6 Tips for Protecting Your Small Business from Financial Loss
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 share our top 4 tips to help protect your small business from financial loss.
1. Business budgeting – track your cashflow (income and expenses)
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.
Get an accountant
An accountant helps to look after your finances. Provide you with reports and recommendations, and even help you create a strategy for your future growth.
Some accountants are also certified business tax advisors.
Did you know that businesses can get significant tax relief through property capital allowances. More than half of the businesses in the UK don’t even claim their entitlement, which can be worth hundreds of thousands of pounds.
Another business tax relief people are not aware of is R&D tax credits. Research and tax relief is available for companies of a technological or scientific nature. The research has to be significant enough so that an expert in that field could not work out how to do without conducting their own thorough research and development. Your project does not have to succeed in order to be eligible.
Additionally, a great accountant will also be able to help you secure financing for any investments you wish to make.
If you are struggling with your finances, or have found yourself in debt that you cannot pay, you may need to enlist the help of insolvency practitioners.
2. 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 lead gen platform is Salesforce, but there are other smaller players like Linked Hacker who are really good. Linked Hacker is a B2B lead generation agency and cold email software that can guarantee pre-qualified leads straight to your inbox.
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.
3. Invest in 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?
To prevent data breaches, you could talk to cybersecurity professionals to give you invaluable support.
4. Get IT support
If your business relies on the internet to generate income, either through direct sales or bookings, then it makes sense to outsource IT support. Look into IT consultancy and support to discuss customised automation on web and mobile apps, regular security updates, and much more.
5. Make sure all your contracts are legally binding
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.
6. Get 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.
If you’re not sure about what type of insurance you need, you can seek out a small business insurance broker who can help you to find the right policies for your company.
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.