Most startups fail in their first year, and when they do, it’s usually down to money one way or another. So, if you’re just starting out, it’s probably a good idea that you plan for a solid financial future and work out how you’re going to mitigate against potential financial disasters. Here are a few things that can help you with that…
Don’t Sink Everything into Your Startup
You might think that your business idea is wonderful; that it’s a sure thing, but that doesn’t mean that it really is – in business, there are no guarantees. That’s why you shouldn’t put every last cent you have into your new business. Keep something behind, and then, even if your business goes down, you won’t have a personal financial disaster to deal with too.
Build a Financial Cushion
When you’re creating your business plan and crunching the numbers, make sure that you allow for a financial cushion of between 3 and 6 months’ funds, so that if you’re having teething problems, or if you go through a dry spell, you can keep on moving in the right direction and avoid any serious financial calamities.
Protect Your Data
Modern businesses are all about data – well a lot about data anyway – and data can be a great source of income. It can, however, also be a prime source of financial disaster, if it’s leaked, that is. That’s why, as soon as you start your company, you should ensure that you invest in server security, a good malware detection system, software that’s as good at protecting data as it is at simplifying file transfer procedures and even just locks that will prevent your data from getting into the wrong hands. Fail to do this, and you could end up on the wrong end of a lawsuit with a business in ruins before it’s even begun.
Take Out Insurance
You should not be operating a business, no matter how small, without some sort of insurance policy to cover any general negligence that you could be accused of and taken to the cleaners for. So, do your research and see what kind of coverage you need.
Implement Health and Safety Procedures
Another thing that could see you facing expensive legal action that could ruin your business is a lack of health and safety procedures. As an employer/ business owner, it is your duty to ensure that your staff and any visitors to your business are always safe.
Just because you are running your own business, doesn’t mean you have to plow all of your profits back into it and actually it’s a good idea to put some of the money you make into safe investments. That way, even if your business isn’t doing quite so well, you can make some money to keep things going, and you can have the peace of mind in knowing that not all of your cash is in tied up in a high-risk venture.
Financial problems are part and parcel of the business world, but if you’re smart, a financial disaster doesn’t have to be in your future.