The Big Financial Risks Waiting To Take A Big Bite Of Your Business

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Business is a risky game. It’s not just all about whether your investment is going to work out, either. You can have the best, most researched idea in the world with a whole new market just for you. There’s still a very rocky road ahead. However, there doesn’t have to be. You can just as easily smooth things out with all the right preparations. So we’re going to look at the big financial risks that you could find yourself easily avoiding.

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Protecting your idea
A lot of what makes up your business are the ‘ideas’ that keep it going. By ideas, we mean intellectual property of all kinds. It can the product or service that you’re delivering. It can be the visual and written aspects of your branding. The fact is that these are all important ways of establishing a place for yourself in the market. So you need to protect them. Patenting and copywriting ensures that your bigger competition doesn’t try to steal them from you in a costly legal battle. Non-compete clauses in contracts for your employees cut any potential competition from your own staff, too. We don’t like to think that people we have worked with may care to steal our ideas or our customers. It’s an unfortunate truth of business, however. So make sure you’re using restrictive measures properly. Otherwise, you’ll be spending a lot fighting for your own ideas.
Protect your data
Then, behind the scenes, you have the systems that keep the business running. For most businesses, this relies on data like contacts, finances and customer details. Having these stolen is bad for your reputation, your business and perhaps even your legal standing. Failing to protect your customer data could get you on the wrong side of a lawsuit. A full cyber security protocol is a necessity for any business that wants to make sure they don’t lose any of their data to unauthorised access. This involves training your staff as well as making tech adjustments. Password security and making sure logged on computers aren’t left alone is important. Of course, so are things like anti-viruses, firewalls, and ethical hacking. But the fact is that you can’t just rely on great tech. You also need a bit of common sense.
Know your value
A lot of businesses fail in their finances because they don’t fully understand the value they might already be sitting on. For one, you should look at your physical assets. Is there any equipment you might be able to sell off if the situation calls for it? Do you have any spare space in your business premises that you could potentially rent out? Then there’s the possibility for further revenue streams that a business owner should consider. What services can you sell with your product? Is there a market for you to sell your expertise in things like webinars and talking opportunities? You should always have a few ideas on how to squeeze a bit more cash from the business in case things ever get tight.

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Look after your employees
It should be no surprise that the staff of a business are one of the most common sources of lawsuits against that business. First, you should consider an arbitration clause so any complaints are dealt with without a lawsuit. Otherwise, it’s all about how you take care of your employees. They have rights you need to respect. The most commonly failed is the right to health & safety. If you’re not looking after their health, you’ll be spending a lot of money on worker’s compensation after. Then you need to make sure you have proper protocols to deal with harassment, discrimination, and termination. Otherwise, those topics can be a minefield for potential claims.
Expect the unexpected
Legal issues aren’t always the cause of a sudden loss of money in the business. Disasters, natural, man-made or otherwise, cost money. They do damage that needs to be repaired and destroy resources that need to be replaced. If all of that is coming out of your own pocket, then you could be in trouble. First, look at the cause of any damage. If it’s someone else’s responsibility, you may be able to get them to fork out the cash. Otherwise, it’s best to be prepared before the unexpected event. The right insurance policies can save you a lot of heartache down the line.
Do your damn accounting
You don’t need a huge disaster to lose a lot of money, however. Sometimes all you need is a bit of negligence. A lot of business owners get themselves in a bad situation by taking their eye off their finances. That can’t be you if you want to keep your money. From your funding sources to your invoices and payroll. Record everything going in and out of your business account. Ensure you keep that account separate from your personal account. Dipping too much into either can sink a business or business owner. Then make sure you’re paying the right amount of tax for the structure of your business. Otherwise, again, you might be facing some steep legal trouble.

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Look to the future
One risk that not every business owner will recognise as a risk is the future. In particular, having a successful one. Yet failing to scale properly is a huge concern for startups. It’s the most common reason that they don’t make it past their second year. For example, you have to look at how you deal with the need for extra manpower. Instead of just pumping your business full of more people, you should consider restructuring how your staff operates. Some tasks might actually work worse with more people than better. Similarly, you should look into growing your marketing, customer support, and delivery systems. Having any one of them fall behind will cause a huge loss overall.
We hope that the above tips help you miss some of the bigger mistakes in running a business. There will be challenges, undoubtedly, but with the bigger ones out of the way, you have less to fear.

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Show Me The Money: Core Habits Of A Financially Stable Business

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When it comes to the finances of a small business, one of the key things to bear in mind is that you need to be strict. Of course, it goes without saying that money is a core part of running a business. As such, this should not come as much of a surprise. However, it can be difficult for new entrepreneurs to know exactly what needs to be done. If you have recently started a business, then you are probably keen to discover what you need to do to stay on top of your finances. In fact, there are some basic healthy habits which you need to try and adopt. As long as you follow these guidelines closely, it is likely that you will do pretty well in the long run. Let’s take a look at some of the core habits you should try to develop from today.

Leave No Stone Unturned

There are many kinds of problems and issues which can arise from poor financial management. For a relatively young business, these issues can quickly become more serious. It is therefore wise to be able to stop them while they are relatively small. The best way to ensure that you catch these small problems is to adopt a keen sense of investigation. As long as you are watching your business’ finances carefully, it is much more likely that you will do well in the long run. It is important to leave no stone unturned. If you are keen for your business to be financially stable, you need a keen eye for detail. This is arguably your best friend against financial danger in the long run.

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Consider Outside Help

It is not unusual for the owner of a small business to feel a little overwhelmed from time to time. After all, there is so much that needs taking on board. The truth is, it is unlikely that you will be able to do it all yourself. Nowhere is this felt more keenly than in the financial side of running a business. Even if you have a good head for figures, you might find this difficult. With that in mind, don’t be afraid to hire some outside help to help you get a better grasp on it. With the right accountant on board, you will find that the whole business is a lot less of a headache. The difference it can make having some outside help is phenomenal.

Be Brave & Take Risks

Business is all about taking risks. If you never did anything unexpected, your business would be unlikely to get very far at all. Of course, it is one thing being able to take risks. It is quite another knowing when, and how, to do so. For maintaining financial stability, this means that you should take calculated risks. There is a significant difference between blindly taking a risk, and thinking carefully about it first. As long as you plan it out well, you should find that your risk is more likely to turn out for the best. Of course, you never know for certain - that is the risky element.

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Death of the Santander 123 account

I've got some bad news for you. In case you didn't hear the Santander 123 current account is cutting its interest from 3% to 1.5%. This is a huge 50% cut in the interest. The Santander 123 current account was effectively the last place of refuge for hard hit savers over the last few years.

Without taking on additional risk there is virtually no where to earn a return on your cash in the current market. Bank of England interest rates are now at an all time low of 0.25%. As a consequence the borrowers are having a feel day and continue to borrow money cheaply whereas savers are struggling to find a return.

I have had my cash in the Santander 123 current account for the last year and have held a substantial portion of my cash in that account, about £15,000. This earned me about £40 in interest each month and will be sorely missed. I've been thinking about an alternative and to be perfectly honest I can't find any. There are the odd accounts that offer 5% on cash holdings but that's only for the first £2,000. Unfortunately, there isn't really a replacement for the Santander 123 current account. 

The question is, do I just keep my money in the account earning 1.5% or do I take on some more risk? I have no immediate large outgoings. I recently bought my first flat with my fiancĂ©. We aren't planning on moving for at least five years. In theory, five years appears a decent span of time in which to invest over. However, given the amount of cheap money lying around and recent leaps in the stock markets around the world assets appear overvalued. I keep telling myself that I'm holding cash on the side ready to pounce when share prices take a dive. The problem is, when is this going to happen? 

Fund managers appear to be in a risk-on state. Deals and IPOs are still common place. Even the threat of Britain leaving the European Union has now been all but ignored by the stock market. The FTSE100 in the UK is now nearing its all time high. My gut is telling me that now is not the greatest time to be investing in the stock market.

What are the alternatives to investing in the stock market?

Property is unlikely given that I probably don't have enough for a deposit (certainly not in London). Furthermore, I don't want to be invested in an illiquid asset and then potentially struggle to sell it once we seek to move house.

Bonds yields are incredibly low at the moment and aren't attracting me. The last refuge appears to be peer to peer lending. The only problem is that you can't wrap up your investments in a tax free ISA wrapper, meaning that your returns are taxable....Ho hum....where to put my money?

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