How to Financially Protect Yourself as A Business Owner

 Josh Krasinksy
  Jul 23, 2018

There is a lot of financial responsibility that comes with being a business owner, which is often the downfall of many. Out of all of those who try to be a business owner, there is only a 20% success rate after a two year period.

If you want to be part of the top 20% of successful business owners, then it’s important to make sure that you are taking out all of the necessary financial precautions in order to prevent your business from suffering if the worst should happen.

There are lots of things to consider as a business owner, which vary from paying people's wages, to building maintenance fees, to other necessary things that you have to pay for. If you're operating from a physical premesis you need to consider all of your overheads such as electricity and rent. The same can be applied even if your business is solely online, with costs such as shipping costs and internet bills forming part of the bigger picture. With so much to consider, it can often feel that the list is endless. Because of this, it’s important to get together a financial business strategy in order to stay afloat during difficult periods.

One of the key factors that you have to consider, is that markets and industries are constantly changing, so it’s important to stay ahead of the market and make sure that you are open to changing your business strategy in order to remain relevant.

Take the necessary precautions:

As a business owner, it’s your responsibility to assess all of the things that could potentially be detrimental to the financial health of your business. This is something that you will need to set short and long term goals for, in order to remain in a good position. Putting together a contigency plan can be invaluable for your business in the future.

Employee performance is the bread and butter of your business, if they don’t perform well, then your business doesn’t perform well. It’s important to set a progression plan in place to keep people motivated, i.e. cash bonuses, employee days out and other perks.

On the other side of this, it’s equally as important to make sure that your employees are performing well. If you find that attitude, performance and motivation is declining in any of your employees, be sure to monitor this and make sure that you are taking necessary precautions to make this happen. For example, if you have an employee that doesn’t want to work, then you need to assess their value to your business.

It’s important to track the outgoings and the income to assure that you are making enough to get through the year. If you lose business, then you could lose a lot of money, so be sure to do everything in your power to make your clients and customers happy.

Legally protect your business:

It doesn’t matter if your business has a great reputation, or how careful yourself and your employees are, there is always room for human error. Sometimes, things happen that are out of your control, so it’s important to legally protect yourself should anything go wrong.

If a client is unhappy with a service they have paid for, they can ask for a refund or in the very worst case, they will seek legal action. Legal cases are extremely costly and often work in favour of the client. This is a serious financial burden and can leave you bankrupt if you do not take out the necessary precautions.

If you plan ahead and take out professional indemnity insurance, then you could save yourself a lot of money should the worst happen. This will cover any of the legal costs and reparations that you may have to pay during the court process. It’s important to make sure that you calculate the risk of anything like this happening and ensure that you take the necessary precautions to prevent it from happening in the future.

How to Financially Protect Yourself as A Business Owner

Josh Krasinksy

Josh Krasinksy is a Business and Management student based in London. His career aim is to work with environmentalist groups to teach businesses how they can operate in a more eco-friendly way. He's often attached to his laptop, but when he does have some downtime he enjoys a spot of golf.

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