A big part of being able to survive throughout the quieter months of the year is to have a good financial plan and the following information is always worthwhile keeping in mind when you’re looking at your small business’s finances to ensure that you don’t suffer when things quieten down.
Have a back up fund
When your small business’s income reduces, it’s always agreed that it would be particularly useful if you had a pot of money that you could utilize temporarily until business starts to pick up again.
Although it might seem impossible, the truth is that with the right planning – something that should start from day one, with a certain amount of your business’s profits going into a contingency fund and which is stated in your business plan – you could easily have a pot of money available to use should you need to.
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Don’t wait until the drought hits to try and find water
Arguably the most important point to consider, it’s imperative that you don’t keep putting off and putting off preparing for when the worst happens, as it’s almost guaranteed that all of a sudden you’ll be in a financially poor position without a plan or no idea of how you’re going to survive.
Running a business should only have a minimal amount of risk and the simple way that you can reduce the likelihood of your business suffering from any affecting factor – be it financial or not – is to plan and prepare for every eventuality as far in advance as possible.
Work with other businesses
When you’re working for an organization and things start to get too much for you to handle in your own role, you have the ability to ask others around you for assistance.
When you run your own small business, you don’t naturally have this capability.
However, if you spend some time networking with other small businesses, you can develop relationships that can be particularly useful when things aren’t going well for your business.
OK, you might not be able to get financial assistance as such from the businesses that you’ve networked with, but it’s generally accepted that if you had a good relationship with several businesses and they weren’t your direct competitors, they would be able to help out by providing free advertising and directing customers to your business when you needed it most.
Do remember that this has to be reciprocal and if you needed to call upon your business contacts for assistance, you would be expected to do the same in the future should they require your help.
Every small business struggles at some point financially. Some have trouble on a regular basis, others only once or twice every few years, but however your small business operates, it’s imperative that you plan and prepare properly to ensure that you are able to come through the other side of any financial difficulty.
This post was originally featured on July 5, 2011.