Four in ten businesses don’t last more than five years. Running a business isn’t easy and requires a lot of careful risk taking. Take the wrong risks and your business could fold. In many ways, it’s a gamble, but by being sensible you can lower the odds of failure. Here are just a few ways that you can prevent gambling away your business.
Never go all in
When budgeting, it’s important to always have money spare just in case disaster strikes. Such a disaster could be something as major as a fire or a minor as an employee leaving you in the lurch. Either way, such a disaster will require money to fix it, and if you’ve spent your bottom dollar, you’re not going to be able to do that. Getting into a bad habit of taking out business loans is also not advised – always make cutbacks where possible before considering borrowing large amounts of money.
To insure or not to insure?
Some insurance such as employer liability insurance is compulsory, whilst other schemes such as property insurance are optional. Of course, it’s useful to have property insurance to protect against a possible vandalism or fire, but many people will weigh up the costs and decide against it.
Bundle liability schemes can lower costs – including protection against damage to your property, your workers and clients. However, liability insurance for startups can be tricky, as many insurers require 2 years of revenue/operations before they will consider the risk. Shopping around and considering anti-theft devices and safety devices such as burglar alarms and protective equipment, may all increase your chances of getting insured. Weigh up the real risks by doing research and don’t just reject and accept insurance based on impulse.
Businesses now have all kinds of red tape to adhere to. Having a legal advisor on call can help you to keep your business legally tight could prevent costly fines and lawsuits. Getting contracts professionally written up, hiring an accountant to check over your books and reading up on all health and safety laws are also advised.
Know when (and when not) to bluff
All successful businesses play bluff. However, there’s a difference between bluffing, and all out lying (which can get you in legal trouble). Many small businesses will make out that they’re bigger than they are, outsourcing city addresses for postage when they may be based rurally and referring to their office over the phone when they may well operate from home (it’s still technically an office, but clients don’t have to know you’re working at a desk in your conservatory). This has minimal risks and is sensible, but once you start lying about past clients, buying Facebook likes, advertising fake ‘limited’ deals and promising services you can’t follow through with, you start entering dodgy territory. When taking a risky bluff, always look into the legal ramifications and consider the implications on your reputation.
Share your winnings
If your business is going through a successful period, be careful taking too much of it for yourself and not sharing it with your employees. If your staff see you coming to work in a new swanky car and suit, and they’re still on the same wage, they’ll start to questions what’s motivating them to work so hard if they’re not seeing any of the rewards. Always consider your staff first – if they over-achieve, reward them for their efforts with some form of bonus. Otherwise, your success could be short-lived if good employees start leaving for better pay.