Build your business savings strategy

Create the right savings plan for your business

Whether you’re running a one-person show or a larger operation with multiple employees, all business owners share the same goal – to get your money working for you.

You’ve invested a lot of hard work and effort in your business, so when you start to see a profit, you want to do smart things with it. At this point, it’s time to consider how to invest to ensure the greatest return while balancing your risk tolerance and your organization’s need for flexibility and access to funds. You need a savings strategy.

Why build a savings strategy?

Your business may be flourishing today, but the future always holds some uncertainty. Issues with inventory or suppliers, staffing challenges, the loss of a key client, or an economic downturn – these are just a few reasons why you could your business and profits reduced.

By regularly depositing a fixed amount in a savings account or cashable term deposit (GIC), you can build a safety net to protect you and your business.

Once you have your safety net in place, you can determine whether you will reinvest these funds back into the business or take some of the money out for your personal investment portfolio.

Safety net savings

The first step in saving for contingencies is to open a business investment savings account. You’ll still have complete access to your funds at any time if you have an immediate need, and will earn a small rate of return while your funds are on deposit.

Investing for growth

Once you reach a certain point in your savings, you may want to move some funds into a higher yielding term deposit or GIC.

Consider your liquidity needs when deciding about keeping your money in a cashable GIC or locking the funds in for a specified term. Rising rate or Escalator term deposits typically offer the flexibility to cash out without penalty on the anniversary date.

If you have funds that you know can invest for the longer term, you can start building a business investment portfolio. This likely isn’t the place where you want take big risks, so your portfolio should focus on more conservative or balanced investment strategies. As with personal investing, holding a variety of assets can help safeguard from any large scale losses. 

Review and adapt

As your business grows and changes, so will your savings and investment requirements. It’s important to review your fund allocation regularly to consider how much you have and where, your portfolio asset allocation, and your future business plans to ensure you are implementing the right strategy for you and your business.

Just as a business plan sets your company up for success, a solid savings and investment plan will help ensure you are financially prepared. You’ll be better equipped for all the ups and downs of running a successful business as well as being able to make the most of your profits.

Your business advisor will be able to assist you in this regard, and an investment advisor will be key to setting up an effective portfolio when you reach that stage.