There’s a delicate art to getting a small business off the ground, growing it to a point of stability, then either settling there or seeing how far you can take it — and a core part of that art involves financial management. Unless you have the vast budget of an international conglomerate, there isn’t much room to breathe: one mistake and you can run into major cash-flow problems.
One part of keeping your finances in check involves nailing your invoicing (production and chasing) to ensure that you get paid on time and in full. Another part involves keeping your regular spending down by getting the best possible deals on hardware, software, office rental, furniture, and anything else you know to be necessary.
But those are expenses aren’t the only ones you’ll ever encounter. It’s the expenses that sneak up on you that tend to be the most damaging — you haven’t planned for them and you don’t know how to respond (but responding is your duty as a leader). Here, then, we’re going to run through some tips for protecting your business from unexpected expenses. Let’s get going:
Factor in your secondary expenses
What do I mean by secondary expenses? It’s simple: any and all expenses that go towards supporting your business. One such expense is transportation. It might seem trivial, but numerous social trips can really add up, so don’t just book the first option each time: look around for a good deal. And if transport is frequently needed for work events, get a company fuel card (iCompario has a solid comparison) to trim down that cost.
Another expense is food. It’s nice to get your team lunch, and a small business shouldn’t have a huge bill, but this type of thing can steadily erode your finances without you even realizing. Make a habit of accounting for everything you spend and you should have an easier time.
Build up a decent savings fund
Best practice generally calls for having enough money in reserve to keep your business going for a full month. This isn’t easy to achieve, particularly when you’re just starting out with minimal funding, but it should be a core goal and a high priority. It might not seem like it, but it’s just as much an investment in the business as any sum of money put towards expansion.
After all, you can’t deliver on the full potential of your business if it hits a roadblock and suffers so much damage that you have to shut it down. By protecting it carefully, you give it the buffer it needs to endure early troubles and start sailing through calmer waters. Apps like Squirrel can help you with this by automatically protecting some of your business income.
Carefully track your subscriptions
There’s a lot to be said for the subscription model that has become a staple of both the business and entertainment worlds. Just as people can subscribe to Netflix instead of buying (or renting) shows or movies individually, you can do things like subscribe to weekly (or even daily) food services for your office, or — more commonly — pay for SaaS tools.
The issue here is that these subscriptions can get out of hand, particularly when you’ve empowered your employees to get the tools they need. A given SaaS utility might be necessary for a while but go unused after a few months (yet continue to cost you money each month due to the subscription never having been canceled). To combat unused subscriptions, you can use a service like Trim, or you can just start monitoring your payments closely and manually getting rid of anything you no longer need.
Protecting your small business from unexpected expenses mostly comes down to putting in the effort to prepare for what could go wrong. Anticipate the secondary expenses that might add up, get rid of any subscriptions you don’t need, and build up a decent savings fund as soon as possible — you should be fine.