Key steps can help you build resilience into your operating model for your small or midsize business.

Chances are, you started your own businesses to be your own boss, not to do your own books. In fact, just 54% of business leaders say they understand financial management.
No one says you need to be an accounting whiz and give up the passion that fueled your entrepreneurship. But you will be better equipped to adapt, pivot, and evolve through the inevitable ups and downs of consumer tastes and economic forces by building and strengthening your financial fundamentals. Here’s what successful business owners have in their toolbox and how they keep it in good working order.
Cash flow management. P&Ls. Margins. Financial ratios. Revenue recognition.
Accounting terms might not be your sweet spot, and that’s OK; you can and should lean on a trusted source to help you manage your financial and tax obligations. But whether you’re outsourcing or hiring the needs, it’s essential for you to understand the basics so you can plan and protect your business: Over half of small businesses saying lack of financial or resource management make it difficult to monitor key success measures such as profit margins and performance indicators.
What you need to know depends on your level of familiarity. Some business leaders are experienced with accounts payable and receivable, accounting types, margins, profitability, and more. But if you’re not, find someone you trust who can guide you as you learn.
You might be able to control a lot of what happens inside the walls of your business or your office, but circumstances outside those doors are another matter. That, in turn, can impact your financial footing: Nearly half of businesses say they have cash flow issues.
Take your receivable accounts: One business might pay you on time, another might consistently be late. That, in turn, may impact the cash you have on hand, which is why building a cash reserve and securing a line of credit are keys to a strong financial foundation.
Stockpiling cash in the boom years may help you avoid risking your personal finances by, for instance, taking out a second home mortgage for your business. How much to set aside is the question; one rule of thumb is several months, but some business strains may last longer than that.
“The worst-case scenario? You have a year’s worth of cash reserves and don’t need it,” says Nate Schelhaas, senior vice president of Benefits and Protection with Principal®.
If cash reserves are an issue, “evaluate all the sources of cash at your disposal and in which order it makes sense to use them,” Schelhaas says. That may include sources such as the cash value of a permanent life insurance policy. While the main purpose of life insurance is to provide a death benefit, the cash value in some permanent life insurance policies can be used during your lifetime.
The second essential to protecting your cash access is securing a line of credit—before you need it. “When a lot of businesses need it, those who’ve already arranged lines of credit tend to have an easier time,” says Chaun Powell, president of Elevate by Principal.
That line of credit may help you pursue unexpected growth opportunities, says Powell, or stockpile components if you’re worried about supply chain snags. It can also help you keep your business financials separate from your personal financials. Your financial team can help you understand when you may want to draw that credit, when you won’t, and the size of the line of credit you should consider.
Creating a continuity and crisis management plan now—when you don’t particularly need it—can help you with long-term financial planning so you have the flexibility to handle volatility. “Business owners—small business owners in particular—are so often absorbed in the moment because of the all-consuming nature of their work,” says Amy Friedrich, president of Benefits and Protection for Principal.
Your crisis plan could cover a number of scenarios and potential risks, from natural disasters to disruptions in leadership. You’ll have your own version of that crisis management plan based on your industry, region, and supply chain. Typical plans include setting up an internal team, stress-testing communication and responses, and workforce training for key personnel.
Outside experts can help you envision the kinds of business crises that might require a different adaptation. Team building centered around understanding and responding to scenarios can help your employees better understand what your crisis management plan looks like.
You may be decades away from selling your business, but a succession plan is crucial to healthy financial fundamentals. “Knowing the value of the business is the foundation of planning,” Schelhaas says
For starters, it plugs in to the work you’ll do creating a crisis plan; if something happens to you as an owner or leader, what’s next for the business? A business succession plan also requires a regular business valuation, which is critical to help determine lines of credit, acceptable debt load, and even the timeline should a business sale be on the horizon.
Your team likely has two components: your workforce, including key employees, and any outside consultants you lean on for expertise.
One way to strengthen your workforce retention plan is by focusing in on benefits: 93% of employees
Retaining an experienced workforce remains key to any long-term strategy. “Finding and adding the right talent when you’re already poised for growth can be very difficult,” says Friedrich. “Employers should strive to retain skilled and key employees in times of stress or crisis so the business can flex its agility when returning to growth mode.”
And as you assemble an outside team as necessary to help provide the insights you need, they may also help you build your short- and long-term financial planning skills. The most critical component to finding those people: Trust, says Friedrich: “It’s your job as a business owner to go through a deliberate process, and it’s their job to earn your trust.”
Over one-third of small businesses are confused about how to file taxes.
Start by working with your tax and financial professional team to include a cadence for not only taxes, but financial record review and priorities. Includes taxes, record review and record keeping, and financial priorities.
Unsure of which voluntary benefits pay off for your employees—and your bottom line? Check out the insights in this voluntary benefits guide.