Exploring Financial Best Practices for Small Businesses

May 2, 2023

Turning your idea into an economically viable enterprise involves a lot of work. Even for experienced businesspeople, infrastructure investment and runway costs are often too great—at least, they’re too great without proper planning. Then, for people who have compelling ideas but who are not well-versed in how to run a business, promote their product, utilize a supply chain, or fill out tax forms correctly, even with a compelling business idea, running a small business can seem impossible. The good news is there are resources to help you.

Three Important Financial Practices for Small Businesses

1040s, CPA’s, Accounting Nonprofit Resources

Even if you’re a brilliant car repair mechanic, loose management of money or incomplete recordkeeping will lead to financial problems. This is particularly true in filing and declaring income. The tax form that a small business entrepreneur uses is called 1040, and you can read more about this on the IRS’s website link here.

It’s also highly recommended that you establish a relationship with a Certified Public Accountant (CPA). If that is not within your financial means, then consider reaching out to a nonprofit dedicated to helping people with their finances like the Accounting Aid Society. If you need help with managing your money, then leverage economic and social organizations to get the help you need. Learn more about those resources here. Your business needs to have federal and state tax IDs in order to register for assistance or engage in contractual agreements.

The right distributor & go to market strategy

When bringing a product to market, small businesses need to find an institution through which they can sell. If you are a farmer, it’s likely that you can sign contracts with grocery stores in your area—which is why my local Kroger always has a special corner for Michigan cherries and local organic grass-fed milk. This process can be as simple as making a call to a larger center.

However, the price paid to wholesalers is less than the price which individual consumers will pay for your product. Therefore, if you can touch the consumer directly, you can “cut out the middleman,” and keep more of the profits. If you have some fruit trees in your backyard and want to make as high a profit as possible for small businesses, consider selling at a stand in the local open-air market. However, if you own acres, then perhaps the way to establish your go-to-market strategy is through an agreement with a large distributor.  If you are an individual selling a physical commodity, Amazon might be the right place for you. If you’re a dog walker, then Rover. or any other specialty apps that might connect you to your customers.

In order to reach your customers directly, you need a communication system that allows you to connect with your customers on the channels your customers are using. You don’t need to buy a second cell phone. You can just port a second, dedicated business line on any smartphone. Saas-model services are more dynamic than stagnant hardware. Learn more on the MultiLine for Small Business page.

Small Businesses name, entity name, and trademark

If you are serious about marketing your brand, then you should declare your business name, entity name, or trademark.  This is to protect your brand and a worthwhile investment. There are four different ways to register your business name: Doing business as, Domain name, trademark, and entity name. You can learn more on the US Small Business Administration’s website: here.

To learn more about how to open your small business, check out some of these resources:

SBA Gov Business Guide

US Chamber of Commerce Start Guide

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