No one sets up a business wanting it to fail. Yet, statistics from the Bureau of Labor Statistics reveal that just 20% of businesses survive past their first year and only one third are still active after 10 years. Ensuring your business is financially secure should be at the forefront of any entrepreneur’s mind and to achieve this, you should take steps to protect your growing organization. This means staying abreast of the latest small business regulations that you should adhere to and doing all you can to secure your company’s finances.
Take out appropriate insurance
Insurance is a must have product for all small businesses. You can take all the precautions in the world, but there’s no foolproof way to stop a thief stealing from you, a faulty piece of equipment starting a fire or an employee sustaining a workplace injury. Not having the appropriate insurance can put your entire livelihood in jeopardy as you’ll have to fund repairs, replacement goods or medical expenses at your own expense. Doing this can easily eat into your business finances and leave you at risk of going bust. Therefore, secure a policy from a reputable insurer who provides cover for all your business needs.
Seek advice and innovative methods
Interestingly, businesses can learn a thing or two from downfalls that made headlines – like that of Toys R Us. The retail giant was once the face of the high street and was the go-to place for many parents and grandparents. But, with their debts surging over recent years and peaking at $5 billion, there was only one way it was going to end. At times, businesses may fall into debt, but it’s how you deal with it that matters.
One way to deal with debt and improve cash flow is through invoice financing – an innovative financial tool allows businesses to borrow money against the amounts due from customers. In simpler terms, it helps businesses unlock the cash tied up in unpaid invoices – providing them with immediate funds which can go towards covering expenses and investing in growth. Some even call it “a lifesaver” for businesses struggling with cash flow issues, especially when facing financial challenges like those that Toys R Us encountered.
Spend and save
As a business owner, it’s essential you regularly sit down and review your books. This gives you the opportunity to see where your money is being spent and to decide whether there are ways of clawing some cash back. Sometimes you’ll have to make difficult decisions such as letting staff members go for the financial benefit of the company. Other times, it’s worth investing in professionals to review your business and provide feedback or to design a professional website for you, if it’s not something you have experience of.
Most small businesses will experience financial ups and downs. Effectively managing the downs is the key to securing your small business’s finances and encouraging your company’s growth.
