Efficiency is the name of the game at Agents of Efficiency (obviously) so we’re making it even more efficient for you to improve your business. Every week, we sort through all the boring stuff to bring you the best tips from the wide world of the web. For this week’s #2tips4tues, we examine how to minimize risks in business and gain peace of mind.
According to a recent Bureau of Labor Statistics study, about 80% of new businesses survive their first year. But this portion quickly dwindles with each passing year. By the 5th year in business, only about 50% of those new enterprises will survive. It’s no wonder entrepreneurs are sweating bullets and hoping to minimize risks anywhere they can. So here are two things worth doing for your business early on.
Manage Cash Flow Wisely
One study ranked insufficient cash flow as the primary reason small businesses fail. How can it be prevented? Scott Lovingood, CEO of The Wealth Squad told BankRate, “Calculate every month how much money you have on hand and how long it will last if your income dries up. Also evaluate monthly your total accounts payable and the number of days accounts are outstanding because a slowdown in accounts payable will lead to cash-flow crunches.”
Develop a Plan
Creating a risk management plan is a proactive way to ensure you are one step ahead if anything goes wrong. Part of this is purchasing or reviewing an insurance policy. Depending on the kind of business you operate, the types of risks you face will vary. Focus on implementing protocols that prevent injury or property damage before they occur. Consider in what areas you’ll need “backups.” For example, find employees who can fill in during emergency situations. Know where to purchase last minute supplies in case you temporarily run out of key materials to operate your business.
Along with careful cash management, prevention is the key to minimizing risks and preventing fatal mishaps.