The key to success is keeping it out of trouble when running a business. The more time and money you spend avoiding mistakes, the less wasted effort you’ll have to fix them later. Preventative measures are always better than reactive ones. These tips will help keep your business safe and profitable for years to come:
1. Hire the right people
People are the most critical part of your business. Hiring the wrong person for the wrong position can be very expensive. In the long run, hiring a good employee will save you money because they’ll help get more done in less time. For example, if you’re hiring a new accountant that will be able to find deductions you may have never known about before, it will make your business more profitable.
2. Protect yourself from lawsuits
Inform your employees of company policy regarding discrimination or harassment, and make it clear that you will take any complaints seriously. Suppose an employee can’t represent themselves in a meeting. You’ll need to clearly define who is authorized to speak on behalf of the business. You can hire a commercial lawyer to help you protect your business from lawsuits.
2. Keep a well-stocked bank account
Having money in the bank allows you to cover an emergency if necessary and gives you leeway for paying your employees. Suppose your cash flow is negative each month. In that case, you’re going to have trouble meeting payroll for sure. But even if you have a positive cash flow, keep enough money on hand to pay all wages owed plus two or three months’ additional operating expenses that will allow you to weather minor economic downturns. This way, your business won’t be facing bankruptcy anytime soon.
3. Plan for tax time
Keep accurate records of all deductions at the end of every year. That way, filing taxes at the end of the year doesn’t seem like a huge hassle. If you pay your employees daily, make sure they know what’s going on with their money and that you’re keeping accurate records of it. This way, everyone will easily file their taxes on April 15.
4. Prepare for cash flow problems
Cash flow is the most essential part of running any business. If you have enough money saved up from your previous projects, don’t spend it all in one place, or else you won’t have any left when your next project comes along, or if there are unexpected expenses such as an equipment failure. Even the best-run businesses have cash flow issues once in a while, so preparing your business for them will keep your business running smoothly.
5. Have a solid contract
When you hire a subcontractor or an employee, make sure that they sign a contract that specifies the exact terms of their employment with your company and hold up to this agreement no matter what. If someone breaks the rules, fire them immediately so that they won’t be able to sue you later on for any damages incurred by their actions, such as damaging business property.
6. Stay informed
If you don’t stay on top of all legal changes about your industry and how they could affect your business, then you could find yourself in hot water very quickly. Your state and the local legislature can pass new laws every year, repealing old rules just as fast. Keeping your finger on the pulse of what’s going on will help you avoid being involved in something that might be harmful to your business.
7. Take time off
Taking a break from work doesn’t mean taking a vacation to Aruba every three months. However, it does mean letting your employees have a day or two off here and there to rest and recuperate so that they can give their all when they return. Sending them home early for a couple of hours just because it’s warm out is another way to keep costs down as well as morale high.
8. Accept customer criticism graciously
Every self-employed person knows how hard it is to please everyone all the time, no matter how hard they try. If a customer complains about something, make sure you listen to them and offer any assistance possible without going overboard on your generosity. If you refuse to help them in any way, then chances are they’ll be more than happy to take their business elsewhere and tell everyone they know how unhelpful you were.
9. Learn from mistakes
No matter what kind of business you run or how many years of experience you have under your belt, there will always be times when things go wrong and customers get upset. Getting angry at yourself for making such a mistake is never the answer, though. Instead, learn from it so that it won’t happen again and put measures in place so this doesn’t come up again.
Keeping your business out of trouble isn’t always easy. But if you play it smart and use what you know to your advantage, nothing can stop you from success.