If there is one thing every business owner should know, it’s how to properly manage their finances. Anything less would plunge them into hot waters. While small businesses can’t boast of the financial competence of the bigger corporations, 40% of small business owners admit to being financially illiterate. In comparison, 81% of them manage their business finances themselves, which will likely put their business at risk of failing. Here is how to protect your small business’s financial health.
- Get creative
When you establish a business, you will almost certainly incur debt. This may be due to your need to borrow money to keep up with present costs or expand your business. Unfortunately, debt can be burdensome as it creates a challenge for businesses to cover their basic expenses and make debt repayments. At this point, it can be useful to consider other creative options instead of taking a bank loan, using your credit card, or taking on other types of debt. Fortunately, a few creative alternatives like receivables factoring can be ideal for businesses that offer credit sales to customers instead of demanding down payment on their purchases.
- Secure yourself against liabilities
You can’t afford to take the chance of being sued and paying a large compensation payment. For example, employer’s liability insurance is a legal necessity for businesses to protect themselves from potential damage claims from employees. More so, your customers, suppliers, delivery persons, and others who enter your facilities may require public liability insurance. You may require property and commercial vehicle insurance to protect yourself in some instances. Meanwhile, you want to ensure state and regulatory compliance to avoid federal or state labor laws disputes. For example, your business can avoid hefty fines by posting Labor Law Posters in areas in the workplace.
- Keep good relationships with suppliers
Regardless of your business type, you will likely need supplies from other businesses to ensure your daily operations run smoothly. Therefore, fostering and keeping your supplier relationships positive is essential to protect your business finances. Failing to pay your suppliers on time or living up to contractual obligations can easily cost your partnerships. Unfortunately, as news can spread quickly, other suppliers may hear of this and compromise your relationship. This can make it hard to forge any meaningful relationship with new suppliers.
- Pay attention to your data security
Data can be as important as your physical assets. Data is key for today’s modern businesses as you need to find ways to leverage for more actionable insights to improve your business. Data is crucial for making those result-driven decisions and client marketing. Data security considers everything from protecting client information to intellectual property and information on staff mailing lists. Likewise, it would help if your security protocols dictate how much information is accessible and where. It is vital to have a robust response plan to mitigate damages during a data breach. This is key for protecting your brand and saving your business from expensive lawsuits.