The 5 Steps to Financial Freedom

It’s crucial to be equally strong in 5 key areas to maximize financial efficiency and ensure continued growth

Ensuring the financial health of your business relies on the diligent review and management of a combination of factors, not just one or two areas. This involves carefully evaluating where you’ve been and what your numbers look like right now. Only then can you make fact-based decisions about the future of your business. 

Minimizing your tax burden and choosing the right legal business structure are two other ways to be proactive about managing your finances. You must put practices in place that give you the right insights and the power to turn those insights into action.

Here are five steps to financial freedom that we practice at Provident CPA & Business Advisors, and how we approach each area.

 1. The Proactive Management System

First, you won’t be able to plan for where you’re going without knowing where you’ve been and what’s happening right now within your business. This is why we employ the Proactive Management System to focus on two main components:

• Accounting: We make sure that your accounting process is effective and efficient. You need a method in place that will always be accurate and also provide the insights you need to keep improving.
  
• Putting numbers to work: We help you take the critical numbers you’re tracking and combine reports into a simple, automated dashboard. This enables you to always see and use your most important financial metrics.

Our system helps you understand your cash flow, identify areas where you could make changes, and take the right steps to keep growing and improving.

 2. Tax minimization

Many individuals and businesses overpay in taxes each year without knowing it. We help our clients pay the least amount of tax legally possible through a concerted review of your situation and devising a strategy that matches it. Our 5 Star Program™ helps you create a long-term plan for tax minimization that enables growth.

Examples of tax-saving strategies include taking advantage of the gift-tax exclusion, understanding and applying deductions for entertainment and travel, the tax benefits of charitable giving, and many others.

It’s also important to know the tax implications of the different types of business structures, whether you want to form an LLC, a sole proprietorship, a partnership, or a corporation. Each has its own pros and cons for taxes, and we’ll help you select the option that fits your needs and goals.

 3. Growth and profit improvement

At Provident, we’ve come up with a structure to help you scale and financially succeed. Our plan revolves around these components:

• KPIs: Identifying the most critical key performance indicators (KPIs) for your business is the first step to success. Monitor your progress and view business data that will help you make better decisions.
  
• Critical drivers: What are the vital drivers of your business? There are between three and five essential components that we’ll help you identify and measure.
  
• Budgets: Keeping a rolling 12-month budget helps you understand what’s happening each month and where you can improve.
  
• Forecasting: The budget is linked to 12-month forecasts so you can keep tabs on revenue and plan more effectively.
  
• Financial statement review: We review and analyze all financial transactions, so nothing is unclear.
  
• Cashflow planning: Prioritize real-time planning by focusing on your future cash flow.

These are all important areas that need to be reviewed regularly for continuous business improvement.

 4. Succession planning

Part of ensuring your business lasts for the long term involves creating the right succession plan. It’s not always easy to imagine how things will operate after you’re gone. But you likely don’t want the business to fail when you’re no longer running things—especially if you’re keeping it in the family, or a successful sale is tied to its continued financial performance for an agreed period. 

Start succession planning now. Key considerations when creating your succession plan include what individual will take over, the precise steps taken during the transition, and what to do if something changes. Other related strategies we help you with include selling the business, estate planning, minimizing taxes at the time of death, retirement planning, and buy/sell agreements.

 5. The EOS Model

The Entrepreneurial Operating System (EOS) is an effective method we use to help our clients. The model is centered around the idea that if you can clarify and achieve your business’s vision—and implement concerted steps along the way—you’ll find long-term success. 

There are six components of EOS:

1. Vision: Everyone involved with the business should be on the same page about what they’re working toward.
2. People: Every individual on your team must align with the vision and strengthen the organization.
3. Data: Identify and track the numbers that provide an objective measure of success.
4. Issues: Problem-solving in the right way is a crucial component of a well-run business.
   
5. Processes: Identify the core processes that truly drive your business. Each department and each team member should know what to do, and these procedures should be transferrable and repeatable.
6. Traction: Continuous growth is driven by discipline and accountability. Ensure you maintain traction by mastering the art of execution.

5 steps to financial freedom—exponential results

These five steps drive our values and services at Provident CPA & Business Advisor. We ensure that you aren’t leaving money on the table come tax time and continuously taking proactive steps to understand and improve your business.

Contact us to learn more about how we can help.