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4 Tips for Protecting Your Small Business from Financial Loss

by Tanya December 19, 2021

The main purpose of most businesses is to make money, so it’s natural that earning as much money as possible is its main focus.

Businesses also need to think of ways to minimize this risk.

This is especially important when it comes to small businesses, as they may not have as much capital to fall back on.

Below, we’ll be sharing our top 4 tips to help protect your small business from financial loss.

Business insurance

Many small businesses don’t take out insurance because they feel that the money they will lose each month isn’t worth it.

While it’s true that insurance will financially set your business back a bit each month, that sum is nothing compared to what the business will have to pay if a tragedy occurs and they are uninsured.

RELATED: Where To Get Freelance Insurance [+ Is It Worth It?]

Many people think that their small business doesn’t need insurance, especially those who are in the craft/arts industry. This simply isn’t true. Even if you’re selling bath and shower products, you do need to be insured.

Online security

Cybercrime is on the rise.

Criminals like to attack smaller or newer businesses because these businesses are unable to have the same level of security and protection as big established organisations, so it’s easier to hack into their systems.

So – what can you do to protect yourself?

You can outsource IT consultancy and support. 

Legal contracts

Contracts of employment are legally binding documents between at least two parties that define and govern the rights and duties of the parties to an agreement.

Contracts protect your business and define terms and conditions for your employees, suppliers, clients, or investors. Make sure your contracts are legally binding and governed by law by hiring a lawyer to confirm them.

Make sure you have the appropriate tools in place to help you move smoothly as your business expands. Using a contract management platform can help you stay on top of new clients and contracts to support your growth.

This will ensure that all parties have to pay you for your services or face legal action.

Lead generation (for growth)

No customers = financial loss.

This means you need to generate leads continuously.

Lead management software helps businesses manage their lead generation campaigns by providing all information in real-time. The most popular platform is Salesforce, but there are other platforms like HubSpot and Act-On. A good guide for managing leads will outline how to set up a good strategy for your company, follow company guidelines, and ensure that everything is running smoothly.

Business budget

If you don’t know how much money you have, earn, spend, or need, it can be very easy to think you have more money than you do, and end up wasting too much.

Budgeting is the most effective way to consistently meet profit targets and avoid costly surprises.

Freshbooks has a great guide to small business budgeting.

Budgeting helps you invest your resources by using careful consideration rather than responding to urgent needs.

That’s why having a business budget set up is so important.

This way, you’ll always know where you stand with your finances, and as such – manage your finances better.

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Tanya

The first Millennial blogger in the UK. Twitter @_luckyattitude

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