For small business owners looking to take their business to the next level, prioritizing savings can be a challenge. Research shows that small businesses with more than $10,000 of monthly expenses only have an average of two weeks’ worth of savings.
Yet setting aside money isn’t as complicated as you might think. Here are a few simple ways to grow your savings while also growing your business.
Set Clear Savings Goals
A great first step for maximizing savings is to establish savings goals. These should be based on your current needs and include targets for different areas of your business. Having set goals can help you in a number of different ways, including:
- Covering your taxes
- Tackling monthly expenses
- Anticipating the unexpected
- Investing in your business
- Selling your business
- Planning for retirement
Another benefit of goal-setting is the ability to plan ahead. By determining which areas of your business will benefit from added funds, you can position yourself for strategic growth in the future.
Separate Your Savings Into Different Buckets
While it may be tempting to keep your savings in one place, we recommend separating your personal savings from your business savings to streamline your finances. This can help to ensure that you’re not blending your personal savings with your business savings and accidentally spending funds you may need at a later date.
Separating your personal and business savings will also make it easier to put money aside for taxes and avoid potential “oh no” moments that may come up at tax time. If you want to be even more strategic with your savings, you can create separate buckets for each of your savings goals.
Look for an Account That Can Help You Achieve Your Goals
Next, it’s time to explore your account options. A savings account designed for small businesses is often a great option. These types of accounts have specific features that are generally missing from personal savings accounts.
Developed with business owners in mind, Square Savings lets business owners organize and manage their money in a way that fits their needs. It also offers the opportunity to automate savings by deducting a specific portion of each sale. Business owners can choose to deduct anywhere from 1% to 20% (or more) depending on what works best for them.
Unlike traditional savings accounts, Square Savings also offers the possibility of a higher yield with an APY equal to 8x the national average. Over time, this could translate to significant growth. What’s more, savings can be organized in folders to align with specific goals.
While growing a small business has its share of challenges, making the most of your savings doesn’t have to be one of them. With a careful approach to saving, you can determine an appropriate savings rate and decide how those funds can benefit your business. By separating your savings and choosing the right savings account, you can also enable smart investments in the future of your business.