Most of us are familiar with the expression, “Don’t put all your eggs in one basket.” And most of us know it can be applied to more than just eggs. That was certainly the case for me, as one of the first things I learned as an investor was not to put all my eggs in one basket.
For small business owners, this advice means you want to make time to really understand what you own in your business and what it’s worth. Most of us don’t value what we have until it’s gone, but if you adopt an inclination to plan ahead, you can avoid serious losses.
I recently met a business owner who thinks an employee stole $20,000 from the business. But he isn’t quite sure because he doesn’t really know how to figure it out. “Something just seems off,” he told me. Another business owner had an employee who didn’t stay up to date on accounts payable and, as a result, they now cannot collect the money. These two are not just feeling a personal loss, but they also feel like they let their employees down who worked hard to make that money.
These scenarios do not have to happen to you and your business. You might not understand everything in your financial statements, but above all remember your business is your nest egg you need to take care of it properly.
Here are five tips for protecting your business’s assets:
- Make sure you have assets worth protecting. Look at what your business owns by regularly reviewing your balance sheet. What assets are listed on the balance sheet? Do you know for sure they exist? What could you sell them for today if you needed to?
- Spend time building your business assets & increasing their value. Once you know what assets you have; you can set goals to increase their value. As an entrepreneur, you probably have ten new ideas a day. Stick with the ideas that can increase the value of your assets.
- Protect your cash Review your cash balances regularly. Make sure to separate duties for bookkeeping, deposits, reporting and auditing.
- Protect your ability to access credit (borrow funds) Monitor your FICO score and debt level regularly.
- Plan for the future The most successful business owners take time to plan and determine how they can make more money next year than they did this year. Put it on your calendar to plan and monitor.
Doing these five things on a regular basis will help ensure your business’ longevity and that you aren’t putting all your financial eggs in one basket. Bottom line is that it’s your business and it’s your nest egg – protect it.
Liz Lemesevski helps small business owners and non-profit leaders build a strong financial foundation to attract lenders, investors and donors. She started her company, Money Native, to help non-traditional business types shape their organization’s bright future. She specializes in profitability metrics, cash flow improvement, budgeting, capital structure, financial statement analysis, and competitive analysis.