As a small business owner, your primary focus could be delivering the best products and services to your customer, but you cannot do this without finances. You need cash in the business for the sake of longevity and boosting growth. The problem is that in a small business, there is often a lack of finances that can prevent growth or, even worse, lead to a collapse. Well, let us highlight a few tips that can help you stay on top of finances in a small business setup.
Separate personal and business finances
A failure to separate personal and business finances is one of the major mistakes that small business owners make. For starters, it makes it challenging to keep track of and control your business finances. For example, you may end up spending cash that was meant to pay your employees for personal use. Remember, in a small business, you don’t have the luxury of money and you have to use your finances meticulously. So, get a separate account for your business right from the start. It will help you track and control your business money.
Tip: Keep off spending money meant for your business for personal use
Protect your business liability
As a small business, you need to guard your business against possible liabilities. Yes, liabilities like personal injury claims can lead to the closure of your business due to lawsuits and a large amount of money that you could require for compensation.
You ought to stay on top of any liabilities. For example, you can get the right liability coverage for your employees, suppliers, visitors, and customers, etc. You can also take insurance coverage for your critical business properties like machinery and vehicles.
- If you have a risky workplace, then go the extra mile and train your employees on how they can avoid work-related accidents.
- Use legally binding agreements to guard you against disputes with stakeholders like employees
- Deliver quality and safe products to avoid consumer lawsuits
Avoid tax issues
Every business is entitled to Federal, state, and local taxes. You ought to know that any non-payment or underpayment of these taxes can lead to harsh repercussions to your business. You can get hefty fines or, even worse, a lawsuit, both of which could affect your small business operations and lead to closure. Tax issues tend to be complex and can change from year to year. Most business owners end up in trouble for inadequate tax knowledge. It is advisable to seek professional help from a tax attorney to help you avoid any issues with the IRS. Don’t just hire a tax attorney when in trouble. Find one to avoid running into business tax issues right from the time you get into the business.
Reduce business debts
Frankly, it is hard for a small business to run debt-free, but you need to be careful as these debts can cripple your small business. It would be best if you tried as much as possible to reduce business debts. Try to raise cash from sales and fine-tune the funnel to acquire and retain your customers. You should also reduce the expenses that are unnecessary in the business. For example, you don’t need expensive office or furniture. Just buy and pay for what you need to sustain your venture.
It is good to get the right funding for your business and maintain a good relationship with your creditors. If you have a nice relationship, you can negotiate with them during tough business times for favorable loan repayment terms.
Safeguard your business against cybercrime
According to the U.S National Cyber Security Alliance, approximately 60% of small businesses close within six months after a cyber-attack. This shows the magnitude with which a cyber-attack can affect small businesses. You have to protect your business from the attacks! Ensure, your infrastructure is protected. For example, you can secure your devices by setting up firewalls, limiting data access only to the right people. More importantly, train your employees on data security and how to identify threats like phishing emails.
Tip: Don’t forget to backup your critical business data to help you get up and running should anything happen.
Protect your business cash
We are in a digital world, but around 30% of the transactions in the business are still made via cash. As you protect your digital systems, remember that it is very easy for your business cash to be stolen. Your employees are a business threat in this case, plus you could face robbery. That’s why you need proper cash records maintained and that the cash transactions verified in your business to avoid fraud.
- It is safer to subcontract security companies that collect and transport money using armored cars to safeguard against robbery.
- Store in-house cash in a secure safe to protect against theft.
As a small business owner, your primary role is to get cash streaming into your business. You also have to put in work to protect what you have if you get that healthy growth that will translate to success!