Financial insulation tactics
In business and investment as a whole, there is a need to avoid running out of knowledge. Atimes one can say creating wealth is not an easy task yet to some point I feel it can be in the presence of adequate knowledge. So what is wealth? A continuous increase of possessions or resources. From a numerical term, one can say it is a manipulation of numbers to make more meaning. The moment you know how to turn $1 dollar to $1.1 you are already up to something.
Creating a business can be one thing and maintaining or staying in business can be another. You know something just happened tonight and I learnt from it in the process. The rain was falling windy heavy and I was far asleep. My brother had to help me do something to salvage the situation.
When rain usually falls with high winds, there is likely to be some water into the house as it beats on the door. That water will find a way to pass through the tiny holes on the bottom of the door and it can be inconvenient assuming I left something on the floor near my door.
So he got in that night into my room to help me put a sealer cloth so the draining water wouldn't get in. It was an insulation process from my view; preventing the drain from accessing the inside so there will be no damage. I was just left to imagine in the process what he just did and how this can be applicable to our daily business. How can one insulate his business? Or to be more precise, how can I insulate my business?
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Financial insulation practices can be achieved in angles of insurance, management of debt, creating of emergency fund, asset diversification and so on. I would like to center this article on the area of diversification as an insulating hedge.
To be in business, you have to think very broadly, the issue of cash flow has been one of the challenges I am trying to resolve as a business. In the presence of enough inflow into a business, there is much to be achieved. The reverse has seemed to be the case, we are finding it difficult to retain the cash.
We had a meeting today to address the challenges, one of them is the fact that there has been a massive economic scramble. Aside from that, we must admit we also have to find ways and stay ahead of any curve. First, we are much into service delivery and we are looking at a market that is squeezed one way or the other.
The current situation in the economy calls for adjustment, with the presence of forgone alternatives, there will be service lapses. Much of everyone money is going into food. As it stands, over 70% of people's earnings are swallowed up by food expenses.
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Speaking of finding ways, we have to insulate expenses and trigger more cash flow. How will we achieve this? The idea boils down to introducing a much softer incorporation into the company? What will generate income faster with less work to insulate us from ALL this choking daily expenses. One of the risk one can take is living below his means, it is better to take steps to expand your means.
It has been something we've been pending for a while yet after been able to set our service rendering business to at least some standards there is a need to push into the goods industry. To be more precise, we are looking at consumables, those goods that link both low class and high class together.
I have learnt from big businesses, one of the ways they stay ahead of the financial curve is the underground business they do aside from what they forefront. Until you are big enough to drive in that big contract, insulation practices are very compulsory.
Bringing out a brand will need consistency and time. You can't just fold hands during those years of grinding. There must be something that keeps feeding and the entire system. This was what I had to point out to this company, we need something soft to incorporate while we are focusing on growing our customer base mostly for a big brand vision.
To conclude, let me add, financial insulation is a tactic that can hedge a business. Expenses is part of business, yet when it seems to eat too much into revenue, there is a need to find ways to curtail the danger. When expenses over-run income, there is only one dead end; bankruptcy. Let's just hope this tactic works out just fine. As an entrepreneur, you will always be sourcing for ways to solve pending problems, that's where the rewards lie. Something is once again on the table, execution is next.
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