barriers when it comes to accessing funding, with some banks offering ATM access and the ability to link to a business checking account to bypass certain fees.
However, like CDs, these accounts may work best for businesses that keep higher monthly balances in savings.
How To Open a Small Business Bank Account.
Now that you know more about the different types of business bank accounts, it’s time to do some research and open your account.
First and foremost, when opening your small business bank account, thoroughly research the banking institution. Is it online or brick-and-mortar? Do they have banking products that your business could use in the future?
Then, determine which accounts you want to apply for and what the requirements are. For example, in addition to business formation documents, there may be financial stipulations regarding your credit. Be prepared and gather all documentation beforehand.
The last step is to make your first deposit, which can usually be done via electronic cash transfer, written check, or cash deposit.
Frequently Asked Questions (FAQs).
Which bank is best for small businesses?
Though the best bank truly depends on your specific needs, US Bank is one potentially attractive option for small businesses. There are no monthly fees for its Silver Business Package and the institution offers different options as your business grows. Meanwhile, online banks such as Bank Novo can be a great free starter option for freelancers looking for a business bank account that doesn’t require a heavy lift.
How many bank accounts do I need for my small business?
There is really no limit to the number of bank accounts that you can have for your small business. However, keep in mind that the more accounts you have, the more effort it will take to manage them all. Start with one in the category you need and open more as it becomes necessary.
Should You Open a Business Savings Account?
Reasons You Might Need Another Account Besides Checking
Savings accounts are joint for personal use, but as a small business owner, you may have considered whether it’s worth opening this account for your business.
To help guide your decision, we’ll discuss what business savings accounts are; cover their benefits and limitations; address the timing of when to open a business savings account, and answer some frequently asked questions on the topic.
What Is a Business Savings Account?
A business savings account can often be opened with a business checking account. A business checking account is typically used for revenue and regular transactions such as paying bills and making purchases, and business savings accounts are reserved for storing funds.
Business owners can move money between checking and savings accounts according to their financial demands. Usually, money is kept in the savings account and moved into the checking account as needed. Below, we’ll discuss the advantages and drawbacks of having savings account for your business.
What Is the Point of a Savings Account?
There are several reasons why small business owners might consider opening savings accounts. We’ll discuss a few of the everyday purposes.
Save for the Unexpected
Savings accounts are great places to store cash to prepare for the unexpected– both good and bad. Having a rainy-day fund for emergencies or unanticipated expenses is essential for small businesses and can bring peace of mind to you as the owner. Cash on hand can also allow you to take advantage of business growth opportunities without jumping through all the hoops involved with borrowing money.
Plan for Upcoming Expenses
Spending money regularly can help you plan for future costs and invest in your business’s growth. Budgeting in advance to prepare for upcoming expenses such as renovations, business taxes, or even retirement can help to alleviate financial stressors.
You can earn more interest– money that the bank pays you for using your funds– by keeping your cash in a savings account than you would in checking. Some savings accounts, such as a high-yield account, have a higher interest rate or annual percentage yield (APY) than others.
Linking a business’s checking account to its savings account can help prevent overdraft fees. If there aren’t enough funds in the checking account to cover expenses, money can be automatically transferred from the savings account. This can help protect against unexpected fines.
Federal Deposit Insurance Corporation (FDIC) typically protects business savings accounts. If a bank cannot pay you back your money or has closed down, the FDIC will ensure that your funds are repaid up to an insurance limit of $250,000.
Limitations of a Savings Account.
While savings accounts can come with many benefits for your small business, there are some limitations to consider before opening an account. For instance, savings accounts may require a minimum balance to prevent you from being charged a fee. You must meet this minimum threshold to avoid regularly paying money to maintain an account.
There is also an opportunity cost of keeping too much of your funds stashed away. If you own more money than necessary in your business savings account, you could take advantage of opportunities to grow your business or invest the funds in places that might bring higher returns.
When You Should Open a Business Savings Account.
Savings accounts can be very beneficial for business use. Business owners should be attentive to a bank’s terms and potential fees when deciding where to open an account.
However, opening up a savings account may not be as much of a priority if your business is still relatively new or needs more income to meet the minimum account balance requirements.
Frequently Asked Questions (FAQs).
What do I need to have to open a business savings account?
The documents required to open a business bank account will vary depending on the bank. Most banks usually request you provide your business’s employer identification number (EIN). However, if you’re a sole proprietor, you’ll use your Social Security number, formation documents, ownership agreements, and business license.
Which types of savings accounts will earn you the most money?
High-yield savings accounts can be an excellent option to earn more money from interest than traditional accounts. When deciding where to open a high-yield savings account, pay attention to account details such as the annual percentage yield (APY), fees charged, and minimum balance requirements.
How many business banking accounts should I have?
There is no set answer regarding the number of business banking accounts a small business should have– it depends on the business’s financial needs and goals. Having multiple business banking accounts can help keep your finances organized, make it easier to prove your creditworthiness, increase security, and take advantage of various offerings. However, the more accounts you have, the more complicated it can manage, as each may come with its own set of fees and requirements.
Buying vs. Leasing a Car for Business: What’s the Difference?
Many small business owners may find that a car becomes necessary to operate their businesses, whether starting or aiming to grow their ventures to the next level.
The first step in this process is deciding whether buying or leasing a car for business purposes is best for you. The main difference between the two is that buying a car gives the business complete ownership, allowing it to customize and put on unlimited miles. However, leasing a vehicle for your business can mean lower monthly payments. To help you with your decision, here are some considerations when choosing a business car lease versus purchase.
Buying and leasing a business vehicle comes with initial costs that may dictate your choice. Buying a car can take a significant down payment, affecting your immediate cash flow. Leasing a car, however, typically requires a security deposit, usually equal to one month’s payment rounded up.
Many business owners take out loans from banking institutions to purchase a car outright, creating higher monthly payments toward the loan’s interest first and principal second. Buying a vehicle takes up short-term cash flow and could affect your ability to take out additional loans for the business. Yet this translates into long-term value as you have a stable asset on your balance sheet.
Leasing a car can mean lower monthly payments to free up your immediate cash flow. Because of smaller amounts, you can afford to drive an updated vehicle that generally would be out of your price range. However, going from one lease to the next can lead to higher costs over the long run.2 Buying a car becomes a more favorable option for value over time because payments stop once the loan is paid off.
Regularly scheduled maintenance checks and repairs are crucial to keeping your asset running smoothly. But how you take care of maintenance depends on whether you lease or buy.
Depending on the agreement, leased vehicles include some form of maintenance, some repairs, and even free oil changes, which can alleviate the stress of vehicle repair. A lease also covers essential wear and tear, although anything out of the ordinary will result in fines. Buying a vehicle places the responsibility solely in the hands of the owner. You bear the cost of scheduling and repairs, although excessive wear and tear isn’t a concern.
Deciding whether to buy or lease a car for a small business means being clear on the purpose of the vehicle. Knowing this will help you figure out how many miles you plan on putting on in a year.
A lease agreement comes with a mileage allowance that dictates how many miles you can put on the vehicle. When you go above the budget, you start incurring mileage fees, which add up quickly. Prices range anywhere from 10 cents to 50 cents per additional mile.
Mileage considerations can make buying a car a more cost-effective decision in the long run. You don’t need to limit your drive time or hold yourself to a set amount of miles because your ownership gives you complete authority.
Some small businesses may want to utilize vehicle marketing by outfitting their automobile with company decals and stickers. Buying a car gives you the option to customize it however you prefer.
A leased car must be returned near showroom condition, apart from normal wear and tear. Customizations are not allowed for these vehicles or may result in significant fees.
A small business reaps considerable tax advantages when utilizing a specific vehicle for company operations. An owned car can use depreciation and standard rate or actual costs as deductions. A leased car can use the standard rate or substantial cost as an expense, but not both.
Depreciation: Depreciation is the amount you can deduct over the vehicle’s lifespan that accounts for a drop in value. A car becomes less valuable over time from wear and tear and mileage accrual, which can be claimed as a deduction.
Standard rate: As determined by the IRS, a business owner can deduct the standard mileage rate for business miles driven using the traditional rate method for the lease. This must be started in the first year the car is available to your business. The standard mileage rate was 58.5 cents per mile for the first half of 2022, and for the final six months of 2022, the standard mileage rate is 62.5 cents per mile.
Actual cost: You can use the exact cost method to deduct the expenses associated with operating a vehicle, including gas, oil, repairs, and depreciation or lease payments.
Which Is Right for Your Business?
Deciding whether to lease versus buy for business depends on your circumstances and how you weigh the different considerations. There is no one-size-fits-all methodology for small business car leasing or ownership, but there are a few questions to answer that can provide clarity on what works best for you at any given time.
- How much money do you currently have for a down payment?
- How many miles do you think you’ll put on in a year?
- Do you want any customization on your business vehicle?
- How will the car be used, and will that incur abnormal wear and tear?
- Do you want to deal with maintenance yourself?
Every business case will be different regarding buying or leasing a vehicle. Buying a car offers a long-term investment if you have enough borrowing power and cash flow. Further, if your business will need to use a vehicle extensively, purchasing a car outright means you aren’t limited to a specific amount of miles.
On the other hand, a more limited cash flow may make leasing a car a much better decision. Renting a car is also best for a business owner who doesn’t want to take care of maintenance or desires the latest vehicle on the market.
Best of Both Worlds Option.
Some leasing agencies may offer a chance to purchase the vehicle once the lease ends. Also known as a lease buyout, this is a fantastic option to keep your cash flow available during the lease while also investing in a long-term asset. Reach out to a few leasing agencies to explore adding this to your lease terms.
Finally, your business growth may call for a change in vehicle ownership. You always have the option to lease a car first and buy one after that lease ends if it’s a more financially sound decision.
Frequently Asked Questions (FAQs).
Is it better to lease or finance a car for tax purposes?
Both buying and leasing give you tax advantages with adequate recordkeeping. Buying a car means you can use depreciation as a deduction if you use the vehicle at least 50% of the time for business purposes. Buying and leasing also suggest using a standard or actual cost method to deduct things such as mileage or lease payments, gas, and repair.
When starting a small business, is it better to buy or lease a car?
This answer differs for every business. Small business owners need to consider the vehicle’s purpose, how often it will be driven, and what level of maintenance they’re comfortable putting on their shoulders (or wallets).
How can I ensure my business car?
A business car must be insured just like a personal vehicle. You can work with a local insurance agent or business advisor to find the best insurance coverage and prices. Leasing and buying may also affect coverage type and price.
Types Of Business Bank Accounts.
Should You Open a Business Savings Account?
Buying vs. Leasing a Car for Business: What’s the Difference?
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