With the vast majority of businesses failing within the first 5 years of operations and a high proportion of these doing so due to poor cash flow and financial mistakes, keeping your figures at the center of everything you do is vital to ensure you fall victim to the same fate.
Your finances are an integral part of what you do. Making a profit doesn’t always equal good cash flow or financial stability within a business. Often, business owners’ poor decisions or lack of attention impact finances.
If you want to protect your business against financial loss, these tips can help.
Have Cyber Protection
Cyber attacks cost US small businesses thousands of dollars each year. From having to pay a cyber ransom (on average, each small business spends around $16,000 for the safe return of stolen data) to paying fines for not having enough security measures in place to a loss of reputation and business, leading to decreased sales not to mention the cost to clean up after a breach, cyber attacks can be costly endeavors. You need to have appropriate cyber security in place in the hope that you will mitigate risk, protect yourself, and avoid financial losses from breaches.
Insurances
Legally, you must have a certain level of insurance coverage for your small business. However, it is often the optional coverage that can provide you with the financial support you need. Business Loss Cover can help you to recoup any losses you might suffer if you’re unable to trade for any reason. While in shipping insurance can cover any financial loss for damaged or missing items when stock is being shipped to you or to the customer, cyber insurance can protect against anything discussed in the previous point. Exactly what coverage you take out is entirely up to you, but having various policies in place will serve you well.
Pay On Time
Paying your bills on time is the best way to protect yourself against poor funds and financial failure. Paying employees, vendors, utility suppliers, etc., on time when your bill is due will help you improve cash flow, create better forecasts, and ensure that you always have the right funds in appreciative places when required.
In addition, the better you are at paying on time, the better your relationships will be, and the better deals and rates you can unlock, thanks to your good reputation and credit score. This means you can avoid things like late fees, high interest rates and prices due to a poor credit score, and penalties.
Keep Copies of Financial Statements
In a world where everything is stored digitally, keeping paper copies of financial transactions for your records can be a good idea to help you stay on top of cash flow and finances. These can be credit agreements for your business, credit card statements, bank statements, copies of payments made to vendors, etc. Keep them together and secure so you have copies to improve your finances and cash flow.
Improving finances isn’t always easy. However, it’s easier to establish good financial habits from the start than to rebuild from a place of poor financial decisions. These tips can help you stay on top of your finances and keep your business in good standing.
