When you're running a business, you need to ensure everyone involved in that business is capable of making sound financial decisions in their roles. This means you need to implement a set of solid best practices for business finances. Here are five of the best corporate financial practices you can use.
Having adequate insurance coverage is vital to any business. Insurance coverage is meant to protect you against issues such as property damage and litigation and to assist you in paying bills related to such issues. Consider the size and type of business you're running, as well as what kinds of insurance you need and how much coverage you require. Some businesses get traditional insurance, while others utilize captive solutions. Depending on how many types of insurance coverage you need, you may also opt to bundle your coverage.
Financial best practices call for some level of flexibility, as well as knowledge of when you'll need to be flexible. When you're developing your financial goals and best practices, allow room for adjustments to be made if and when they're needed. You should also take the time to determine which places in your financial roadmap are the most likely to be subject to change and flexibility. Instead of one specific profit goal to meet, for example, determine the ideal profit margin and give yourself some cushioning on either side. You should also develop contingency plans in case certain things don't go to plan. A good example is a delay in a product launch. Every time you develop a new product, make plans for how to react and adjust in case it gets delayed or experiences any issues during development.
Doing the necessary research before committing to a financial investment is imperative whether you're considering investing in your personal or business life. Never take the advice of a friend, acquaintance, media program or other casual sources at face value. Instead, consider whether those sources are trustworthy and valid. Then, if you decide they are, carefully research the opportunity and fact-check it to ensure it's legitimate. Finally, determine whether the opportunity makes sense for your business. Even if the opportunity is legitimate, it may simply not be a good avenue for your business's needs.
Not only should you carefully research and implement flexibility in your financial planning, but you should also implement continuous updates. Continuous updates in financial planning are similar to continuous updates in product development. Instead of updating your financial plan once annually, review it several times throughout the year and make adjustments as needed. Many companies choose to do so quarterly, but you can review your financial plan more often if you so wish. This practice ensures your financial plan is always up-to-date.
The concept of the stretch goal refers to a goal set as an incentive for employees to exceed expectations. Stretch goals can also be applied to your finances. Set stretch goals related to profit generation, savings, lead generation and other things that can affect and be affected by finances. Setting a stretch goal does not mean you must meet that goal. Rather, it's a way to incentivize your business and employees to surpass your standard goals and find ways to push the limits of those standard goals.
Make sure these financial best practices make sense for your business. Some best practices make sense across the board while others are better suited for businesses in certain industries or of certain sizes.
Publish Date: May 20, 2022 4:24 PM