Running a business comes with a lot of responsibilities, and the financial stability of it rides on several factors. Some hard work goes a long way, but without ongoing strategies to ensure your finances are secure, there isn’t a guarantee your venture will endure.
Look at these five steps to a more financially secure business you can adopt today.
Make sure you have insurance
From day one, a business exposes itself to risks. This makes it vital to have the right insurance plan in place. Without one, a catastrophic event or lawsuit could knock a small business flat on its back. Consider professional liability that will cover a business against negligence claims, worker’s compensation, and product liability insurance to protect your business.
Hire the right help
At each state of your company’s growth, reevaluate its needs and see if your business would benefit from hiring people to fill various roles to lighten your load. For instance, hiring an accountant during tax season can be helpful and make your life easier, even if you don’t hire someone full time.
Another option is to hire independent contractors for your workforce needs. Independent contractors aren’t treated as employees in the sense that payroll taxes and some state and federal employment laws don’t apply to them. Hiring independent contractors is advantageous because they allow you to have a work force when and if you need it. In addition, hiring independent contractors provides a safeguard against some lawsuits that employs can file against employers such as overtime that wasn’t compensated and unfair employment termination. Most states automatically side with the employees so hiring independent contractors instead of employee keeps the business owner out of hot water in these areas.
Build and nurture your team
The lifeblood of your business is its team – and to secure the longevity of your business and help it thrive, you need to inspire your team. If you’re like many business owners and want to know how to improve your business, note that research shows that engagement and productivity are inextricably linked. Give your team a stimulating environment and prioritize employee retention so your most valuable assets – your employees – won’t go anywhere. One great way to do this is by creating regular praise of their accomplishments. You can think of this as quarterly reviews that focus on the positive work they are doing for the company.
Stash cash for business expenses
Saving is challenge for small business owners, but it’s essential to regularly set aside money to maintain long-term financial health. It’s not mandatory to open a business savings account, but it’s a good idea to have money somewhere specific since you never know when you may experience an unexpected event. Extra cushion to deal with expenses that occur out of the blue are crucial. Think of this as an emergency fund that same way you would for your personal finances.
Not thinking about tax time? It’s easy to forget to save for it when you’re focused on business operations, but you need to reserve designated cash so you have available funds when tax time rolls around again.
Implement effective risk management strategies
Even though some of the best stories started with a bet, risks require a lot of research when it comes to small businesses. Effective risk management strategies allow you to identify your project’s opportunities and strengths, but also be aware of its threats and weaknesses. Before you launch your next project, define how you’ll handle potential risks so you can mitigate and avoid problems. Effective risk management strategies help you plan and prepare your business for what may come its way.
If you’re an ambitious business owner who wants to succeed, you need to make it a point to keep your business financially airtight for the long haul. Cash flow management and risk mitigation is the name of the game. Use these insights to help solidify long lasting business growth.
Kidal Delonix is a contributor to Mr. Hoffman's blog. The views and opinions are entirely his/her own and may not reflect Mr Hoffman's views.
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