Every business aims to be around for the long term and also desires some level of financial comfort. In order to do this, they avoid bankruptcy like a plague. Below are seven tried and tested principles that help every business in avoiding the risk of bankruptcy and survival.
Have A Business Plan
Every sphere of life needs planning, whether it’s in business or in personal goals, planning always helps in setting achievable goals, the processes involved in reaching those goals, timelines and a breakdown of strategic actions.
In most businesses, planning is done by top management and is shared with other members of staff so everyone can have an idea of the vision and mission of the company and work together in a synergy to achieve.
Business plans should be constantly updated and perused as this is vital to the growth and survival of any business. A well rounded business plan includes marketing, operations, financial budgets and projections. References should be constantly made to the business plan to ascertain if the business is in line with its set goals, objectives and also budgeting and if necessary adjustments need to be made.
Focus On Your Expenses And Revenue
A great deal of attention should be paid to your expenditure and incoming revenue. Financial record keeping is of utmost importance for any business who’s aiming for financial stability. No stone should be left unturned to enable a working financial system that can be used by both old and new employees and stand the test of time.
All financial books should be balanced and an accounting structure put in place to track expenses and income as this helps in accountability. Technology has made it easier as we have various software’s that help with financial book keeping and reporting including xlreporting and slickpie. You can also employ the service of an accountant to help if you need to.
Get a Loan
In as much as most businesses file for bankruptcy as a result of unavailability of working capital and it seems like stating the obvious to find more capital. Getting the right amount of loan to enable the business run for a little longer can help find out the root causes of the bankruptcy without necessarily shutting the business down.
Not having enough money is not a good feeling for any business and this might not allow you focus on the other factors that might be affecting the business negatively. If you are averse to regular bank loans, You can apply for a working capital loan from flexible lending facilities like merchant money.
Get with the times
The world is always changing with paradigm shifts happening. As a business, you need to constantly update yourself with these changes and how it affects your business. It might be a new government policy, new form of technology or even consumer behaviour. You also need to pay attention to what your competition is doing in the same market place you play.
It is possible that you’re doing everything right as a business but your competition has changed the dynamics of the game, leaving you behind to struggle to stay afloat. Monitor trends, carry out research and constantly do surveys in order to be up to date and learn more effective and efficient ways of pleasing and retaining your customers whilst bringing in new ones.
Pay your taxes
Pay your taxes on time and as at when due to avoid running into debt. Playing a fast one by deducting taxes from worker’s salary and not turning it in is only the beginning of trouble that’ll happen at a later date. Not paying taxes can result in interest and consequences that might submerge the business financially.
If it seems like your financial books are not adding up and you seem to be paying more in taxes, you can get professional help and advice from experts in the field. They can help analyse the financials and find out where the problem is and how to solve it.
Mixing business and personal finances
Do not mix your business finances and personal finances. Let there be a distinct separation between the two. If there is need to borrow from the company, let it be properly documented and accounted for. Every time you have to dip into your business finances, pretend like you’re borrowing from a financial institution like a bank.
Also make sure to avoid loaning money from your business to family members and friends without proper documentation and signings. Let the money be accounted for to avoid problems in the near future. When businesses start encountering financial problems, the first port of call is to get monies owed back and if proper documentation hasn’t been done, getting it back might be a herculean task.
If things are starting to go down south, it is better to get professional advice as soon as possible because you never can tell if the business can be salvaged. Don’t wait till things become irredeemable before calling a professional or an expert to come and do an analysis and make recommendations.
That being said, your business is an organism, treat it with care and don’t let it die