Building a Financial Safety Net for Your Small Business

Jun 22, 2023

IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities.  Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by John Dunbar of Housing Secrets (

Building a Financial Safety Net for Your Small Business

As the owner of a small to medium size business, you understand that financial stability is crucial for your company’s success. A financial safety net can protect your business during economic downturns, unforeseen expenses, or unexpected challenges. By taking the necessary steps to create this safety net, you can weather financial storms and continue to grow your business. In this article, we’ll discuss essential strategies for developing a robust financial safety net for your small business.

If you’re planning on selling your business, International Business Associates can connect you with reputable buyers. Schedule an appointment.

Develop a Cash Flow Projection: Anticipate Revenue and Expenses

The first step in creating a financial safety net is to develop a cash flow projection. This will help you anticipate revenue and expenses for your business, allowing you to make informed decisions about spending and investment. To create an accurate cash flow projection, consider factors such as seasonal fluctuations in sales, upcoming expenses, and potential changes in your industry. By regularly updating your cash flow projection, you can stay ahead of potential financial challenges and make adjustments as needed.

Monitor Financial Statements to Identify Areas for Improvement

Regularly monitoring your business’s financial statements is critical for identifying areas for improvement. By reviewing your balance sheet, income statement, and cash flow statement, you can gain insight into your company’s financial health and identify opportunities to cut costs or increase revenue. Additionally, keeping a close eye on these financial statements will help you spot any discrepancies or issues that may arise, allowing you to address them promptly.

Conduct Surveys for Marketing Insight: Incentivize for Better Results

Market research is an essential tool for understanding your customers’ needs and preferences, which can help inform your business decisions. Conducting surveys is an effective way to gather valuable insights from your target audience. To increase survey response rates, engagement, and response quality, consider incentives for survey participation such as gift cards, money back, or a donation to their favorite charity. This will encourage more people to take part in your survey and provide honest feedback, ultimately helping you make better-informed decisions for your business.

Separate Personal and Business Finances: Prevent Overspending and Confusion

One of the most critical steps in creating a financial safety net is separating your personal and business finances. Mixing the two can lead to overspending or confusion when it comes to managing your company’s financial health. By keeping separate accounts for your business and personal expenses, you can more easily track your spending and ensure that your business finances are appropriately managed.

Consider Leasing Equipment vs. Buying

For many businesses, equipment purchases represent significant upfront costs. To minimize these expenses and reduce the financial strain on your business, consider leasing equipment instead of buying. Leasing can also help you save on maintenance costs, as the leasing company typically handles repairs and upkeep. Additionally, leasing allows you to upgrade your equipment more frequently, ensuring that your business stays up-to-date with the latest technology.

Build Relationships with Lenders to Access Capital When Needed

Establishing strong relationships with lenders or investors is crucial for accessing capital when needed. By building these connections, you can ensure that your business has a reliable source of funding during times of financial need. Be proactive in maintaining these relationships by providing regular updates on your company’s performance and discussing any potential challenges or opportunities that may arise.

Work with a Financial Advisor to Develop a Long-Term Financial Plan

Lastly, consider working with a financial advisor or accountant to develop a long-term financial plan for your small business. These professionals can provide valuable guidance on budgeting, forecasting, and financial management, helping you create a comprehensive strategy for building a robust financial safety net.

Creating a financial safety net for your small business is an essential component of long-term success. By following the steps outlined in this article, you can develop a comprehensive strategy for managing your company’s finances and navigating potential challenges. With a robust financial safety net in place, you can confidently grow your business and secure its financial future.

If you have any questions relating to the content of this article, John Dunbar would welcome the opportunity to answer them.  Mr. Dunbar can be reached at (919) 894-2043 and

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, accounting, legal, and financial planning communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.