I believe that through knowledge and discipline, financial peace is possible for all of us.
It has been a challenging and eventful three years for UK businesses with a series of high-profile incidents highlighting how situations can change suddenly and often without warning. From the continued pressure of uncertainty relating to Brexit, terrorism, fire, extreme weather and cyber-attacks, how would your business cope if it was affected by something similar?
Would your staff know what to do? Would the business be able to keep trading? And what about smaller events, like your biggest customer suddenly switching to a competitor or multiple staff experiencing sickness issues?
Creating a contingency plan
Start by putting together an operational guide for your business, outlining everything you would need to know to keep it running, such as who your suppliers are, how and when they are paid, and everything else that happens on a daily, weekly or monthly basis. As part of the same process, not only outline the roles and responsibilities of every key member of staff, but document the daily and weekly tasks so a replacement could assume those responsibilities quickly.
Devise an action plan for spending and saving.
Not having a plan for spending and savings habits is one of the biggest pitfalls that keeps entrepreneurs and others from achieving their wealth goals. For greater insight on this, I reached out to Spencer Barclay, founder and CEO of Savology, who explained, “The problem stems from the fact that many of us simply don’t track where our money is going, which can undermine the financial goals you’re working toward. Serious budgeting means planning ahead for how you will spend and save your money and then tracking every expense. When you are cognizant of your spending habits, it becomes much easier to keep them in check and contribute more to your savings goals.”
Diversify risk by generating new income streams.
The idea is similar to creating multiple revenue streams within your business. By selling through new channels or introducing new products, you create additional opportunities for sales growth. Even if one channel or product starts to underperform, your business remains profitable because of the stability provided by other income streams. Diversifying your personal famuluss can lead to similar results.
Invest to create passive income.
Many investment experts recommend implementing the “buy and hold” strategy as a way to generate passive income over time. According to Investopedia, a long-term study of this strategy covering the years 1926 to 2010 found an average 12.1 percent annual return for small stocks and a 9.9 percent annual return for large stocks. This even accounted for the three market crashes that took place during this time frame.
Stay aware of the market.
Becoming proactively aware of market shifts will alert you to monitor trends or events that could affect your business and other investments, allowing you to take timely actions that protect your assets. Even something as simple as adjusting your pricing in anticipation of a market change could help you avoid incurring major losses.