Small businessowners have their plates full and have a few curve balls thrown at them almost every day. Like entrepreneurs, they are mostly focused on making the business a success – a full-time job of juggling finances, marketing, HR and everything else, and may overlook the most important steps necessary to secure the business.
It is a sad reality that the curve balls that take up most of their time are not the fundamental factors that determine the healthy future and longevity of the business. Most small and medium businessowners turn to address the pivotal requirements for a healthy and strong business only at the time of need which is most of the time too late when the chances of losing the business are high.
Point in case are the last two years experienced by the world. Many businessowners were far from being secure and safe for the weeks, nevevrmind months of no business transactions. The one element of business that needs a good handle is finance. But finances for entrepreneurs can be very confusing which is why it is good to know the financial products needed to cover and create security for businesses.
Based on recent learnings, especially in South Africa, KwaZulu – Natal in particular, after experiencing looting and riots, businessowners know that they need to ensure that basic business and household insurance is in place for business premises, assets from theft or looting, fires, water damage or any other natural causes that could affect the normal day-to-day operations. It is also smart to think about what will happen should you as businessowner become sick and unable to generate income for days or months.
The situation becomes worse also because small businessowners or start-ups are not always able to hire employees. This makes building and maintaining good relationships and collaborating with business associates on projects essential so that client are not left unattended mid projects when the businessowner is incapacitated. Such relationships enable businessowners to generate an income when unable to physically apply themselves.
Most small businessowners are not financially in a position for all that is necessary to ensure their business’ financial security. But this reality does not stop financially challenging situation from occuring. So, businessowners and entrepreneurs must protect their salaries and never stop payig the medical aid.
Right now, most businesses, Globally, are in financial recovery phase as a result of covid19 and lockdown. Unfortunately electricity load shedding in South Africa leaves little opportunity for businesses to exit this financial recovery stage.
However, there are countries that have suffered power outages for long periods of time but have somehow managed to keep their businesses and the economy growing. Globally, the economy must recover from the highly stressed tourism industry which may take time until it is back in full swing mode again.
One of the main reasons that small businesses fail is a lack of upfront and ongoing financial planning. This means that we are now, especially after lockdown, more challenged because we must plan and execute whilst in recovery mode.
What To Do Next:
– Apply intelligent money management and stick to set strategies.
– Have a good plan and do not forget or postpone to seek good tax advice and learn basic accounting skills.
– Make sure you have chosen the correct business entity!
– Consider that it takes years to start making profit after starting a business. The smart advice is to overestimate your starting capital cost.
– It is smart to keep your business and personal fixed expenses as low as possible for as long as possible.
– When you start making a profit, be sure not to be tempted to immediately upgrade your lifestyle.
– Keep your personal finances separate from the business. Pay yourself a salary. Experts say the sooner you start the more secure you become, especially for future needs of the business.
This advice is only a highlight of what can be taken into consideration towards ensuring financial security for your business. It is necessary to continuously research and learn new ways to remain financially secure. Remember…there is always room for improvement.
By arise Mag Staff Writer
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Sources: Bizcommunity and xneelo web