Featured Image Caption: Avoid Financial Disaster
You’re probably already familiar with the statistic that half of all startup businesses fail within the first five years. How do you prevent your business from becoming part of that unfortunate percentage? One of the most common reasons that businesses fail is finances. While that may seem obvious, it can be surprisingly easy to lose track of important financial matters. Here are four resources that every business needs to avert financial disaster and weather any fiscal storm.
Rainy days come often in the business world. Make sure you’re prepared by maintaining a healthy business savings fund. Keep enough savings to cover at least a few months of basic operating expenses, such as employees’ salaries, rent, utilities and supplies. This is especially important if you come into early profits. Building a solid savings and emergency backup can determine whether your business is a flash in the pan or a lasting company. A crisis can hit unexpectedly. Recently, everything was business as usual until a pandemic caused a continuing economic disaster. This emergency fund could make the difference between your business thriving through a crisis or going under.
Comprehensive Insurance Policy
From worker injuries and customer accidents to fires and natural disasters, operating a business opens the door to all kinds of unexpected expenses. Make sure you’re covered with a comprehensive insurance policy. Ideally, you should have coverage before opening your doors, but it’s not too late if you don’t have a policy. The kind of insurance you will need depends on the exact nature of your business. Consult an insurance broker as soon as possible to get covered or choose a better policy.
Theft is a common source of financial loss for any business, and even shoplifting of small amounts can add up to big bucks over time. Investing in a good security system to protect your assets doesn’t have to cost an arm and a leg. Camera technology is more affordable than ever, and just a few strategically placed units can effectively deter and catch thieves. You can also use tracking chips and ink tags on high-value items to further prevent theft. Security needs will vary from firm to firm. As one obvious example, you won’t need to protect your product in the same way if you don’t have a storefront or sell services rather than a physical product. Security specialists can help you determine what exactly you will need at your business.
Good Credit Rating
Where does your business turn when a financial crisis strikes and you exhaust your rainy day fund? Business loans are a great way to stay afloat through hard times, but you need a good credit rating to get them. Take extra care of your business’s credit worthiness during good times to make sure you can access the help you need when things go south. Investment and borrowing are often the backbone of a business, if you plan and work accordingly. Paying your debts on time is essential to keeping your business in shape. Remember to only borrow money when absolutely necessary, borrow only what you need and pay it back on time.
Is your business struggling financially despite having all the necessary resources? Make up the deficit by trimming your operating expenses as much as possible. Take steps to reduce monthly bills like water and electricity, negotiate your rent with your landlord, ask employees to take temporary pay cuts and consider foregoing your own salary. While, hopefully, you will never need to use these measures, it is important to have a plan for even the worst situation. That way, your business is much more likely to stay afloat.
By Lizzie Weakley
who is a freelance writer from Columbus, Ohio. In her free time, she enjoys the outdoors and walks in the park with her husky, Snowball. She recommends https://mga.com/ for your insurance needs.