SGOL love to add value to your visits to our blog page so we have invited some trusted contacts to Guest Blog to share some tips and tricks for micro business owners – some added value, something a little wider than just legal….
In this insightful guest blog post from Jon Page of Neon Financial Planning, we look at 6 ways of protecting your business…
- Plan. All good things start with a plan. Think about what would happen to the business without you (or someone else key) in it. How would the business continue to trade? Could it deliver on contracts that are already in progress? If you employ staff, what would happen to them? As they saying goes, prevention is better than cure so identify those problems and put a plan in place to keep things stable.
- Agree. If several of you own a business jointly, you should have a shareholders’ agreement in place, setting out what you want to happen to your shares if one of you dies or is seriously ill. And alongside that you will usually need insurance (called shareholder protection) which pays out enough for your shares to be bought by the others and makes sure your family don’t lose out.
- Evolve. Things change fast, and consumer trends can be fickle. It’s not that long ago people rented DVD’s from Blockbuster, bought Christmas presents from Toys R Us and got a new mobile from Phones 4U. Get regular feedback from your customers, keep up with peers and competitors (monitoring social media sites is a great way of doing this) and network to get other people’s views on the industry.
- Insure. You insure the tangible bits of your business as a matter of course, but the true value of a business is often the skills, talent and creativity of the people within it. If a key person within the business becomes ill or dies, you are going to have a problem. Having insurance (such as Key Person) buys you time. The business can use the insurance money to pay staff, service debt, recruit replacement staff and make up for lost revenue or relationships.
- Diversify. If your business income stream relies on one product, one key person or a couple of big customers then it can easily be interrupted. Consider reducing the dependency of your business with some diversification. A ‘side hustle’ if you will. If you have the time. Then Freelancing, providing business coaching or attending trade fairs can open up new avenues. If you are short for time, consider passive income streams such as improving online sales, participate in affiliate marketing, renting part of your office space to another business or advertising your parking space to the public if you are in a prime location?
- Save. Last, but certainly not least is cash flow. It’s the biggest risk to any small and medium sized business. Try to work out your monthly operating costs and then build up a reserve of at least 3-6 months held in cash – you never know when business may dry up so this is vital to keep things going. It can be difficult to do this, especially for a start-up, so you may also want to consider trying to establish other means of a cash reserve, such as grant funding, a bank loan or angel investing.
The good news is that you’re not on your own. The team at Neon Financial Planning have a range of services that include arranging insurances (along with a whole host of other useful planning services). They can also offer coaching sessions if you just want to talk things through and get a second opinion. All the services can be easily booked online, and you can even book a video call with them at a time to suit you too. Nice and easy!