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For those in the skilled trades industry, planning is an essential business activity. Costing projects, arranging jobs, and bringing in help are just some of the ways you need to be systematic in your day-to-day work. This is especially true if your work is seasonal, as there is a shorter window of time to maximize profits.
But it’s just as important to plan for things that are not so immediate and pressing – things like an emergency, an unexpected shortage of work, and your retirement savings. Here’s how:
Boost Retirement Savings
It’s tempting for business owners to plough any extra cash into their business. But there are many good reasons why you should also contribute to a Retirement Savings Plan (RSP).
Having some investments outside of your business can help you diversify and reduce risk, particularly if your business or industry – or even the housing market – suffers a prolonged slowdown. Investing inside an RSP can help give you greater freedom and flexibility than if you relied on your business alone.
And your RSP contribution is tax-deductible and the money in your plan grows tax-free. There are many online tools that can help you determine where you stand today and how much you need to be investing to reach your goals. Check out the Scotia RSP Reality Check™ tool to get started.
RSP Savings Tip - Make it automatic. Arrange to have money automatically transferred from your bank account to your RSP on a regular basis through a pre-authorized contribution plan. It’s an easy, convenient, and disciplined way to save. You don’t even have to think about it. And there is no charge to set up your plan.
Build a “Rainy Day Fund”
Despite our best-laid business plans, life can sometimes toss a curveball our way. An unexpected loss of a major project, a disability, caring for aging parents — any of these can throw your finances out of whack.
If you have dependants, or your income fluctuates or is seasonal, an “emergency fund” becomes even more important.
Financial Tip - When the work is rolling in and your business finances are in order, a rainy day fund is probably the last thing on your mind. But that’s precisely when you should be boosting your contributions to your fund.
How to Save - A high-interest savings account is a good place for your emergency fund. You'll earn a more competitive rate of interest, and your money is secure and always accessible. Make it automatic with a pre-authorized contribution plan.
Develop a Succession Plan - More than half of all business owners plan to retire over the next 10 years, yet the majority don’t have a business succession plan in place. Succession plans can help you plan for the transfer of sale of your business.
Whether you are just starting out or your business is well established, it’s a good idea to start thinking about a succession plan today. For instance, if something were to happen to you, who would assume your responsibilities? Would there be enough income for you and your family to sustain your current lifestyle?
Your business banker can help you begin to make plans for your business succession and connect you with the expert advisors you need to start developing your plan.
Whether you are looking to find ways to boost your retirement savings or build your emergency fund, your business banker can help you meet all of your planning needs.
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