The latest Small Business Roundup from Wells Fargo has our advice on keys for cash management, ways to save on business insurance and how to avoid business budgeting mistakes.
Best Practices
Keys to Cash Management
Cash is king, and many small businesses are in danger of running out in today’s slumping economy. Business owners continue to struggle to find cash flow strategies that will help them survive the recession. Recent research suggests companies both large and small are still struggling to stay financially viable. The stakes are high and decisions critical, so what can you do to keep your business afloat?
Three things you can do:
1. Manage risk-managing accounts receivables is one of the key strategies for keeping cash flowing.
2. Understand cash needs-Cash flow projections are an important tool in understanding the cash flow needs of the business.
3. Conserve cash-Conserving cash is a key strategy for weathering recession. Many businesses are operating with a cost structure that can’t be supported by soft revenues.
To read more about keys to cash management, including Cash Flow Tips, click here.
Business Protection
Five Ways to Save on Business Insurance
Securing insurance for your business can save you tens of thousands (if not millions) of dollars if a covered loss occurs. But you can begin saving money before you even purchase your policy by following these five pointers for choosing the most cost-effective coverage.¹
1. Comparison Shop—Insurance prices vary from policy to policy and from company to company. Use this to your benefit by finding an insurance company that offers the best policy options for your needs at the lowest rate.
2. Choose a Higher Deductible—Deductibles are the amount of money you pay before your insurance policy kicks in. The higher the deductible, the less you will pay for the policy.
3. Buy a Package Policy—It can sometimes be more affordable to purchase a package policy rather than individually priced policies. One very popular package is a Business Owners Policy (BOP), which typically includes liability, property, and business interruption coverage.
4. Work Closely with Your Agent or Broker—Your business insurance agent can provide invaluable advice to help protect your business from unexpected disasters.
5. Be Proactive About Ways to Prevent Losses—You may be able to lower your rates by employing risk-management techniques like:
• Inspecting your workplace for loss prevention improvements.
• Installing safety devices like sprinklers, fire alarms, smoke detectors, and security systems.
• Offering workplace safety workshops.
• Offering disaster-preparedness training classes.
For more on ways to save on business insurance, click here.
Line Items
Avoid Key Budgeting Mistakes
Success is ultimately determined by the numbers, and a working budget is critical when it comes to understanding where the numbers are taking you. But budgeting mistakes can quickly derail a budget.
Ian Benoliel, CEO of software solutions provider NumberCruncher.com, Inc., has worked with thousands of small businesses in the areas of finance, accounting, and operations. In that time, he’s seen owners make a few common, yet easily avoided budgeting errors:
Imagine the Worst When Doing Projections—”The thing we see most often is owners not being conservative enough,” he says. “Whether it’s on revenue projections or expenses, it makes sense to start with the worst-case scenario. You may think your sales will be great, but you need to account for those slow times for your budget to be realistic. What happens if you have no sales for a few months? What will it take to keep going?”
Take Care with Credit—Whether it’s your own credit or credit that you extend to customers, you need to keep a close eye on it. Whenever you sell a product in a non-cash business, for example, you’re typically not getting the cash from a sale right away.
Don’t Forget the Tax Issues—It may seem like a no-brainer, but it happens all the time.
For more on Avoiding Key Budgeting mistakes, click here.
