CHALLENGES FACED BY SMALL ENTERPRISES
"Problems are inevitable. Misery is a choice." ― Ann Landers
Operating a small business goes beyond earning a considerable profit. As an entrepreneur, one needs to oversee daily operations, manage expenses, promote products and/or services, and bolster sales. Challenges are inevitable. However, we can do something to contend with such problems. Read on.
A good entrepreneur performs rebalancing on a regular basis. This is where diversification comes in. The objective of this exercise is to align the asset allocation with a business owner’s financial goals and risk tolerance. It is not advisable to put all the eggs in one basket. But it does not mean a person should not invest too much on equity or play it safe with bonds and the like. If an entrepreneur fails to maximize profits and minimize losses, he can end up losing all his capital in the long run.
Having a huge debt is a major no-no. Yes, it is okay to tap a savings account, obtain cash advance or loan, or turn to credit cards to expand a business or help sustain cash flow. But securing too much financing is another story. If a sizable portion of revenue goes towards paying off debt obligations, it leaves less income to finance expansion, improve operations, or support other endeavors. Repay corporate debts in order to reallocate money into other important expenditures.
Businessmen deal with taxation whether they want it or not. But this taxing process entail different tax advantages or deductions which can be availed on the business return. However, one has to prove a specific expense is both ordinary and relevant, based on Section 162(c) of the Internal Revenue Code. Not maximizing every tax break leads to paying unnecessary tax bill. It helps to seek the professional assistance of an accountant to take care of finances and lower taxes.
Some occurrences are beyond our control such as external risks. And it can impact a business if not handled properly. An entrepreneur can reduce liability by choosing the right business model and evaluating personal and business insurance policy to ensure protection against unforeseeable circumstances.
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