As one of the top alternative lenders in the industry, we’ve worked with businesses of all types. In doing so, we are afforded insiders access to the financial habits of small and medium-sized businesses. Some habits are questionable while other habits are counterproductive. However, we have isolated 3 staple habits of businesses that prove to be successful. You may find these helpful in the development of your own business.
1. Keeping Business & Personal Finances Separate
Good accounting always isolates and logs business expenditures properly. Hence combining personal expenses and business purchases is a bad practice. It not only confuses your finances, especially for tax purposes, but it also can nullify the liability protections that are inherited through your business structure. Combined personal and business finances can put your personal assets in harm’s way if your business is sued or assumes other debts. An easy fi is to have two different bank accounts—business and personal.
2. Insure Your Operation
Many large companies have departments called Risk Management. Their main purpose is to minimize the risks that are inherent with normal business operation. As a smaller business, you probably will not have a dedicated department for this purpose, but you’ll still need to cover yourself from worst case scenarios. The best way to do this is by means of insurance. Contact an insurance provider and let them walk you through insurance types. Then decide what level of protection is best for your business. Remember a single event can eradicate your business if you are not insured.
3. Cash Flow Tracking
The most critical insight to every small business is cash flow. Knowing how much cash is coming in and how much is exiting your account is key to avoiding business interruptions. Once a problem occurs with your cash flow every other part of your business will be effected. Successful businesses can often forecast their cash flow for up to four months. This enables them to make seasonally decisions, take advantage of market trends, and plan for economic downturns.
Incorporating these three habits will help run a more successful operation. However, sometimes you need capital to put somethings in place. If you find yourself in such a situation, fill out our quick application online or call us at (877) 478-7232. STRADA Capital helps businesses of all types to get the working capital they need!