Insurance

While the freedom to travel, or spend time with the family or just play video games all day, is often cited as the reason most entrepreneurs start their own business, money is always a pretty big reason as well. According to the book The Millionaire Next Door the typical millionaire owns their own business, rather than work for someone else, thus giving them more control over their money. However, with control comes responsibility and many new business owners have ruined their finances because they did know how to manage it.

There are countless books on every aspect of money management; however, like most things in life there are a few simple rules that make all the difference. Of course to be a serious business owner a more thorough understanding of money management will ultimately be necessary, there are a few basic things that determine the success or failure of a new business right from the start.

Start-Up Capital
Ideally the business owner has enough money at start up to pay for all the equipment, software, licenses, fees, insurance, and other expenses necessary plus enough additional money to cover expenses for the first few months or years. Since this is rarely the case it is vital to have a working plan to compensate. One of the most popular options is to bring in outside investors, if the business owner has good credit and especially if repayment can be delayed until the business is profitable this can be a great option. Many new business owners are forced to boot strap, or pay as they go, for the business owner taking this route it is even more important to have future expenses clearly planned out and even then it is still worth looking into getting a line of credit or some there fail safe just in case the business does not generate the money soon enough.

Tracking Money
Boot-strappers are not the only ones who need be concerned with cash flow, however. In the old days expense tracking was tedious and often confusing; many business owners dreamed of the day they could hire a professional to manage it for them. Now thanks to software advances in the last few decades almost anyone can easily afford quality, accurate financial management software. Not only does this software make the job of tracking income and expenses almost effortless, but most CPA's and other financial advisers use the same software themselves, so they will already be familiar with the information presented.

Pricing
Setting the right price is a careful balancing act that must done right for the business to make it past the first few months, to say nothing of long term success. The general wisdom is to offer something custom or unique, and then charge customers a premium for it. While there is logic in this approach, it is not a one-size-fits-all solution, make sure customers would be willing pay extra for the unique feature or level of quality provided. Often the customers themselves are the real key to this equation, they will usually indicate, in one way or another, whether prices are too high or a virtual giveaway.

Health Insurance and Retirement
Imagine how long the average business would survive with 100 percent of its employees sick in the hospital. This is the nightmare scenario often faced by new business owners who neglect to get good health insurance after leaving their jobs. In a company of one employee it is absolutely important that the one employee be able to work and generate income for the business. It is also well worth looking into supplemental insurance or some other type that will pay for the business owners expenses in the event of some accident. There is no reason to let a few weeks illness or a broken arm mean the death of the business.

Taxes
One of the greatest benefits of owning a business is the difference between personal taxes and business taxes and the ability to take advantage of many legal tax incentives. Because a successful business has a positive effect on the economy, the government gives businesses and business owners many tax breaks and extra incentives not available to the average employee. However, business taxes are also much more complicated then taxes for an employee. The best solution is to find a well trained, experienced CPA, preferably one who already has several small businesses as clients.