Business Tip: Plan For the Rainy Days

Business Tip: Plan For the Rainy Days

Ask anyone who runs a business and they’ll tell you that there’s more rainy days than there are sunny and promising ones. Although this absolutely sounds daunting and a looming deterrent for aspiring entrepreneurs, it’s something you can definitely prepare for. Fortifying your business with safety nets and protective measures is a smart and effective way to ensure that it can brace on for dear life once those proverbial storms come your way. In most business ventures, survival is often the goal of entrepreneurs for the first few years, and only after that fragile time period can one actually start to prepare for growth and success.

Get Better at Forecasting

It’s not enough to just acknowledge the inevitable scenarios of dire need and trouble in your business’ future. Know which signs point to potential mayhem and which signs should be dismissed. Income statements and balance sheets are two of the key financial paperwork that you’ll want to pay attention to and learn how to decipher proficiently. Your pro forma, which pertains to anything estimated in advance, income statement will detail gross and net income and profits. On the other hand, an estimated balance sheet will lay out future assets, liabilities, and your business’ net worth years from now.

Look to Your Budget

Let your budget plan be your financial blue print for rainy days. A budget helps redirect you to the right direction for your business, and it requires to be updated on a regular basis to account for changes in the overall landscape that it operates in. By knowing where possible drains your cash is disappearing to, you’ll be able to stop the financial leak as quickly as possible and avoid further damages to your business.

Consider an SBA Loan

Small business administration-guaranteed loans allow you to restructure your outstanding business debt and provide a longer repayment time frame, that is if the SBA can guarantee such service to your original creditors. If your business is situated in a qualifying location, an SBA-guaranteed loan is a financially sound option for those rainy days when traditional loans and other credit sources have failed to repair the situation.

Have Adequate Business Insurance

Business insurance covers current, such as flood or fire, and emerging risks, like cyber security hacks. Adequate business insurance coverage can act as a financial cushion when an unforeseen disaster hits your business. This can be in the form of environmental destruction, human-induced damages, or scenarios where you are held liable for employee or customer injury.

Have an Emergency Fund

Just like how regular people have their own emergency funds for rainy days at home, you’ll also want to protect your business with some extra cash for emergencies. Don’t make it easy for yourself to raid the rainy-day fund by putting it in a separate account. Separate your budget account from your emergency savings account. It feels cumbersome to keep track of two accounts, but it definitely makes the emergency funds more secure and only accessible when the situation calls for it.

Train Your Employees

When a financial or organizational problem strikes your place of business, it’s not only you who’s affected. The impact also reverberates throughout your entire workplace. Training your employees on how to handle problematic situations can speed up the process of recovering from it. Everyone can do something small to help heal the business’ cash flow, branding, and other aspects that were damaged.

Have a Plan B

Most rainy day situations last longer than a day. Sometimes, you’ll experience a drought in customers and profits for weeks or months. Plan and prepare for all possible outcomes. If your marketing approach doesn’t work out the way you thought it would, have a “plan B” and leap into action with it. What makes some rainy days permanent for businesses is the inability to act to try and reverse the situation. This, ultimately, is caused by a lack of foresight and planning in advance.

Maintain Lines of Communication

Amidst the ensuing chaos, a business suffering from a rainy day or week may lose its ability to connect internally. Employees and top-level positions start to get careless and hasty with their decision-making skills and ability to communicate their needs and opinions on the matter at hand. Keep lines of communication including mobile phones, email, and your personal Cloud server up and running during these fragile times.

Whatever type or size of business you start, the only real constant is the fact that there will be rainy days. For some businesses, the light at the end of the tunnel won’t be visible for months to come, but it’s a prudent attribute to just roll with the punches and see your vision through.

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SMBReviews is committed to providing small and mid-sized business owners with the information and resources they need to select the best service or product for their company.

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