Bailouts always seem to be in the news these days. Usually it is the big firms getting bailed out, and the small ones that are allowed to go bankrupt. But bailouts do happen for small businesses too. If the government won’t help you, then perhaps a bank, family member, or friend will. The fact of the matter is that sometimes small businesses just get in way over their heads. After a bailout you have huge debts that must be repaid, so this is something you want to avoid at all costs.
Preventing the need for a bailout is simply a matter of managing your finances, your capital, wisely. Here are 4 great tips for keeping your money in the bank rather than seeing it flow out in an endless river.
1. Know the transactions that uphold your business. Selling a certain number of units or billing a certain number of hours is going to be your bread and butter. That is what drives the business and that must be financed at all times.
2. Determine your pricing wisely by assessing product overhead, service cost, and other direct and indirect costs, as well as profit.
3. Do not buy goods or services before you need them. Do not commit any money to anything that is superfluous.
4. Consider leasing equipment instead of buying if it make more financial sense.
Saving money in business is not that different from saving money at home. It is simply a matter of determining what the necessities are, being generous with those, and being very conservative with other expenses and investments.
By Logan Barnes