When you check out some of the local businesses in your area, you’re probably thinking about the fun bits. Maybe you’re thinking that it must have been easy enough for these business owners to get to where they are now. Plus, nowadays, a good chunk of people tend to focus on the more fun and creative bits like perfecting their product, making a TikTok account, getting ideas for content, making a logo, and finding their brand voice. Again, the fun and creative bits.
But the problem is, a lot of people, for whatever reason, forget about reality here. Like the receipts, rent, supplies, software subscriptions, random fees nobody mentioned because no one seems to notice, and cash flow that seems to disappear right when it’s needed most.
Sometimes people do get into debt over their heads because of bad decisions. But honestly, a lot of financial mess happens because of situations beyond their control. Refunds stack, trends change, a natural disaster, a personal disaster, etc.—the unforeseen things.
So, for someone with zero experience, it is sometime difficult to proceed with caution.
Get Hard When Starting the Budget
Well, get nitty gritty with it at least. A lot of beginners budget for the “fun” stuff and forget the “existence” stuff. There is inventory and/or equipment, but there’s also shipping, packaging, transaction fees, refunds, chargebacks, and taxes, and these essentials don’t care if a month was slow. Realize the worst-case scenario can always happen, and this is where careful budgeting can come in handy.
A simple way to do this is to list every monthly cost that has even a tiny chance of happening, then assume it will happen at least once. For the most part, it’s not the predictable expenses that hurt; it’s the random add-ons that stack, as well as emergency expenses.
Protect the Business From Things that Can Wipe it Out
Which goes hand in hand with what was being said above. As you already know, protection matters because accidents and liability issues can get expensive fast. Again, unforeseen emergencies and emergency expenses can happen. Now, depending on the business, that could mean coverage for equipment, liability, vehicles, or property. It depends on what’s being sold and how it’s delivered or serviced.
That’s why some business owners talk to agencies like G&G Independent Insurance, because figuring out coverage alone is confusing, and getting it wrong can be costly in ways that are hard to fix later. But overall, there are many types of insurance out there, and you need to protect your business financially. This can also affect your personal finances, hence why you need insurance.
Create a Mini Emergency Fund
Hopefully you will never need it, but you never know. An emergency fund sounds like something only established businesses have, but regardless of size, all businesses need them. Even a few hundred dollars set aside can cover a surprise fee, a broken tool, a rush shipping situation, or a minor repair without triggering a panic spiral. You get the idea, just try and build it up slowly and automatically, or even a fixed amount each week can help.
Photo by Tima Miroshnichenko
