How To Avoid Bankruptcy as a Small Business Owner
Starting your own business is a challenge in its own right, and that’s only the beginning. Managing a small business is a tough balancing act, and a small misstep can lead to major consequences. To survive the trial that is running a small business, you’ll have to avoid several potential pitfalls. These tips can help.
Cybersecurity
Today’s commercial landscape is rife with high-tech solutions to various logistical problems associated with business. In fact, advanced technology has proven to be so beneficial as to become the new normal, and that means you’ll have to adapt to keep up with your competitors. However, a reliance on technology is a double-edged sword, and hackers will take any opportunity they can to steal data from businesses for their own gains. This not only puts your company in danger, but also tends to catch consumers in the crossfire more often than not. Investing in cybersecurity is a must, but no one security solution is enough in isolation.
For example, you’ll have to separately secure your e-commerce app, your website, and your network. As far as your app is concerned, the biggest concern comes in the form of APIs. Application programming interfaces have become a necessity in a world where e-commerce apps are the order of the day, because software development is typically expensive, time consuming, and dependent on a fairly uncommon skill. API’s make developing e-commerce apps more efficient and affordable, but they can also contain and therefore relay security weaknesses that can result in the dreaded zero day exploit.
On the other hand, securing your website entails purchasing certification for encryption and decryption protocols that will ensure that intercepted data is illegible and unusable to hackers. It’s fairly easy for hackers to get their hands on data, but encryption scrambles the information into gibberish so that it’s functionally not the same information without the appropriate cipher. Securing your network will take a variety of tools and techniques from network traffic monitoring to DDoS prevention, so it’s important to consult with a professional in the field of cybersecurity to ensure that all your bases are covered.
Finances
The universal goal of all corporate entities is to generate a profit. Inversely, the ultimate fail state of any business is bankruptcy. Avoiding the latter will require you to manage your finances appropriately. In the simplest terms, profit equals revenue minus expenses. This means that boosting your revenue will increase your profit margins and cash flow, while reducing your operational costs will keep your business afloat.
While business expenses are a necessity, you have some freedom with which to reduce those costs. For example, every business needs a supply chain of some kind or another, but restructuring yours can help you save money. For one thing, you can buy direct from a manufacturer, cutting out the middleman for cheaper prices. However, distributors and wholesalers are value added resellers, and the bells and whistles they provide before selling to retailers is worth the cost in most cases. Even in these cases, you can compare and contrast your options to find businesses that provide products of comparable quality for lower costs.
Increasing your net revenue is also important, but most methods of doing so entail taking on additional business expenses. For example, the most effective way to increase your sales figures and revenue is to invest in professional marketing. That is because marketing excels at attracting new customers and endearing companies to their existing customers, resulting in a more robust, more loyal customer base capable of sustaining and growing the company. It’s important not to skimp on your marketing budget for these reasons, but it’s also important not to overextend yourself. Unsustainable growth can and will sink your business if you’re not careful.
Getting ahead in the world of small business will require you to bring your A game. However, these tips will allow you to avoid some classic blunders and come out the other side victorious.
