What steps are you taking to protect your small business from failure? Over 50 percent of all small businesses close their doors after just five years. To prevent this from happening to your business, you should take measures to protect it from failure. While offering a high-quality product or service is certainly helpful, there are other, lesser-known ways to protect your small business.
Hire the Right Workers
Small business owners often struggle to manage their time, which can result in bad hiring decisions. Rather than taking the time to analyze all candidates, they simply hire the first person who submits a job application. Bad hiring decisions such as this can cost your business thousands of dollars per year. The average cost of a bad hire in the United States was $14,900 in 2016. This cost is easily avoided, thankfully, by taking the time to size up candidates and choose the best one for the job.
Try to review your business’s expenses — fixed and variable — at least once a month. Many small business owners neglect this basic accounting task and, instead, focus their time and energy on attracting customers. When expenses are neglected, however, it can hurt your business’s cash flow. You’ll end up overpaying for products or services, some of which you don’t need. By reviewing your expenses on a regular basis, you can find money-saving opportunities that have a positive impact on your business’s financial health. If a product vendor is overcharging you for shipments, contact other vendors for a quote.
Slow and steady wins the race. Businesses that pace themselves are more likely to succeed than their fast-growing counterparts. Upon experiencing an initial bout of success, some small businesses open new storefronts in new markets. But there’s no guarantee that these new storefronts will experience the same level of success. If they perform poorly, it can lower the business’s profits and potentially force it to close. To prevent this from happening with your small business, grow slowly and only open new storefronts after thorough research and planning.
Listen to Customers
The best advice you’ll receive on how to run a successful business comes from customers. Therefore, it’s important that you listen to your customers. When a customer has a problem with their order, he or she may contact you. Failure to respond to these messages and resolve the customer’s problem will land a blow to your business’s reputation. The customer may share his or her negative experience with other people, discouraging them from buying your business’s products. On the other hand, customers may send you positive messages praising your business. The bottom line is that you need to listen to your customers and respect their views.
While most states don’t require businesses to have insurance, besides Workers’ Compensation, it’s a smart investment that can protect your business from failure. Like consumer-grade insurance, it’s designed to protect you from financial loss when a negative event occurs.
There are different types of business insurance, some of which include protection from lawsuits, vandalism, theft, data loss, cybercrime, employee injuries and more. If a customer sues your small business, for instance, insurance can cover the high cost of legal protection. And even if your business never uses it, insurance will provide you with greater confidence knowing that you are financially protected. You can save money on this expense by seeking business insurance quotes from multiple providers.
All small businesses will experience periods of slow sales and stagnant growth. With the right managerial approach, however, your small business can weather these periods.
Author Bio: Jeremy is a tech and business writer from Simi Valley, CA. He’s worked for Adobe, Google, and himself. He lives for success stories, and hopes to be one someday.