Business Services, Finance & Loans

Practical Tips on Reducing Financial Risks to Your Business

When you are running a business of your own, there are always risks involved. The first thing that probably comes to mind is your cash flow. When you run out of money or credit, your business ceases to operate until you begin funding it again. Risk management is one of the most important elements of a startup business. This separates the great from the successful.

When you are dealing with a limited amount of funds, you’re going to need to cut out non-essentials from your business. Things like fancy desks or expensive computers will only leave you struggling in the first few months of your startup. Your goal is to obtain positive monthly returns and by setting yourself up with all these “necessities”, you’re taking steps backwards.

Whatever helps the company services or products are what you should be focused on. Amenities will come later once you’ve reached the point where your investment has been covered and solid revenue is being produced.

Maintain a proactive approach by calculating your burn rate, which is how much money you are losing per month. By keeping a constant tab on this, you can determine how many months or years you have left with money still in your reserve.

Financial risks are always going to be associated when you create a startup business. The approach to this is appropriately preparing for what’s to come. The glory days will come in due time. The sacrifice leading to success is what makes this journey so worthwhile.

Bio: Ferhan Patel, formerly with AlertPay has implemented his certifications and skill sets to become the Chief Compliant Officer and Director of Global Risk and Compliance for Payza.