Of course, the fruits of business are way more enticing than that of working an 8-to-5 job. It’s apples and oranges. That’s why that allure of business has made many people quit their jobs and start something to become a boss. But business is never for the weak of hearts. Quite frankly, it’s a tortuous road that may have people fall short of their success. And if there is one word that has made the spines of entrepreneurs tingle in fear, that word has to be bankruptcy.
You will be surprised to find out how many business owners have gone bankrupt. According to studies, about 20% of businesses go bankrupt after the first year. Truly, it’s a sad tale. If you do the math, 20% of over 31.7 million small businesses is still a very big number. Luckily, bankruptcy can be prevented. If you play your part well, you might just come out on top of it all. Here are some essentials.
Have a Business Plan
What’s a business without a business plan? Any business without one is quite frankly heading for disaster. Think. If those who plan well failed, how much more those who don’t.
Your business plan should be a guide for your business. Take note that when making the business plan, make sure it’s written. A plan that’s all in your head is not a plan. It’s just a hunch.
The point of having a business plan is to document how things would run in the business. This includes expenses, operational costs, goals, sales, and every other thing related to the business.
With a good business plan, people working for you have an idea of what they have to achieve. And then you can keep track of how well the business is fairing. Plus, when you write it down, you make it open for improvements, making it better in the process.
Be Accountable with Money
This is another essential tip if you want your business to thrive. You must keep track of expenses, even to the smallest penny. Ensure that you are not spending more than you have to. This is also why you need a good accountant that can keep track of all the money. And brief you monthly.
So your objective is to be as efficient as possible. To do that, go through your expenses every month. Then check areas where you could save some more. And remove unnecessary expenses. Usually, these expenses are recurring charges. We’re talking about software you’re not using, apps you’ve stopped using, and many more. Additionally, you can look for affordable options for things consuming a lot of money.
However, know that you would need to source money to help your business grow. For one, this is where a mortgage lender can be a big boost in expanding your business. The good thing about mortgages is that compared to banks, they can customize to your financial needs better. Plus, if you’re a low-risk opportunity, you could get very competitive rates over time.
Then again, it would be best if you explored your options on how to give your finances a timely boost.
Prioritize Paying Debt
Right here is one part you should never neglect. Make sure that on top of the list is paying your debt. Classic examples of these are mortgage loans and loans from friends and family to start the business.
Make sure you pay on time as the interest will keep piling up. And before you know it, it’s beyond control. Never procrastinate paying loans as it could cost you a lot later in the future.
Review Insurance
One thing that takes up a lot of money for businesses is their insurance. Make sure you are in constant contact with your insurance agent. There are times that premium goes up, and this could cost a lot on your end. Ask for cheaper options that would make things easier on a business.
Be as Conservative
When running a business, you have to be as open-minded as you can. You don’t expect that every customer that comes will stick around. Or that all your customers will pay. That’s why you have to be ready financially. This would involve creating the worst-case scenarios in your head. But then again it’s for the best. When you prepare for every possibility, however challenging, your business won’t come crashing down when customers are scarce.
As much as you are excited and optimistic about the business, it would be best if you were realistic. When taking risks, weigh the options. Make sure it’s worth taking. Action without deliberation is madness. Then again, when you do good business, the profits flow continuously, and you would earn more than if you work in any 9-to-5 job.