The market offers a lot of opportunities for small businesses to thrive at the moment. There are more chances to expand than ever before, despite many market uncertainties. You have the internet turning the world into one global market and allowing you to tap into more potential customers.
Rapid growth, however, should never blind you from establishing a strong foundation for your small business. As tempting as growing at an incredibly pace may be, your business will not survive market challenges when it doesn’t have the basics covered properly. You need to protect your small business and there are several things you can do to get started.
Understand the Laws
One of the first things you need to do when you want to establish a strong foundation for your small business is understanding the laws. We’re not just talking about the local laws that govern the city you are in. You need to take the time to understand the laws in different markets you are operating in.
There are several things you want to dig into. First, you need to understand the employment law of the city you are in and other areas in which you plan to hire employees. You also want to get yourself accustomed to the financial laws.
Once you have these two basics covered, venture into other areas of the law that also affect your business, including marketing and advertising law and intellectual property law. These regulations affect how you can protect and market your products and services in different markets.
Understanding the law isn’t always easy. There may be jargon and specific regulations that you cannot understand even when you try. This is where having a good business lawyer comes in handy. Your lawyer can help draft the contracts you make and keep your business in compliance with the law at all times.
Protect Your Assets
Next, you need to start thinking about protecting your assets. Assets are valuable resources that every small business leans on at different times. The office you use, the office equipment you bought when you first started your business, the cash and financing options you have, employees filling key roles, and other assets of your business are equally important and are worth protecting.
For most tangible assets, you have insurance options to look into. A building insurance plan can help protect your investments and equipment. Business insurance offers coverage against interruptions, allowing your small business to remain healthy even in bad situations.
Other insurance policies protect the business against liabilities. Workers insurance, for example, is designed to not only keep employees covered but also to protect the business from financial risks associated with workplace accidents. You can even go a step further and provide additional insurance coverage for employees.
Speaking of going a step further, many small businesses now take active steps towards protecting their key employees. While business lawyers help protect your business from legal matters, you can have a team of lawyers on the side of your employees when they face their own legal problems. Advocates like the experts you can find on this website are worth retaining.
Work on Your Cash Flow
Cash flow is king. The only way your small business can grow is by maintaining a healthy cash flow at all times; well, at most times at least. Cash flow dictates how you handle expenses and income. When you have a healthy cash flow, you can keep up with expenses without an issue. An unhealthy cash flow, on the other hand, often leads to bigger financial issues for the small business.
Market uncertainties certainly make creating and maintaining good cash flow harder, but it is not an impossible thing to do. You just have to be smart about balancing your expenses with your income.
Timing is everything. Earning $20,000 from a project is great, but the amount isn’t as useful when you have $15,000 worth of expenses to pay before your invoice for that project clears. You will end up with $15,000 worth of expenses that you cannot cover, causing a serious disruption to your business cash flow.
Fortunately, you also have more financing options to utilize these days. Short-term loans, long-term financing, and project-based advances are some of the financial instruments you can use to keep your business running smoothly while you wait for the big invoices to clear.
Diversify Whenever Possible
Another thing you want to do to further strengthen the business is diversifying. Relying on a single source of income isn’t how you survive a competitive market. You need to find additional revenue streams so that the business can continue to operate smoothly in different situations.
Additional revenue streams don’t need to come from a separate business entity or another operation. Adding a product that is aimed at different market segments is a good start. Diversifying is also achievable when you cater to online and offline customers. These two groups of customers behave differently and complement each other.
Some small business owners even go as far as developing passive revenue sources for their businesses. Similar to financing options, you also have more investment instruments to add to your portfolio. For instance, you can rent out a portion of your office that you don’t need to other businesses. You are basically generating passive revenue on your asset.
Proceed with Care
Running a small business means taking a lot of risks along the way. When that big order comes in, your instinct will tell you to grab it right away. This is a good mindset to be in, but that doesn’t mean you should make reckless decisions.
With every decision you make, be sure to calculate your risks and explore ways to manage them. You need to be extra careful with every step you take, even when you are certain that the step is good for the business.
Risk management is a natural part of running a small business. When you know how to manage your risks properly, implementing the tips we covered in this article and turning your small business into a big success is easy to do.