As a small business owner, you know how important it is to have control over your finances. You have to pore over the budget every month. You have to carefully tally up transactions and deals. You know that mismanaging your money could put the entire operation in jeopardy — and managing it well can bring a lot of rewards.
So, if you want to get better at managing your business’s finances, you should follow these three simple tips:
1. Save for Emergencies
You can’t pin your financial plans on everything going smoothly. What if a major piece of equipment breaks down? What if the plumbing in the building needs fixing? Or what if there’s a sudden drop in cashflow? Something is going to go wrong eventually, and you need to be prepared for it.
The best way to prepare is to build your business an emergency fund. Dedicate a portion of your monthly budget toward this financial safety net. If you make more profits than usual, consider adding some of those funds into your emergency savings. The more savings you have, the more protected you will be.
An emergency fund takes time to build, so you might not be able to rely on it right away. You might not have enough savings to handle problems like repairs and replacements. So, what can you do? If something goes wrong and your emergency fund is still on the small side, you could apply for online installment loans to help you handle the issue.
Not all online loans will be available in your area. Narrow your search to options available in your state. So, if your business is located in Detroit or Grand Rapids, you would want to look for online loans in Michigan to help you handle your emergency. Otherwise, you might waste precious time looking into a solution that Michigan residents can’t even use.
2. Get Insured
Insurance is an expense that seems unnecessary and wasteful — until you need it. Then you’ll be thankful that you took the precaution. Thorough insurance coverage and emergency savings should help you handle almost any obstacle that comes your way.
What type of insurance should you get? If you have brick and mortar location, you will need to get the standard commercial property insurance to recover from problems like fire, theft and natural disasters. It will help you cover the steep costs for repairs and replacements without going into the red.
Here are some other types of coverage that you might want to consider:
● General liability insurance
● Product liability insurance
● Cyber insurance
● Business interruption insurance
3. Build Up Your Business Credit
One of your biggest financial goals as a small business owner should be to build up your business credit score. Your business credit score is different than your standard consumer credit score — the scores are ranked between 1 and 100, with 100 being the best possible option. Having a strong score comes with some amazing advantages, like lower insurance premiums and interest rates.
If you’re unsure how you can do this, look at this list of simple suggestions on building business credit from the Small Business Association. Following these practical suggestions will move your business’s score up the ranks and improve your reputation with clients, investors and lenders.
First-Rate Finances
These tips will do more than help you manage your finances. They will help your business stand the test of time.
