Weathering Economic Storms: Financial Resilience for Small Businesses

Weathering Economic Storms: Financial Resilience for Small Businesses

Starting a small business is an exciting time full of new opportunities, but no matter how successful your business is, it will still be vulnerable to outside factors. These outside factors can be turbulent markets, recessions, changing global events, or market crashes. However, Taurus CPA Solutions has a few tips to help you weather economic storms and foster financial resilience for your small business.

Cash Reserve

Think of your cash reserve as a financial safety net that will be your lifeline to get you through rough times like recessions, and a good rule of thumb is to aim for an emergency fund that covers your operating expenses for a year. You can create this financial safety net by saving anywhere from 5% to 10% of your income and parking it in a high-interest savings account.

Don’t Add Debt

One of the things you don’t want to do when the economic storm lashes at your business is to take on more debt. Businesses with a high amount of debt are more vulnerable during recessions due to high interest and payments, which means that even though you might think about taking out a loan or a new line of credit to tide you over, doing so can hurt your business. Instead of turning to loans and new lines of credit, try increasing sales and cutting costs.

Focus on Relationships

Your relationships with vendors and customers are key, and a well-managed relationship will last far beyond any recession, market downturn, or other economic storm. For customers, it’s important to gain their trust and help them help you. One of the ways you can do this is by offering a payment plan for anyone struggling financially and always providing exceptional customer service. 

As for your vendors and lenders, it’s important to realize that while you’re focusing on your customers, you are the vendor and lender’s customer, which means you might be able to negotiate with them on waived late fees, credit terms, and discounts. It’s also important to let your lender know where you stand in regard to your financial position.

Protect Yourself

One of the keys to thriving in challenging times is taking a proactive approach to financial management and making good decisions based on reliable data. While it’s obvious why a business would check the credit of their customers, many businesses forget to credit check their suppliers. You don’t want to face a disruption in your supply chain due to your supplier’s financial issues, which can then affect your income. If you discover your supplier has a poor credit rating, then it’s time to find someone else.

Forecasting and Budgeting Software

When you own and operate a small business, you want software that fits what you need, and many accounting systems aren’t up to the task. Choosing the right solutions that meet the needs of your business while being scalable is vital, but we at Taurus CPA Solutions can help you with that. We analyze the nature of your business, look over your transactions and future plans, and assist with choosing and implementing a software solution that fits what your business needs and is flexible enough to grow with you. 

We’re Your Port in the Storm

If you’re ready to safeguard your small business against economic storms, Taurus CPA Solutions is here to guide you. We’re here to assist you and see you thrive in challenging times with the right tools and strategies. Reach out to our experts today to see how we can help you navigate the ever-changing business landscape.

No Comments

Sorry, the comment form is closed at this time.