Recent studies have shown that 8 out 10 businesses in USA fail within the first 3 years. There are many different reasons why this happens, with the most common one being poor handling of finances. This happens when business owners who are not specialized in economy decide to run the finances in their SMB without consulting professionals or doing any research. Because of this, we have come up with 5 tips that can help every SMB owner minimize the risk of bankruptcy. Make sure you check them all out.
Try to Predict Your Expenditure
One of the most important things you will have to do with each project is try to overestimate your expenditure. Many business owners tend to start a new project without even thinking about whether they will have enough money to see the whole project through. Still, this is absolutely necessary if you don’t want to put your business at risk. When trying to predict the expenditure, bear in mind that you should always budget above the anticipated costs since there can always be some unplanned expenses.
Think about Different Cash Flow Periods
When running a small business, there will always be some periods when you are going to have more customers and the periods when you will be working more slowly. It’s very important to mention that your cash flow will drastically decrease during the periods when you have less customers. The best thing you can do in order for this not to become an issue, is create a financial cushion that will help you run your business during these periods.
Don’t Delay Accounting Tasks
You should never delay any accounting tasks just because it seems difficult. If you aren’t specialized in economics, dealing with finances can be daunting but it’s very important that you do it on time. If you keep delaying these, they are all going to hit you hard at some point and leave you having to deal with an enormous accounting mess over a short period of time. That’s why if you don’t know much about economics, you should let professionals take care of these for you.
Always Collect All of Your Debts
It’s also very important that you make the most of everything you invest into your SMB. That’s why you should never let any debt go uncollected. Still, collecting debts is not always easy as it may seem. Debt collection can be quite a difficult process, especially if you are dealing with customers and business partners you don’t know much about. There are many different techniques to help you deal with this issue. The best way to make sure you get all the money you are entitled to is to hire professionals who offer debt recovery services.
Never Devalue Human Capital
No matter how much expenditure you have, firing your employees or cutting their wages is never a good idea. Even if paying less employees can help you save some money, chances are you will have to work 80 hours a week and be much less productive if you do so. Experts agree that having a strong and satisfied team around you is a key to success when running an SMB. Also, investing in your employees by sending them to conferences or team-building activities can be very helpful.
Make sure you follow all of these tips and your business will never be at risk of failing. Just think your every move through, carefully and remember that letting professionals help you from time to time can do wonders for your business.
Dan Radak is a marketing professional with ten years of experience. He is a coauthor on several websites and regular contributor to BizzMark Blog. Currently, he is working with a number of companies in the field of digital marketing, closely collaborating with a couple of e-commerce companies.