The importance of accurate financials cannot be understated. The difference of making $5000 in one month and losing $5000 could easily influence a business owner to be overconfident in his or her team and processes. Start with the facts and then make decisions. Common errors in expenses for small business include insurance amortization, inventory recognition, salary accruals, tax timing and more. Investing in the accounting system will assist management and ownership to make the right daily choices for operations and sleep better at night. A key to making money is to know much you are making!
Risk management starts with understanding your exposure, including what is the worst that could happen to you and your business. Isolate the dollar and emotional exposure in your daily activities and then decide which require coverage or policies that can minimize the fall-out.
Ask yourself, what are we budgeting for in the next 3 months? How did we perform vs. our budget plan in the last 3 months? How much were our profits in line with our forecast last month? If you hesitate to answer these questions because you don’t have the figures, make this a priority project for your business. As the saying goes “..those who fail to plan, plan to fail…
One insurance strategy which can save you thousands of dollars is to make sure you have catastrophic insurance coverage in all key areas of your business. This frees you from all the nickel & dime offers for coverage on items worth less than $5000, including cellphones, heavily depreciated vehicles, extended warranties, minor rental car coverage, low deductibles and others. Imagine you took all those premiums and extra payments and instead deposited the cash into a special bank account for ‘self-insuring’ on all these minor items. How much cash would be in that account today?