Nothing kills more businesses than the budget… or, more specifically, refusing to budget properly. Finances can bring you down quick, or they can set in like cancer and let you linger. In the end, it’s not how slow or how fast they kill you, it’s what you do to stay healthy and alive that matters.
Don’t wish for reserves, build them into your business plan. You need to be saving, not just for a rainy day, but for a myriad of reasons. You never really know when and how badly the market may tank. In times like these, a market that’s been thriving for decades could just go bone dry overnight. Industries that seemed timeless a decade or two ago are dead or dying. Companies that had enough in the tank to buy the time needed to build new business models and streams of income have survived. Some are beginning to thrive. Others are footnotes in history.
This is about more than having savings in the bank for the bad times, though. This is about funding for research, for problem solving and for new ideas. Nothing hurts more than needing something new and not being able to build it because you don’t have the cash.
Split your income streams. Your business should never be totally dependent on any one product or service to pay the bills and bring in profit. Ups and downs in demand are much easier to manage when you have other sources of income coming in.
Don’t shortchange your money by making it Just One More Thing. Your business finances should not be a part of your to-do list. They are a separate and essential function of your business, just like production and sales. If you don’t have sales, your cash flow dries up, and your business dies. But, you know what, you could have huge sales and still tank if you don’t manage your money well.
Most people will read this and nod their heads, but some of them will still walk away treating the “money part” as just one more thing they need to “get to”. Here’s the reality. If you don’t have control of your finances, you don’t have control of your business. So, you need to have people on your team that you trust to get the job done right. Protect yourself from holes you can’t climb out of, market surprises and inevitable shifts.
Build reserves with specific labels on them. Divide your income streams to protect your income. Treat your financial situation with the respect it deserves. Do these things, and you are in a much better position for success. How have you implemented budget-protecting steps into your business management plan?