Essential Safety Nets For Startups
Starting a new business in any industry is always something of a gamble. You might be giving up a career in a well-paid job to chase your dreams, and there are no guarantees of success at all. There are, however, a few safety nets you can create for your fledgling business to ensure you have the best chance of success.
Building a solid foundation for your startup is critical, as there are so many things that can go wrong – at almost every step of your journey. And while starting a business is all about inspiration and ideas, it’s also about avoiding too much risk and laying the groundwork for success in the future.
In today’s guide, we’re going to show you a few things you need to consider to weave the perfect safety nets for your business. Let’s take a closer look at everything you need to think about.
Cover your assets. Don’t assume that because it is easy to start a business, you can do everything on your own. You need to tap into key financial and legal services to give your new company the best chance of success – and the best possible protection. So, get yourself a business lawyer at an early stage. You will need one at many different points in your startup’s life span, and establishing a relationship with a lawyer that has industry experience early on is a sound move. Similarly, find yourself an accountant. Again, it might seem like an expense you don’t need, but the amount of money they will save you will significantly outweigh the costs. And when you are just finding your feet in business, every single penny counts.
Cover your business. When you are getting started with a new business, you may not see the need for spending on business insurance. But it is vital – for a variety of different reasons. Take professional indemnity insurance as the perfect example. What happens if you forget to insure yourself, but then make a grave mistake while working for your very first client? An unhappy client could end up taking you to court, and the costs could be enormous. While it is possible to get retroactive PI insurance cover, it’s almost always best to ensure you have insurance right from the very start. Similarly, what happens if you suffer an accident? When you work for yourself and are a business owner, there are no safety nets when it comes to sick pay, and you won’t be able to work to make money. So, something like self-employed insurance might be vital to help you keep your personal finances in order.
Ensure liquidity. Liquidity is vital for any business, but, perhaps, most important for startups. In simple terms, if you have no cash, your new company will be going nowhere. It’s a good idea to have a reserve set aside when you are starting a business, as startups tend to face negative cash flow for the first year or so of trading. It’s also important that having cash means you can make more money – as long as you spend it in the right places. So, create a financial safety net that is there fro when you need it. There are many situations where a startup can come unstuck – perhaps a big client doesn’t pay you on time, for example. And if you work in a volatile industry, a cash safety net is even more important – there could be long periods of no takings for periods of up to six months at a time.
Resilience. Finally, as an entrepreneur, you have to be your own safety net. Starting a business is not for the faint of heart, and there will be many different – and dangerous – bumps in the road ahead. You will have to have a certain amount of resilience to deal with the many challenges that will, inevitably, arise. The money will be tight, and you can’t expect to take a salary or make any profit for quite some time. It will be tough on your health and wellness, too, as starting a business takes up a lot of time and energy. You will be staying up late and waking up early every day of the week – your relationships at home could suffer as well. In simple terms, following your dreams can be dangerous, and it is literally you against all the things that can go wrong. Are you tough enough to get through the dark days? It’s a question everyone with plans for starting a business needs to answer.
Photo by lumina Images | Shutterstock
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