A small business is equally vulnerable to the tides of economic change. While change isn’t bad in itself, it can throw you off balance. Whether you survive or thrive depends on how prepared you are.
Thankfully, as a small business, you are void of the accounting and financial complexities experienced by bigger businesses. When implementing a contingency plan, healthy bookkeeping practice should serve as a good guide. And, if you have employees, a good payroll management system will help significantly.
In this post, we take a look at best practices in effective business contingency plans. However, they are guides you’ll have to adapt to suit your business and industry.
1. Identify your business’ vulnerabilities
They may be wide and varied and it may be difficult to predict their eventuality, but anticipating and preparing for some likely events is useful. For example, protecting against currency exchange fluctuations is vital if your business is heavily dependent on raw materials from overseas.
2. Know what keeps your business going
Over time, your business may have expanded to include activities you may have deemed essential for your growth. For example, you might have employed a social media marketer to oversee your business’ social and digital media marketing activities. When the business is on an upward trajectory, it makes perfect sense to have someone in the company to oversee this function. However, are there cost savings to be made by outsourcing this work instead? When times are tough, you need to carefully consider how you can keep your fixed expenses down.
3. Make insurance a central business activity
Every penny counts when you are a small business, so it’s reasonable to expect immediate and extrapolated returns from every penny spent. As such, insurance may not seem to be essential, apart from your regulatory requirements. However, this is the wrong view to have and can have grave consequences on your finances. Not only do you need to have appropriate policies in place, but you need to ensure you’re adequately covered too.
A good bookkeeping practice lays the foundation for the effective running of a business, even when life throws you a curveball. To learn more about how bookkeeping helps, connect here.