How to Protect Your Home Business from Financial Ruin

52 percent of all small businesses are operated out of the home. And, this number keeps growing. The best way to protect yourself and your business from unpredictable future events is to have adequate insurance. However, research shows that 40 percent of home businesses are underinsured. Here is why you need home business insurance and what products you should consider.

Why You Need to Protect Your Home Business

A few real-life scenarios will illustrate the reasons why you need extra protection for your home-based business. First, let’s consider the uncertain future. Your digital or printed business data could be compromised if you are the victim of a technology failure or security breach. This could lead to lawsuits or lost income. You can protect yourself from these unforeseen threats with business insurance.

Your reputation and business could be in jeopardy if a customer were to sue you for negligence. But, you can protect your good name and company when you have the right policy in place. Also, most homeowner’s policies will not cover you if a delivery driver were to drop off a package for your business at your front door and injure himself taking a dive off your front steps. Yet, a strong business insurance policy will cover any potential costs associated with this accident.

How Do You Protect Your Home Business

There are almost as many different home business insurance policies as there are home businesses. The key is finding the right policy to manage the potential risks of your enterprise. A few of the most popular types of coverage include:

  • General Liability– This helps out when the delivery guy trips over his feet. Your business and your family are protected from lawsuits due to injuries, accidents, or negligence claims.
  • Interruptions in Business – If your home business’s operations are interrupted by a covered loss, you will still be able to secure some income when you have this product.
  • Workers Compensation – You will need this type of insurance when you have employees working for you. If a worker suffers an illness or injury due to workplace conditions, workers comp insurance will provide a schedule of benefits, regardless of liability.
  • Medical insurance– it is essential that self-employed people take out health insurance to protect you against loss of earnings if you were to fall ill and be unable to work. Independent workers are often under huge amounts of pressure to return to work quickly following illness. This can exacerbate the problem and prevent you from bouncing back to optimum health.
  • Business Property – With this policy, you can protect the merchandise, equipment, computers, tools of the trade, and any other property that is associated with your business.

This is just a sampling of what is available. If you operate a home business, it is just a smart idea to be ready for any obstacles you may face. Insurance could make the difference between a little paperwork and financial ruin.

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Net Worth: Why You Should Track it closely for Financial Success

A person’s net worth is the ultimate determinant of their sum wealth. The net worth is the result of deducting liabilities from the assets. Calculating the net worth gives one a clear picture of the total cost and earned and spent in a lifetime. Tracking the net worth helps one keep their goals and perspective in check. For example, if a person’s total amount of assets amounts to $200,000 and liabilities equals $300,000, the individual will have a negative net worth of -$100,000. It is crucial to establish the financial status of a person or an enterprise so as not to accrue a deluded sense of net worth and fail to achieve success.

Reasons why it is imperative to track the net worth 

1. Considering that net worth is the honest reflection of a person’s wealth, it is a perfect way to determine if one is making positive or negative financial progress. Bob Berger of Forbes.com, states that a constant or increasing net worth is a sign that investments are bringing positive returns. A declining net worth means that one should deduce which activity is draining the money and work towards adjusting the situation.

2. A clear picture of the net worth eliminates the notion that income is equal to one’s wealth status. A person earning $500,000 per year with liabilities amounting to $200,000 in a year is worth $300,000. The same result applies to an individual making $350,000 with liabilities amounting to $ 50,000 annually. With this concept in mind, it is easier for one to plan the steps towards realizing financial success by reducing liabilities to increase the net worth. Besides, considering the assets only when establishing net value, such as a home or a successful investment, is a misguided way to achieve success. The difference between the property and the liabilities like debt determines the exact net worth.

3. When applying for a loan, most banks and lending firms will evaluate the borrower’s sum net worth to determine credibility. A bad credit loan automatically disqualifies one from receiving the cash. Keeping a positive net worth helps one acquire a higher credit limit that can be helpful in expanding one’s investments and ultimately reach goals.

4. A good net worth is essential in keeping the debt status in perspective. A significant amount of loan offsets a lot of people. However, if one’s net value exceed the amount, then it is clear that the debt level is not extreme. A loan that exceeds the net worth means that one should probably cut down on the amount borrowed and live within affordable ways to amass wealth. A low net value to loan ratio is also a great motivation for one to find means to realize a higher rate that translates to increased prosperity.

According to Investopedia.com, the net worth is bound to experience fluctuations just like the financial health of any other industry. As a result, the net worth will reflect the status of the financial health of the various assets and liabilities. It can be difficult to establish one’s long term goals and short term goals without a clear picture of the money owed and money earned. Determining the ultimate net worth with the help of a financial analyst, or a convenient net worth determining software application will save one the stress that comes from tapping into savings and investments, and accumulating unwarranted debt.

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How to Succeed as a Business Entrepreneur – 6 Top Ways

Having taken the primary and most important step, which was to set the wheels of your business project into motion, the next step would be to discover new ways to make it grow and prosper successfully. 

It is important to realize that you need to dedicate your heart and soul to the initiative for it to receive a great number of responses.

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The most important thought you would need to inculcate is that this would be a result of all the hard work, the creativity and the love that you put in to bring the project to life. So be ready to breathe it, eat it, dream it and live it!

Make it a point to read some quotes every day. Motivational quotes have the power to influence your mindset and allow you to function effectively!

Here are six important pointers to help you become a successful business entrepreneur!

  • Become more vocal

It is imperative that you break out from that shell of yours and become more social. No better time than now to begin engaging with others who are in the same place as you. The best form of help is self-help.

So let’s start there. Make it a point to get to know different people, and tell them about your new project. Speak freely and with confidence. Make it an engaging conversation. Allow them to pass criticism and pick it up from there. When they see the fire and passion in your voice, they will begin to take you more seriously

  • Marketing Online

Another way to spread the word effectively is talk about on the internet. Create a website that elaborately depicts your project in an intricate, catchy yet professional way. Outline your project details effectively and highlight the essentials. Spread the word by sharing the website page on your social media accounts.

You could use your friends’ and family’s help by asking them to do the same as well. Build a strong front by exploring various such upcoming start-ups and mutually help each other to grow together.

  • Lend a Helping Hand

Remember that there are probably many out there like you trying to come up with their own business ideas, and so it’s much easier when you engage with such people. Don’t hesitate to offer them help and let them know when you come across new, innovative ways to sell your project. This will always come in handy because this way you get to learn so much and have a diverse exposure to all kinds of people and projects.

Also, when you lead a helping hand, you can be sure to receive the same when you need it!

  • Good Strategy and Testing

Come up with a good enough strategy to outline your project, beginning from the initial to final steps of development of the project, making sure you’ve kept in mind all the little details. It must be a fool-proof strategy, and you must be able to work out any shortcomings.
The final step before delivering the product to the public would be to test it amongst close friends who would appreciate and criticize you at the same time. Absorb the good and work on the negatives.

  • Come Up With Good Customer Service

This is the next big thing which would help your business grow! Put in place a team which dedicates itself to satisfy the needs of your customers. This is highly necessary if you want good reviews and expansion of your business. This will go a long way to getting contacts as well.

  • Believe In Yourself

This is the first and last thing on your mind when you work on your project every day. Trust yourself to make right choices and stand by it. It all works out for the best when you believe in yourself and in your dreams.

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Don’t Leave Your Business Financially Strapped

When running a home business, you’ve typically got much on your mind.

From lining up enough clients to make the business affordable to making sure said clients pay you on time, those are just two of the many tasks you’ve got going for you.

Before that home business ever literally opened its front doors, it needed some form of financial capital to help it get off the ground.

Whether you had money stored up previously, had assistance from family and/or friends, or even took out a loan recently, making sure your financial affairs are in order is critical.

So, how do you go about making sure to not leave your home business financially strapped?

Learn as Your Home Business Grows

Part of being a good home business owner is learning as you grow.

From knowing when your business is in need of a capital infusion to understanding how to obtain secure credit card processing, you must always be on your toes when it comes to finances.

Whether you are looked at as a high-risk merchant or someone who is hoping to have an Ecommerce business take flight alongside your other business ventures, you must make sure you and money are on the same page.

Ways to go about doing this include:

  • Not getting in over your head – First and foremost, always have a financial plan in place whether you’ve owned a home business for years or are just getting your feet wet in the arena. Some home business owners are great with ordering needed supplies, meeting customer deadlines, even managing the help under them that they may need along the way. So what could be their one fault? If you guessed managing money, you’re right. It is super important to not only know how to manage your company’s money, but to be able to sense the warning signs when things are not going well. Instead of burying you and your business in still more debt, recognize the signs when it is time to get assistance;
  • Getting paid on time – As a home business owner, you don’t get a paycheck every two weeks nor typically healthcare benefits managed for you as such in a “normal” corporate job. As the person in charge, it is up to you to make sure clients are paying you the money they owe on time. If they’re not, you can easily fall behind on your own bills, starting a dangerous precedent for your home business and your overall finances. Keep clients to a regular schedule when it comes to payments. In the event they are late with them, send out reminders, along with charging interest. If they totally remove themselves from paying their bills, look to a collection agency as a possibility, though you will end up paying a portion of the money you receive from the client to the agency in return for their assistance. For those customers paying by credit card, you need to always make sure their card info is up to date so there are no problems having a payment go through. If they pay by check, don’t excuse them if they get in the habit of bouncing checks here and there. Lastly, if you have friends or even family purchasing goods or services from your home business, avoid the old IOU policy. Yes, they’re your friends and/or family, but they should treat you as a respected business owner, knowing getting your payments on time is critical to you continuing to operate;
  • Keep business and home money separate – It can be tempting at times to borrow a little money here or there from your personal account or accounts in order to prop up your home business. You probably figure that both are tied together, so why not do it, right? There are a number of dangers if you decide to go down that road, so avoid it at all costs. The most inherent risk is that you will eat into your personal expenses for the sake of your business needs. When that happens, those dollars you had put away for personal needs and/or a rainy day fund can take quite a beating in just a short period of time. Always make sure that your personal expenses come first. No, you don’t want your home business regularly in the red or even potentially going under, but having a roof over your head, health insurance, food on the table etc. should always be your number one priority.

Having a home business under your direction can be one of your lifetime dreams.

The key is to managing it properly, knowing the warning signs of cash issues, and making sure you are doing everything possible under your power to be a financially smart business owner.

When you do those three things, you are less likely to leave your home business financially strapped.

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