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Last Updated on September 23, 2017 by Work In My Pajamas
Part of being a business owner is knowing your numbers. This means that you account for every expense that you can think of and how it could impact your bottom line. However, how do entrepreneurs handle expenses that come out of nowhere?
In This Post:
It’s Important to Have Money in Reserve
Ideally, every business owner will have money in the budget to handle unexpected expenses. In some cases, a business insurance policy will help to cover costs related to a judgment or a car accident. A good rule of thumb is to hold back at least 10 percent of any profits made during the year to account for additional costs that may be incurred at a moment’s notice.
Negotiate New Payment Terms with Creditors
If an unexpected expense makes it impossible to keep up with current financial obligations, it may be possible to ask for clemency from creditors. This may mean getting more time to make a payment or having a payment rolled back into a loan and made at a later date. It may also be possible to make partial payments now and use the rest of the money to cover your unexpected cost.
Regular Maintenance Can Prevent Unexpected Costs
The odds of a roof collapsing are a lot lower when you have it inspected on a yearly basis. Instead of waiting until water is dripping from the roof to have it fixed, an inspector can spot the early signs of water damage and fix it for less. Some companies, like Acoma Roofing, Inc., know that if you run your company from a physical storefront, fixing the roof in a timely manner means not having to close while the repairs are being made.
Unexpected Costs Should Be Addressed in the Business Plan
The reason why an entrepreneur is supposed to write a business plan is to account for as many different scenarios as possible. This makes it easier to be proactive as opposed to reactive when the unexpected happens. Therefore, a business owner should already have a plan to deal with events that may be impossible to anticipate until they happen.
In the business world, events unfold each day that you may not have seen coming. However, there is no time to make excuses or complain about things not going your way. Instead, you need to be ready ahead of time to ensure that your company can get through a financial crunch and come out of it stronger than ever.