How To Plan For Hard Hits To Company Finances

In a perfect world, your business would never have to take a real hit to its finances. The ups-and-downs would be perfectly reasonable and easy to read. However, that’s just not the case. A disputing customer or employee, a change in the market, a sudden disaster in the work environment. There are many ways your business might end up taking a punch, whether it was preventable or not. The question is: can it take it and get back up? 

Duck & Weave 

Obviously, the first step to avoid taking that punch. Sometimes you can’t, but sometimes, a focus on protecting your finances through company policy can help you avoid some deep hits. Keeping company finances separate from personal can avoid the issues of one affecting the other. Making sure that any of your financial services are digitally protected ensures you’re at much less risk from virtual theft. Picture by Free-Photos 

Give Yourself Some Protection 

Sometimes, your business is going to get in a position where it’s going to pay. There’s nothing else for it. Despite a strict health and safety policy, someone might get injured. Despite your expertise, a customer might suffer a severe loss because of your advice or products. When you get business insurance, you get a layer of safety between what you have to pay in these events and your own finances. Some forms of insurance are legally required, but make sure you get an idea of the other options out there, too. Not all of them will be relevant to your business, but you shouldn’t leave any serious risk without a form of protection. 

Dig In To Those Reserves

There are times insurance won’t cover it, too. Perhaps you are somehow outside of what your cover provides or perhaps it’s just an unfortunate turn of events in the business. A business that doesn’t have reserves like a contingency fund to dig into is going to have a lot more trouble than those that do. It’s easy to want to put as much money back into reinvesting or profits, but make sure you’re leaving some savings behind.  

Know Your Defensive Strategy 

Even with all the protections named above, you have to prepare for the fact your business might face serious financial risk. It’s not a pleasant thing to think about, but you should be prioritizing the different assets and people in the business. You need a cost-cutting strategy for when you’re sinking and you need to lighten the load. This doesn’t mean you should find every opportunity to cut costs to increase profits. That’s bad long-term strategy. Only do so when it’s necessary. 

Find Your Coach

Having someone in your corner to offer a little help can sometimes be a wise idea, too. Be smart with how you finance your business so you’re not getting yourself too deep into debt. Almost all business owners will live with the reality of debt in getting their business set up. However, there are other ways to acquire business finance, like receivables factoring or commissions advances. No business should be left so vulnerable that after one hit, it’s done. You need contingency plans, you need backup, you need insurance. Without them, your business won’t survive more than a strong breeze.

I hope you enjoyed this article about determining whether your small business can take a punch to its finances without crumpling.

Interested in more articles about frugal finances?

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