People often like to say that we are living in the golden age of startups. And granted, the rise of digital tech and globalization of the economy did make the world a smaller place and give new contenders a fair shot at their already established peers. But, this prosperity doesn’t come without a fair share of new challenges. The last couple of years have shown just how quickly things can go downhill if we take the favorable market circumstances for granted and don’t set up contingencies for financial risks further down the road. So, what are these financial obstacles, and what can we do to keep them at bay? Let us try to find out.
Develop a solid business plan
A business plan effectively serves as a blueprint that outlines your company’s financing, long-term and short-term goals, marketing plan, pricing model, and other critical business components. Even though this document doesn’t, in itself, guarantee financial stability it gives you an excellent summary you can use to identify leaks, run business projections and market surveys and measure how well your company is performing at the moment. Therefore, penning down this essential document of the priorities.
Put stronger emphasis on quality control
More effective quality control offers numerous benefits like increased customer satisfaction, positive brand image, reduction in production costs, more consistent output, more effective use of available resources, and even higher employee morale. These things do move a lot of financial uncertainty off the table. Start by setting clear quality standards, documenting the current production process, reviewing the results, and using new operational processes to meet new quality standards. Then, go back to step one.
Leverage insurance products
The well-chosen insurance products can go a long way in helping your company recover from even the worst disasters. Keep in mind, though, that various companies will also try to sell you the products and clauses your business can’t ever hope to claim. Such moves are considered unethical and if you have any suspicion about them, be sure to look for insurance refund help. But, putting aside these malpractices, try to cover the basics like professional liability, property, worker’s compensation, and product liability.
Limit loans as much as possible
Loans may seem like a good idea to patch up some small, immediate problems but relying too heavily on them to sustain your company’s growth can prove to be a grave mistake. With that in mind, if you are facing some cash flow or supply chain issues, try addressing these problems with products like trade finance or invoice factoring that won’t put your organization at a long-term disadvantage. More substantial long-term loans should be put in the sectors that generate the strongest ROI and repaid as soon as possible.
Focus on repeat purchases
Last but not least, we would like to remind you of the recent survey saying that almost 65% of the average company’s business comes from repeat purchases. At the same time, loyal customers spend 33% more money than first-time clients and their retention costs far less than a new acquisition. So, if you are looking for an easy way to support your company’s growth, refrain from engaging in expensive adventures with little chance of success and focus on improving CR and stimulating repeat purchases.
So, there you have it – the top five ways to put your new company on healthy financial foundations and face the upcoming challenges with a clear plan and reliable contingencies. And, rest assured the problems will come knocking at your doors sooner than later and you can do very little about that. That gives you an additional reason to truly nail down the factors that are under your control. The suggestions we gave you should definitely push you in the right direction.
