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4 Tips for Protecting Your Small Business from Financial Loss

by Tanya July 07, 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

Cyber-crime 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 support. 

RELATED: How to Protect Your Home-Based Business from Risk

Legal contracts

A contract is a legally binding document between at least two parties that defines and governs 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.

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

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 the  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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