Find your way with our blog


    We want to give you as much value as possible. Our blogs and newsletters cover everything from T slips and tax deadlines, to tips on staying organized, and recommendations on great resources for small business owners.

    Subscribe to our upcoming newsletter for small business advice, and financial and tax tips for entrepreneurs.

    8 steps to financial planning for small business owners

    Small business owners are often guilty of pouring everything they have into their ventures — can you relate? From the sweat of your brow to dipping into your personal bank account, you’re willing to do just about anything to make your entrepreneur dreams come to life. But remember that this should also include building a strong foundation for your business with solid financial planning

    When it comes to finance for business owners, having a thoughtful and intentional approach — including setting goals and priorities — as well as the tools to make business finance easier to manage, will set you on the path to financial well-being

    Let’s explore some tips to give you greater control of your finances (personal and business) and much-needed peace of mind so you can focus on growing your business. 

    1) Set the vision for your life and business  

    Long-term snapshot  

    What’s your long-term vision for your life? This is a great place to start. Go full pie-in-the-sky on this one: what does a day in the life look like for you, 10 years from now? How are you spending your time? Is this what financial freedom feels like? 

    Paint the full picture with both broad and fine brushstrokes to really get an idea of what kind of life you’re building towards. 

    3-year snapshot  

    Next, describe what your life needs to look like in three years to be on track to achieving your 10-year dream life. How much is your business doing in revenue? What about profit?

    Setting actual goals beyond one year isn’t always fruitful, as so much can change in a year these days — so keep it high level. 

    1-year goals

    Now with the long-term vision for your life (and your business), it’s time to actually set some goals for the next year. What do you need to accomplish in the next year to move you one-third closer to your three-year snapshot? 

    2) Break it down into 90-day priorities

    It’s proven that splitting big goals into quarterly priorities helps people focus and improves their chances of achieving the longer-term vision. If you were only going to accomplish a few things in the next three months to move you closer towards your dream life, what would they be? Pick a few to focus on.

    These quarterly priorities go by a few different terms: SMART goals, OKRs (Objectives and Key Results) or 90-day rocks.  

    At True North, we want you to reach your financial goals and realize that dream life.  A good starting point is to have a realistic picture of your current financial situation.

    3) Build your budgets 

    It's often difficult to separate business goals from personal financial goals. When it comes to compensation and earnings from your business, it makes sense to figure out your personal and family financial requirements first.

    Step 1: Start with determining the monthly burn rate of your household

    Start by building a household budget by exporting the last six months of your personal banking and credit card statements into an Excel (.csv) sheet. Then calculate your fixed costs and discretionary costs to determine how much you need each month to live. 

    Step 2: Add in additional costs that aren’t necessarily monthly: 

    • House downpayment
    • New car fund 
    • Kitchen renovation
    • Post-COVID vacation
    • Kids college fund or RESP
    • And how much you need to be investing for your retirement 

    You’ve now built your household budget, which will help you on your road to financial stability.

    Step 3: Pay yourself from your business

    Using this household budget number (which is an after-tax amount), you need to determine if this will be a dividend or a salary. This will help you calculate the gross amount to pay yourself from the business. Don’t forget to add your savings and investing amount to your household budget to figure out your pre-tax, target compensation.


    To see this in practice, let’s say your household budget is $7,500.

    As a salary, this would be about $10,000 gross salary or $120,000 a year.

    If you paid yourself in dividends, this would be about $100,000. Keep in mind that the corporation would also pay about $11,000 in corporate taxes on the dividend. 

    Step 4: Can your business afford to pay you that amount?

    Next, calculate a budget for your business by taking your monthly financials from last year and using them as a starting point for the upcoming year’s budget. Apply the appropriate growth rates to revenue, and any variable costs associated with earning that revenue. Don’t forget to consider the fixed costs you will incur over the next year, including your own compensation as calculated in step three. Will you have a positive net income or are you forecasted to be in the negative? 

    You may need to adjust some things to make your plan work:

    • Revisit your household budget
    • Reevaluate your business profitability projections
    • Review your future savings and retirement goals

    It’s likely that you will need to explore a combination of all three. And if you’re just starting out, you may need to extend your business budget (target forecast) by two or three years to build up the business.

    Step 5: Finalize your business budget

    Now you’re ready to copy your business budget into a new sheet called “Target Forecast.” You can play with the revenue and costs to figure out how much your business needs to make to hit your target compensation level, while still hitting your target profit margin.

    If you’re using Xero, you can add your budget into your account so you can track Budget vs Actual each month and know whether you’re trending in the right direction.

    4) Find your focus

    Congratulations! You've just created a realistic plan that will help you achieve your financial goals. You now know what needs to be done and you can start living and running your business in a more intentional way. 

    This is when we’d recommend finalizing your one-year goals, and then the 90-day priorities mentioned earlier. 

    5) Make a detailed plan

    Now that you’ve established goals and know where to focus your energy, it’s time to get granular. Break down your goals into small, achievable steps. When executed on, this action plan will move you closer towards your goals. Be intentional by dedicating time each day or week to work on your focus items. Every little step will help you accomplish those priorities and adds up to reaching the one- and three-year goals you set. 

    6) Choose a tool to make things easier 

    As you know, there’s a lot to manage as a small business owner. Entrepreneurs can leverage smart tools that streamline day-to-day tasks and take the stress out of financial security. Tools like Wealthsimple can help you create an investor profile and can recommend investments to match your risk profile and retirement goals, even if you don’t have a deep understanding of investing. Here are some other useful tools: 

    • Helm connects with Xero and helps forecast your future cash balance.
    • Xero offers accounting software that simplifies everyday business tasks like invoicing, collections and bookkeeping.
    • Youneedabudget (YNAB) helps you gain control of your budget and teaches you how to manage your money to get ahead.

    7) Do the work

    This one should be easy since you’re your own boss (which means you probably enjoy your job a lot more than the average person). Wake up and design each day with a relentless commitment to accomplishing your priorities. 

    And get help if you need it. If you need financial support to get you through a tough period (say, a pandemic), lean into the loans and relief programs. 

    Learn more about the small business loans and grants available in Alberta and Canada.  

    8) Reflect, revamp, repeat 

    Review your past quarter and assess your priorities. And don't forget to celebrate the wins and consider the losses. How can you apply your learnings to the next quarter with a focus on those one-year goals? 

    Recreate your 90-day priorities each quarter with a focus on those one-year goals. Spend time each year revisiting your three- and 10-year snapshots and setting your one-year goals. Before you know it, you’ll be sailing into your 10-year dream goals.


    At True North Accounting, we help small business owners set up a foundation for success and thrive. Book a meeting with one of our knowledgeable CPAs so we can help you look at the numbers, give you the low-down on how your business is doing, and create a plan for growth.

    Find more Strategic Advisory topics relevant to you and your small business. 

    Comments (0)