8 Ways to Avoid Loss in Business

1. 8 Ways to Avoid Loss in Business Loss prevention is a challenge for business owners because uncontrolled losses can lead a business toward insolvency. Enterprises need to put a check on their losses before they end up being bankrupt. Businesses witness losses due to internal and external factors. They may not have control over external factors such as the Covid19 pandemic, natural calamities, etc. But they can certainly control internal factors such as cash flow, counterfeiting, and over-expenses to keep a check on their losses while ensuring productivity and efficiency.

2. #1: Review Your Cash Flow Regularly There is a popular saying “Cash is the King”. Improper management of cash flow leads to business failure. The inflow and outflow of cash in business need to be monitored regularly to ensure there is no blockage of the cash flow. It helps the enterprises anticipate how much money will be available for future business. Robust cash flow in a business ensures there is no cash crush during an emergency, avoids overspending, and prevents loss.

3. #2: Keep Emergency Funds In this inter-connected globalized world, no business knows when an emergency situation is going to disrupt the entire market. Unexpected events such as the outbreak of the COVID-19 pandemic or the war in Ukraine disrupted the entire ecosystem across the globe. Businesses witnessed heavy losses, while many were forced to shut their operations due to a lack of emergency funds to handle the losses. This makes it imperative for businesses to keep accessible emergency funds for at least 3-6 months if situations persist longer.

4. #3: Diversify Your Business To avoid instability in business due to losses and low revenue streams, business owners should always be ready with plan B to compensate for their losses and maintain profitability. In the current business environment, enterprises must look for developing new ways to generate additional revenue alongside the main business. They can launch additional products or services under their current business or start a new subsidiary to maintain the flow of cash and generate extra revenue.

5. #4: Curb Flow of Counterfeit Products One of the prime reasons for losses in business is an influx of hoax products. Not only the reputation of a brand is tarnished due to counterfeit products, but it disrupts the entire supply chain and cash flow. Businesspersons can opt for anti-counterfeiting by Blokchi to prevent their business from going into loss due to the circulation of fake products. Blokchi used NFT technology to generate QR codes that are tagged with product packaging to track their movement and put a check on counterfeits. It uncovers the fake product when a duplicate QR code is scanned within the supply chain.

6. #5: Reduce Expenses A business can’t afford unnecessary expenses as they are a warning sign for an enterprise that can halt cash flow and increase losses. Businesses must review their expenses regularly and identify the areas where expenses can be reduced without affecting efficiency and productivity. Stop wastage of resources by optimizing your expenses on the infrastructure, back-end office work, logistics, subscriptions, electricity, etc. Also, consider introducing digitization and automation in various areas to reduce operational and labor costs.

7. #6: Bring Automation to Avoid Loss in Business Manual executions of business operations not only affect the efficiency but also increase overall costs. The implementation of automation can streamline complex functions by digitalizing the complete business process. It removes manual paper works in various functions such as accounting, book-keeping, payroll management, etc. Automating these functions saves a lot of costs and increases productivity. Business owners must figure out the areas where they can implement automation to keep their losses low.

8. #7: Cross-Train Your Team A high-performance team can save a lot of costs for the company. Hiring and training new manpower involves higher costs than upskilling and training the incumbents. You can leverage your employees by training them in other functional areas to improve their productivity and reduces losses. Having manpower trained in multiple functional areas improves team collaboration, and efficiency, and boosts employee engagement and return on investment.

9. #8: Outsource There are many functions that businesses may not have in-house expertise, still, they spend a lot on building infrastructure and training and managing manpower. Such functions incur heavy costs to the businesses and distract them from focusing on the money-making side. Such additional functions can be outsourced to a third party that has the expertise and can get the work done at a lower cost. For example, US-based iPhone manufacturer Apple Inc. does not manufacture their own mobile phones, instead, they have outsourced their manufacturing to China-based company Foxconn, while they have focused their resources on research, development, branding, and marketing.

10. Wrapping up In a globalized world where businesses are prone to uncertainties around the clock, these 8 ways to avoid loss in business will help the enterprises check their losses and avoid insolvency. The tech-based solution such as automation and Blokchi has the potential to curb loss incurring activities, and bring operational efficiency to the business.