As the economy is on the upturn, many small businesses are popping up nationwide. However, with so much competition from other brands and even big competitors, small businesses often don’t survive passed the first year. In addition, turning a profit within the first few years is often not possible as most of the money earned gets reinvested in the business. However, there is something business owners can do to prevent their businesses from failing. As this profit crisis affects not only the owner’s livelihood, it also has the potential to decrease millions of jobs nationwide. Therefore, in addition to protecting your client’s operation with a Professional Liability Insurance program, share the following advice with them to protect their bottom lines.
One of the main concerns for this issue stems from the way business owners look at profit. Often, profit is considered whatever is left over after bills and obligations are paid. However, this typically out-of-reach goal for business owners never comes, causing an uphill battle.
So, how do your clients turn a profit? By paying themselves first. While this might seem counterproductive, it’s important to create a separate account and pay the business first. Every single bit of revenue that comes into your company becomes a step toward profitability. When you get a check, you deposit a predetermined percentage into a separate account that’s designated as your profit account. You open this account at a new bank, and you don’t link it to a debit card. You don’t pull funds from it to pay bills. This is your profit account, and you fund it first, every single time money comes in, explains Mike Michalowicz, a globally recognized entrepreneurial advocate and author of Profit First.
Another insightful piece of advice that Michalowicz offers is to adjust to doing more with less. When a client cancels, it’s no business owner’s first resort to just shut down their operation. Instead, they figure out how to make the numbers work with less.
Small business owners can secure their profits by putting away 1% of their revenue each month in a separate account. This minute amount might not seem like much, but as it accumulates each month, your clients can see first hand how separating their accounts can pay off in the long run. This way, their business can become a lean, strategized operation with money in the bank, regardless of the circumstances.
About Genesee General
At Genesee General, we are dedicated to providing the custom-tailored solutions your business needs to thrive. For 34 years, we have continued to provide quality and affordable insurance policies including professional liability, employment practices, cyber liability, and more. For more information, contact us today at (800) 282-8755.