CUSTOMER EDUCATION

At MainStreet Bank, we’re dedicated to supporting the financial growth of our customers. Whether you’re new to managing your business’ finances, or looking for advice on how to continue your financial journey, taking a few steps today can pay off in the future—literally! Financial planning is one of the best investments you can make on your road to success.

Managing your small business’ finances can seem daunting, but you don’t need to be an expert accountant to secure your financial future. Here are our top tips to get started:

1. Set your goals

Before you dive into the details, ask yourself what you want your business’ financial future to look like. Maybe you hope to open a new location, expand your services, or raise your revenues. Make a list of all your goals—both big and small. Then divide them by timeline. Consider what you want to achieve in the short-term (within a year), mid-term (1-5 years), and long-term (5+ years).

2. Optimize cash flow with multiple accounts

Streamline your cash flow management by opening dedicated business accounts for specific purposes—such as daily operations, tax obligations, and emergency reserves. Using multiple accounts gives you a clear, real-time view of where your money is going and ensures key expenses are funded automatically before you spend profits. If you’re a new business just getting started, make sure to separate your personal and business finances—doing so improves record keeping, simplifies tax preparation, and helps protect your personal assets.

Not sure where to get started? Check out our business banking page to explore account options or to reach out to one of our experienced business bankers.

3. Know where you stand

Now that you’ve set your goals and set up a dedicated business accounts, you’ll want to evaluate your current financial situation. Businesses use three essential financial statements to assess their financial standing.

• 1. A profit and loss statement (income statement) shows your profits and losses over a period of time, like a quarter or year.
  2. A cash flow statement documents cash earned and spent over a specific period of time, helping you estimate your liquidity.
  3. A balance sheet helps you track all your assets, liabilities, and equity to show your overall financial health.

Need help getting started? SCORE offers free online templates for profit and loss projections, cash flow statements, and balance sheets.

Beyond gathering these statements, pay close attention to key metrics like your burn rate (how fast you spend cash reserves), gross profit margin, and working capital. Tracking these numbers alongside your statements helps you spot potential cash crunches early and make data-driven growth decisions.

4. Build your budget

With a clearer picture of your current finances, you can create a business budget that can grow with you. Start by calculating your revenue over the last 12 months, then list fixed costs (like rent, salaries, insurance) and estimate variable costs (like materials, inventory, and shipping). Compare the two numbers and determine whether you’re operating at a surplus or deficit.

Some experts suggest adapting the 50/30/20 rule of personal finances as a guide to business expenses:

• • 50% towards essential business expenses (rent, payroll, insurance)
  • 30% towards growth and expansion (marketing, client acquisition)
  • 20% towards savings and debt management

Want to dig deeper? Check out the U.S. Chamber of Commerce’s step-by-step budget guide.

5. Establish emergency reserves

Once you’ve created your budget, make establishing your emergency reserves your first savings goal. You should set aside enough cash to cover three to six months’ worth of operating expenses, in a separate, easily accessible account. An emergency fund acts as a shock-absorber, helping you keep your goals on track even in the event of an unexpected hardship, like a temporary closure or natural disaster.

6. Plan for taxes year-round

Don’t wait for tax season to take action! Consider setting aside a portion of your net income every month into a separate tax savings account. Business owners generally have to pay estimated taxes every quarter to the IRS, instead of filing once a year in April, with penalties and interest for missing quarterly deadlines. As a business owner, you may also owe quarterly taxes in the states and localities you operate in.

When in doubt, it’s a great idea to consult with a tax professional. You can read more about your federal obligations at irs.gov/businesses.

7. Automate and systematize financial workflows

As your business grows, manually tracking finances in spreadsheets can lead to costly errors. Look for accounting software that integrates directly with your business bank accounts, point-of-sale (POS) systems, and invoicing tools. Automating receipt capture, client invoicing, and bank reconciliations saves time, ensures accuracy, and gives you a real-time view of your daily cash position.

8. Build business credit and funding readiness

Don’t wait until you need a loan to start thinking about financing. Establish a dedicated credit profile for your company by securing an Employer Identification Number (EIN), opening a business credit card, and setting up vendor accounts with net-30 payment terms. Maintaining clean financial records and a strong business credit profile ensures you are “bankable” and ready to secure growth capital or lines of credit when opportunities arise.

Mapping your financial journey

The most effective way to build your financial future is by taking small, manageable, and consistent steps. Set a regular reminder—whether monthly or quarterly—to revisit your business budget and track your goals. Don’t forget to celebrate your progress!