Even though most businesses think they’re prepared to manage disasters, only a quarter actually are, the U.S. Chamber of Commerce Foundation reports. Supply chain delays, economic uncertainty, or even a key client defaulting on a payment can send shockwaves through most businesses. A strong business continuity plan (BCP) ensures that, when something goes wrong, your company keeps moving forward. Factoring and business continuity go hand-in-hand, giving your business the financial stability and resilience it needs to persevere.
Continuity Plans vs. Disaster Preparedness Plans vs. Crisis Management Plans
Before we get into the specifics of continuity plans, it’s helpful to understand how they differ from disaster preparedness and crisis management plans. Each plays a crucial role in protecting your business, but they serve different purposes.
Business Continuity Plans Keep Operations Running
A BCP ensures your company can keep operating when disruptions occur. It focuses on maintaining essential functions, minimizing downtime, and keeping cash flow stable. The goal is to have systems in place that allow your business to function through challenges.
Disaster Preparedness Plans Reduce the Impact of Major Events
A disaster preparedness plan focuses on preparing for large-scale emergencies, such as natural disasters, fires, cyberattacks, or other catastrophic events. It outlines what steps to take before, during, and immediately after an event to protect people, assets, and infrastructure. It also includes components of business resilience to ensure your business can bounce back quickly once the immediate issue is addressed.
Crisis Management Plans Control the Response
A crisis management plan focuses on managing communication, decision-making, and reputation during a crisis. It outlines who is responsible for handling media inquiries, internal messaging, and stakeholder updates. The goal is to control the narrative, minimize panic, and protect the company’s brand.
Risks of Not Having a Business Continuity Plan
If your business isn’t prepared, it’s forced to react quickly. In these cases, knee-jerk reactions rather than strategic responses are common. As a result, you’re likely to experience one or more of the issues outlined below.
Revenue Disruption
If operations pause, so does income. Without a financial backup plan, even a short-term issue can create long-term instability. This sentiment is echoed in U.S. Chamber of Commerce Foundation research, which shows around one-third of businesses take six months or more to fully recover from an incident, while one in ten takes longer than a year.
Damaged Reputation
Customers and partners expect reliability. If your business cannot deliver consistently, they will look elsewhere.
Cash Flow Shortages
Many businesses struggle, not because they lack sales, but because they lack liquid capital. Common issues like delayed payments, supply chain disruptions, or a sudden expense can create an immediate need for working capital.
Regulatory Compliance Issues
Some industries require businesses to have continuity plans. Failing to prepare could lead to penalties or legal risks.
Continuity Plans Are Multifaceted
A continuity plan helps ensure your business remains strong no matter what challenges arise. A few key components of continuity plans are covered below.
Operational Readiness
Your business continuity plan should identify critical processes and outline steps to keep production, service delivery, and logistics running during disruptions.
Financial Safeguards
A strong plan includes funding strategies such as invoice factoring to ensure your business has access to working capital when cash flow is tight.
Customer and Supplier Communication
Clear protocols must be in place to determine how and when to update stakeholders about changes to operations.
Technology and Data Recovery
Safeguards should ensure that business-critical systems, financial records, and customer data remain accessible in the event of cyberattacks or technical failures.
Why Factoring and Business Continuity Plans Go Together
Many businesses assume operational problems are the biggest threats to continuity. In reality, cash flow issues are what usually force companies to shut down. Factoring plays a crucial role in this by providing immediate access to working capital when you need it most.
Factoring Acts as a Cash Flow Safety Net
Most businesses rely on steady cash flow to cover payroll, rent, and supplier payments. However, disruptions can put financial strain on operations. Factoring allows you to unlock the cash trapped in unpaid invoices to prevent liquidity shortages that could otherwise force you to make difficult decisions like delaying payroll or vendor payments.
Factoring Reduces Dependence on Emergency Loans
When cash flow tightens, businesses often resort to emergency loans or lines of credit, which come with high interest rates and rigid payment terms. Factoring is a debt-free alternative. Your business receives cash based on work already completed. This allows you to respond to disruptions without financial burdens.
Factoring Can Help Keep Supply Chains Intact
One in five service firms and two in five manufacturers say supply chain disruptions have recently impeded their business activities, according to the Federal Reserve Bank of New York. Maintaining strong relationships is key to minimizing these issues, and making timely payments to vendors is the first step. Factoring ensures that vendors are paid on time to keep supply chains strong and stable.
Factoring Supports Rapid Recovery After Disruptions
After a major disruption, such as a natural disaster, ransomware attack, or loss of a key client, businesses often need an injection of capital to get back on their feet. Factoring is a fast solution that can help your company stabilize cash flow without waiting for traditional financing approvals.
How Invoice Factoring Works During a Disruption
When business operations are interrupted, whether by economic uncertainty, delayed customer payments, or supply chain issues, maintaining business continuity requires immediate access to capital. This is where invoice factoring services provide a practical advantage. Instead of relying on traditional business loans, many companies use factoring to convert outstanding invoices into working capital.
Here’s how the process works: A business owner sells accounts receivable to a third party, known as a factoring company, for a percentage of the total invoice value, often 80 to 95 percent. This sale of an asset results in a cash advance based on completed goods or services, giving the business immediate cash flow without adding debt. The factoring company takes over the collection process, and once the customer pays the invoice, the remainder, minus a small fee, is released to the business.
Because factoring is a financial solution tied to already-delivered work, companies can avoid waiting for clients to pay and continue meeting financial obligations without disruption. Invoice factoring is often the difference between maintaining daily operations and entering financial trouble, especially for small businesses, B2B providers, and trucking companies, where cash flow gaps can quickly halt progress.
Factoring also supports business growth by improving liquidity during volatile periods. In short, factoring turns receivables into immediate cash, offering flexible funding that aligns with real-world business needs without the delay or complexity of conventional financing options.
How to Fold Factoring into Your Business Continuity Plan
Now that we’ve covered the background on business continuity plans and factoring, let’s explore the steps involved in pairing them together.
Assess Your Cash Flow Risks
Identify scenarios where customer payment delays or unexpected expenses could impact operations. Determine how much of a financial buffer your business will need to overcome these challenges.
Establish a Factoring Partnership Early
The timeline for approval and first factoring funding is relatively quick and can often occur within a few days. Here at Charter Capital, you actually receive your factoring quote and terms the day you apply and can take advantage of same-day funding as well. Even still, every hour matters when you’re trying to meet a critical expense like payroll, so it’s best to get established with a factoring company before you experience a disruption.
Use Factoring as a Financial Buffer
Instead of relying on loans and other financing methods that come with debt and interest, tap into factoring as needed to prevent disruptions or resolve them quickly when they occur.
Strengthen Your Business Continuity Plan with Factoring
By incorporating factoring into your business continuity plan, your company can ensure financial stability, protect key relationships, and maintain operations through challenges, all without taking on debt. To learn more or get started, request a complimentary rate quote.
No matter which side of the table you sit on during contract negotiations between two businesses considering a partnership, payment terms will always be a major focal point. Businesses providing goods and services want to be paid faster, while businesses receiving them want to delay payment as much as possible. In a perfect world, the two businesses will find a sweet spot that works for both. In the real world, the larger business usually has clout. If you don’t accept their terms, they’ll find someone who will. The good news is that you can work with these larger companies and secure lucrative contracts and not have to worry about cash flow even if they refuse to budge on payment terms. Invoice factoring and supply chain financing are two solutions that make it possible. But, they work in different ways. We’ll explore them both in detail below, so it’s easy to see which fits your situation best.
Factoring: An Overview
If your business provides goods or services on net terms, meaning your customers get a certain number of days to pay after invoicing, you know all too well the challenges that come with payment delays. Invoice factoring solves this by letting you sell those unpaid invoices to a factoring company, also called a factor, in exchange for immediate cash. The process is also referred to as “accounts receivable factoring” or simply “factoring.”
The Factoring Process
Here’s a quick overview of how the factoring process typically works.
Perform Your Work: Deliver services or goods like you usually do, then generate an invoice for your client.
Sell the Invoice: Your factoring company purchases the invoice from you at a slight discount. The discount rate is typically between one and five percent of the invoice’s value.
Get Immediate Cash: Receive most of the invoice’s value right away. In most cases, the business receives 80 to 95 percent of the invoice’s value, though some factoring companies, like Charter Capital, offer up to 100 percent.
Focus on Your Business: Your customer remits payment to the factor based on the terms you’ve set, typically 30, 60, or 90 days. The factor follows up as needed, freeing you from chasing invoices.
Receive the Remaining Balance: Once your customer pays, the factoring company sends you the remaining balance, minus a small fee for the service.
Benefits of Factoring
Unlike a loan, factoring doesn’t create debt. You’re selling an asset. This also means:
No Payments: Your customer clears the balance when they pay the invoice. In contrast to loans, there are no monthly payments for you to make.
Easy Approval: Rather than focusing on your credit, factoring companies ensure your customer has the bandwidth to pay. Because of this, a lot of businesses that don’t qualify for loans can still be funded through factoring.
More Consistent Cash Flow: With factoring, you know exactly when payments are coming in, allowing you to manage payroll, cover materials, scale your business, and more, with greater confidence.
Additional Services: Factoring companies may also offer services that help with things like credit management and working capital optimization, so your business grows stronger.
The Hidden Costs of Delayed Payments (And Why Fast Cash Flow Matters)
When customers delay payment for 30, 60, or even 90 days, the impact goes far beyond a temporary cash crunch. Delayed payments silently erode your business’s ability to operate smoothly, often leading to:
Lost Growth Opportunities: Lack of capital can prevent you from taking on new contracts or bulk orders.
Higher Borrowing Costs: Businesses often turn to credit cards or short-term loans, which carry high interest rates and add debt to the balance sheet.
Strained Supplier Relationships: If you can’t pay your suppliers on time, they may shorten terms or pause shipments, disrupting your supply chain.
These financial strains aren’t always visible at first, but over time, they reduce flexibility and can hinder long-term growth.
A Smarter Way to Manage Cash Flow
To avoid these issues, many businesses turn to invoice factoring, a funding solution that converts unpaid invoices into immediate working capital. Unlike loans, factoring doesn’t create debt. It gives you quick access to cash based on work you’ve already completed.
For small-to-midsized businesses navigating long payment cycles, factoring is more than just a cash advance—it’s a tool for smoother operations, faster growth, and stronger financial resilience.
Who Uses Factoring
Factoring is common in business-to-business (B2B) industries with long payment cycles. A few examples are highlighted below.
Trucking and Freight: Owner-operators and fleet businesses tap into freight factoring when they need cash for fuel, repairs, driver pay, and more.
Manufacturing and Wholesale: It’s common for suppliers to wait months for payment from retailers and big-box stores. With tailored invoice factoring for manufacturing, it’s easy to maintain smooth operations while working with large clients.
Staffing Agencies: It’s common for agencies to pay staff weekly despite clients not paying for 30 or more days. With staffing factoring, the agency gets the funds right away, so it’s easy to cover payroll and retain top talent.
Security: Similarly, security companies dispatch guards and must be prepared to scale on demand to meet the needs of their clients, despite waiting a month or more for payment after services are rendered. By tapping into specialized factoring for security guard companies, the agency can maintain smooth operations and offer comfortable payment terms to clients that help lock in lucrative contracts.
Supply Chain Financing: An Overview
Supply chain financing (SCF), also referred to as reverse factoring, is a tool that helps businesses extend payment terms to suppliers while ensuring those suppliers get paid faster. Instead of waiting weeks or months for an invoice to clear, suppliers can get paid earlier, often at a discounted rate, through a third-party financer.
The Supply Chain Financing Process
Let’s take a look at how the SCF process typically works. In this example, let’s assume that you are the buyer. You’ve ordered materials from a supply company. They normally expect payment within ten days, but you’re accustomed to having 60 or 90 days to pay and your supplier cannot wait that long for payment.
Buyer Receives Invoice: You (the buyer) receive an invoice from your supplier and approve it.
Supplier Decides: Your supplier has the option to get early payment through the funding provider you’ve selected.
Instant Payment to Supplier: The funding provider pays your supplier right away, minus a small discount for early payment.
Buyer Pays Later: You (the buyer) pay the funding provider later on your usual payment terms. Instead of paying within ten days like the supplier wants, you get the longer payment window that you need.
Benefits of Supply Chain Financing
Supply chain financing helps keep suppliers financially stable while giving you, as the buyer, more flexibility on payments. This also means:
Longer Terms for You: With SCF, you get longer payment terms, which helps ensure you have more working capital on hand.
Instant Payment for Suppliers: Suppliers get paid early, which reduces their cash flow strain.
Stronger Relationships: SCF eliminates payment friction, paving the way for stronger relationships between buyers and suppliers.
Who Uses Supply Chain Financing
This type of business financing is typically used by larger companies with strong credit ratings that want to keep their company supply chains running smoothly. A few examples are covered below.
Retail and Ecommerce: Large retainers need steady inventory but also want to keep cash in hand.
Manufacturing: Factories that rely on multiple suppliers for raw materials can ensure their production stays steady without any upfront capital strain.
Automotive and Aerospace: These industries have complex global supply chains that require precise cash flow management.
Factoring vs. Supply Chain Financing: Which One Makes Sense for Your Business?
Both invoice factoring and supply chain financing improve cash flow, but they serve different purposes. The best option depends on whether you’re the supplier (person waiting to get paid) or the buyer (wanting extended payments).
Key Differences in Factoring vs. Supply Chain Financing
Let’s do a quick comparison of the key features and how they differ.
Who it Benefits: With factoring, suppliers and service providers benefit. With SCF, buyers and large corporations benefit.
What it Solves: Factoring helps address slow customer payments, while SCF addresses the need for extended supplier payment terms.
Who Pays Fees: With factoring, the business that’s selling the invoice pays the fees. With SCF, the supplier pays the fees if they opt for early payment.
How it Works: Factoring is the sale of invoices for upfront cash, while SCF allows suppliers to get paid early through a third-party funding provider.
Who Qualifies: Businesses with strong-paying customers can qualify for factoring, while buyers with high credit ratings can qualify for SCF.
Common Industries: Factoring is popular in industries like trucking, manufacturing, staffing, and security, while SCF is used more by the retail, manufacturing, automotive, and aerospace industries.
When to Use Factoring
Factoring is a good fit if:
You’re a supplier, contractor, or service provider waiting on slow payments.
Your customers have long payment terms, such as 30 to 90 days, but you need cash now.
You want quick access to funds without taking on debt.
When to Consider Supply Chain Financing
SCF is a good fit if:
You’re a buyer who wants to extend payment terms while keeping suppliers flexible.
You work with suppliers who may need early payments to avoid cash flow issues.
Your company has a strong credit rating that makes financing terms more favorable.
Accelerate Your Cash Flow with Charter Capital
If you operate a small-to-midsized business and are tired of waiting for payments or your business stability and growth are hindered by slow-paying clients, factoring is a simple, accessible, and debt-free solution. To learn more about how it might fit into your financial strategy, request a free rate quote.
“If you’re starting a business and you take out a loan, you’re a moron,” Shark Tank investor and long-term entrepreneur Mark Cuban says. While his words may come across as harsh or even crass, he goes on to make a fair point: “There are so many uncertainties involved with starting a business, yet the one certainly that you’ll have to have, is paying back your loan.” This is an area that trips up many startup founders and even causes people to pull money out of their own pockets to fund their business. But, there are ways to fund your new business without using personal funds and without taking out a loan. Two primary options are venture capital (VC) and factoring for startups. Below, we’ll walk you through how they work and why factoring is often the more suitable alternative.
Why Business Financing is Vital for Startups and New Businesses
Virtually all businesses require external capital at some point. However, because startups aren’t running at full speed just yet and their revenue has not stabilized, their capital needs are often much greater than established businesses.
Finance a Startup: Covering Initial Operating Costs
Two in five startups that fail simply ran out of cash, CNBC reports. While it’s easy to say this comes down to poor financial management, costs such as product development, marketing and advertising, and administrative expenses can add up. Many startups tap into funding solutions to cover everyday expenses until revenue picks up.
Using Business Financing to Scale a Startup Business
Once the business takes off, the next step is scaling. While this naturally involves increasing expenses related to raw materials or equipment that require capital, startups often find themselves in need of larger facilities and technology to help manage rapid growth. In these cases, business growth funding allows the startup to scale without cutting corners.
Bridge Cash Flow Gaps and Build a Cushion
Cash flow solutions are often vital for startups and established businesses alike, especially those that serve other businesses. This happens when the business invoices customers after work or goods are delivered, then waits weeks or months for an invoice to be paid.
Attract and Retain Top Talent
Startups have to work especially hard to attract and retain talent. While some do this by offering shares of the company, others seal the deal with competitive salaries, hiring bonuses, and perks. This, paired with the costs of finding and onboarding talent, can add to the financial load.
Venture Capital Explained
VC is a type of funding that fuels startups with high growth potential. Around $171 billion is awarded in VC each year, Statista reports. However, funding is down in recent years, with the U.S. showing nearly a 30 percent decline, according to InvestmentNews. Industries like tech, healthcare, and renewable energy, where rapid scaling and large returns are expected, tend to get the most attention from venture capitalists.
Unlike loans or other financing options, VC does not require repayment. Instead, investors provide capital in exchange for equity. In other words, they own a portion of your business. However, this also means they’re usually bringing expertise, mentorship, and connections to your startup in addition to cash.
How Venture Capital Works
VC is very different from other alternative funding solutions, and the full process can take anywhere from around three to six months.
1. Pitch
Startups usually pitch their business to VC firms or angel investors. You’ll need to present a clear value proposition, a detailed business plan, and evidence of market demand and growth potential.
2. Due Diligence
If the VC firm is interested, they’ll dig into your business. This includes analyzing your financials, performing market research, evaluating your team, and doing competitor analysis.
3. Investment
Once they’re satisfied, the firm will provide funding in exchange for equity. There’s usually some negotiation during this stage.
The funding is often released in stages, referred to as rounds, that are tied to milestones. Common rounds include:
Seed Funding: Generally speaking, seed funding should last your business 12 to 24 months and helps you get your business off the ground. An average deal will be in the neighborhood of $3.5 million and the investor will receive anywhere between 15 and 35 percent of your company’s equity in exchange.
Series A, B, and C: Subsequent rounds, including Series A, B, and C, each provide a business with anywhere from 12 to 18 months of cash. These phases are designed to help the business scale operations, enter new markets, or develop new products. Deals can provide the business with anywhere from around $20 million to $60 million or more, with each round taking anywhere from roughly ten to 30 percent of the company’s equity.
4. Active Involvement
VC firms often take an active role in your company. They may be involved in decisions, help you scale, build partnerships, and even help you navigate exits like IPOs and acquisitions.
How Startup Business Owners Can Qualify for Venture Capital
Roughly 98 to 99 percent of businesses that request venture capital are denied, Forbes reports. This is because VCs have rigid requirements like those outlined below.
A Disruptive Idea: Your product or service must solve a significant problem or address an unmet market need.
Scalability: Your business must be poised for rapid growth. VCs also want startups that can scale exponentially, not just incrementally.
A Strong Team: Your leadership team’s experience, resilience, and vision are critical. VCs invest as much in people as they do in ideas.
Traction: While early-stage startups can secure funding, VCs often want proof of traction, such as customer growth, revenue, or partnerships.
Benefits of Venture Capital for Startups
There are a few benefits that set VC apart from other types of funding.
Large Sums of Money: VCs can provide millions of dollars, enabling businesses to grow rapidly and enter markets.
Strategic Expertise: VCs often have industry expertise and provide mentorship, which can help shorten the learning curve and help you avoid issues.
Networking Opportunities: VCs can connect you with other investors, customers, and business partners, which can facilitate growth.
No Immediate Debt: Since VC funding isn’t a loan, there are no monthly payments or interest to worry about.
Drawbacks of Venture Capital for Startups
Despite the benefits, VC comes at a cost.
Loss of Control: Giving up equity means investors have a say in major decisions. Some VCs even require a seat on your board of directors.
High Expectations: VCs prioritize rapid growth and high returns. This can make startup founders feel pressured to scale faster than they’re ready and force them to make decisions that prioritize investor return on investment (ROI) over long-term sustainability or values.
Rigorous Qualifications: The application process is lengthy and competitive. Many startups spend months pitching without success.
Equity Dilution: The more funding rounds you go through, the smaller your ownership stake becomes. If your company eventually sells, your payout may be significantly reduced.
Invoice Factoring Explained
Invoice factoring is a type of funding that’s popular with businesses that serve other businesses, especially those that invoice and offer lengthy payment terms. The total U.S. market size is valued at roughly $172 billion annually, according to Grand View Research.
Like venture capital, factoring does not require the business to take on debt. However, instead of giving up equity in exchange for capital, you sell your unpaid invoices to a factoring company for immediate cash.
How Invoice Factoring Works
The factoring process is simple and straightforward. Depending on your level of preparedness and the factoring company you choose, your business can be approved and receive cash in just a day or two.
1. Submit Your Invoice
You provide your factoring company with an unpaid client invoice. The factor then assesses its value and the creditworthiness of your client.
2. Receive Your Advance
Once approved, the factor sends you money immediately. This advance is usually between 70 and 90 percent of the invoice’s value, though it can be more or less depending on factors like your industry and the creditworthiness of the client. The remaining balance is held as a reserve.
3. Receive Your Reserve
Your client pays the factoring company when the invoice is due based on the terms you’ve set with your client. Once the invoice is paid, you receive the reserve, minus a small fee for the service.
How to Qualify for Factoring
One of the best things about factoring is that it’s relatively easy to qualify for compared to traditional loans or venture capital. Let’s review what factoring companies typically look for.
Creditworthy Clients: Since repayment depends on your clients, factoring companies focus on their ability to pay invoices on time rather than your credit score.
Invoice Validity: The invoices you factor must be legitimate and free of disputes.
Industry Fit: Factoring is especially common in industries like trucking, manufacturing, and staffing, where payment delays are common.
Consistent Revenue: Startups can qualify, though you’ll usually need to have been in business for a few months and have steady invoicing.
Benefits of Factoring for Startups
The unique way that factoring works means it comes with a wealth of benefits for startups.
Easy Approval: Factoring doesn’t require stellar credit or years of financial history.
Fast Cash Flow: Factoring typically pays out in one or two business days. However, when you partner with a factoring company like Charter Capital, you can qualify for same-day funding. This makes it ideal for businesses with urgent cash flow needs.
No Debt: Because factoring is not a loan, it doesn’t add to your liabilities or hurt your credit score.
Flexible Terms: Use factoring as a one-time solution or on an ongoing basis. You can factor invoices as needed.
Drawbacks of Factoring for Startups
While factoring has many benefits, there are some things businesses should be aware of before signing up.
Cost: A typical factoring fee can be anywhere from one to five percent of an invoice’s value. While this is a small amount, it’s important to approach it responsibly and ensure you’re receiving ROI.
Client Interaction: Your factoring company will likely have contact with your clients when verifying invoices and collecting. Be sure to partner with a factor that has a good reputation and a strong sense of professionalism.
Limited to Invoiced Businesses: Factoring is only an option for companies that invoice clients for services or products after delivery.
Client Risk: If your clients have poor payment habits, the factoring company may offer terms that reflect the increased risk or decline to factor their invoices.
Key Differences Between Invoice Factoring vs. Venture Capital
When it comes to funding your startup, both VC and factoring offer unique advantages. Let’s take a look at how they stack up.
Ownership and Control
VC requires you to give up a portion of your equity, which means sharing decisions with investors. Factoring does not. If maintaining control of your business is important to you, factoring is the better solution.
Factoring vs. Bank Loan: Which Provides Faster Funding?
From pitch to funding, it takes months to see cash from VC. Conversely, factoring can provide funds right away. If your startup needs funding now or within the next 90 days, factoring comes out on top.
Eligibility and Requirements
VC firms are very selective and look for rapid growth potential. Factoring companies focus on your clients’ ability to repay their invoices. If you’re in a consumer industry or poised for exponential growth, VC might work for you. If you operate a B2B business, factoring will be more accessible.
Cost
While VC doesn’t require repayment, it still comes at a cost—equity in your business. Conversely, factoring comes with a small fee. It’s a transparent and manageable cost that doesn’t impact your long-term profitability. If keeping profits within your business matters more than raising large sums, factoring offers better value.
Purpose of Funding
VC is ideal for large-scale, high-risk initiatives like R&D, market expansion, or launching a disruptive new product. Factoring is designed to address cash flow issues. It’s well-suited for things like payroll, purchasing inventory, or managing day-to-day expenses while you wait for clients to pay.
Long-Term Impact on Your Business
While VC can bring mentorship and networking opportunities, the pressure to grow quickly and deliver high returns can lead to risky decisions that may harm your business in the long run. Factoring, on the other hand, provides funding without influencing your strategy. You can grow at your own pace without external pressure.
Understanding Factoring Rates: What Startups Need to Know
Factoring rates determine how much factoring companies charge when purchasing outstanding invoices from a business. These rates typically range from one to five percent of the invoice amount, depending on factors such as invoice value, industry risk, and client creditworthiness. Unlike a startup business loan, which requires scheduled repayments, invoice factoring for startup companies provides immediate cash flow without adding debt.
There are two primary types of factoring agreements: recourse factoring and non-recourse factoring. With recourse factoring, the business is responsible if a client doesn’t pay their invoice, whereas in non-recourse factoring, the factoring company assumes the risk—but at a higher cost. Startups should weigh the benefits of non-recourse factoring agreements against their higher factoring rates to determine the best fit for their needs.
Beyond the percentage of the invoice value deducted as a fee, some factoring companies charge additional costs for same-day funding, credit checks, and transaction processing. Comparing multiple factoring partners helps startups secure lower factoring fees while ensuring a factoring agreement that aligns with their business funding needs.
Unlike a loan or line of credit, invoice factoring provides fast access to cash by unlocking funds tied up in unpaid invoices, allowing startups to reinvest in operations and growth. Understanding the cost of factoring ensures startups can use invoice factoring effectively as a financing solution without unexpected expenses.
Find the Best Startup Factoring Solution for Your Business
If your startup requires funding and traditional financing, and VC don’t align with your needs, factoring may be the accessible solution you’re looking for. With decades of experience supporting growing businesses and competitive rates, Charter Capital can help you bridge cash flow gaps and build a stronger company without taking on debt. To explore the fit more, request a complimentary rate quote.
“’Tis skill, not strength, that governs a ship,” historian Thomas Fuller wrote centuries ago, yet the wisdom carries through today, especially in business. Just like a captain navigating unpredictable waters, your business success depends on the skills you master, not just the strength of your company’s offerings or the time you put in. Effective financial management is the helm of your “ship,” and therefore, developing and improving essential financial skills is crucial to navigating uncharted waters and challenging situations.
In this guide, we’ll walk you through the importance of building essential financial skills and key areas to focus on, plus provide actionable tips for getting started.
Why Developing Small Business Financial Management is Essential
Before we break down essential financial skills for business leaders, let’s take a quick look at some of the reasons upskilling must be a priority.
The Face of the Entrepreneur is Changing
Launching a new business has historically been a very mindful decision. It was the ultimate goal. Hopeful entrepreneurs would study as much as they could and take roles with other entrepreneurs as a way to build skills. In fact, nearly half of all Boomers running a business today launched it as their only initiative, Xero surveys show. Conversely, 67 percent of Gen Z entrepreneurs began their businesses as a side hustle. Although this allows more time to ensure the business is viable before going full force, it also means most new business owners are learning as they go. When it comes to financial management, there’s a big learning curve to overcome—one that can be difficult to address when you’re managing countless other aspects of running a business for the first time.
Financial Literacy is Declining
Financial literacy is fairly low in the U.S. The average person answered just 48 percent of questions correctly in the annual 3 TIAA Institute-GFLEC Personal Finance Index (P-Fin Index). This marks a steady decline from the peak score of 52 percent in 2020. Business owners are in the same boat, with little more than half rating their financial literacy as “high,” per Xero.
Few Small Businesses work with Financial Planning Pros
Despite a lack of personal knowledge, just 15 percent work with an accountant or advisor, Xero reports. Nearly two in five still manage financial matters on their own. This, unfortunately, means that most business financial matters are managed by someone without the ability to do so effectively.
The Hidden Costs of Poor Financial Planning and Financial Literacy
Poor financial planning quietly erodes business stability, leading to cash flow shortages, excessive debt, and tax liabilities that hinder growth. Without strong financial reporting and forecasting, business owners risk misallocating resources, facing regulatory fines, and losing investor confidence. Instead of proactively managing finances, many find themselves constantly reacting to problems, which weakens long-term financial health.
A key driver of poor financial planning is a lack of financial literacy. Nearly half of small businesses struggle with financial challenges tied to inadequate financial knowledge, according to Xero. This knowledge gap costs them an average of $118,121, QuickBooks reports. To avoid these costly mistakes, businesses should strengthen their financial skills by working with professionals or certified financial planners. A solid understanding of financial trends, problem-solving, and analysis builds resilience, ensures compliance, and supports sustained profitability.
10 Essential Financial Skills for Business Leaders
Strong financial decision-making relies on a mix of analytical skills, communication skills, and a solid understanding of financial concepts. Business leaders must be able to interpret financial documents, assess financial challenges, and explain key financial insights to stakeholders in simple terms. Developing these skills not only improves financial planning but also strengthens problem-solving in complex financial situations. The case for building financial literacy as a business leader is clear. Next, let’s take a look at some of the areas people often struggle with and what to focus on if you’re ready to learn.
1. Tax Planning and Compliance
Optimizing tax strategies is the biggest challenge for small businesses, according to Xero surveys. Closing this gap is a tall order, considering less than half are even confident they’re paying taxes correctly, per QuickBooks.
Rounding out knowledge in this area starts with knowing the best business structures for tax and legal purposes. Choosing the right structure for your business helps you limit tax liabilities. However, your structure also impacts how you get paid, how your business and personal taxes are paid, and special requirements for managing your business, which makes it foundational in everything you do. With this step addressed, you can move into more advanced tax optimization strategies, such as planning your expenses and maximizing your deductions.
2. Bookkeeping
Bookkeeping encompasses the day-to-day tracking of your financial transactions, including payables and receivables. Because of this, it has a trickle-down effect and influences many of the other areas outlined here.
Many businesses fall into common bookkeeping mistakes, such as failing to separate personal and business expenses or overlooking proper expense tracking. These errors create unnecessary stress and can hinder your ability to monitor cash flow and assess financial performance effectively. Conversely, developing bookkeeping skills allows you to understand your company’s financial health and make informed financial decisions. It also helps you ensure the accuracy of your books and compliance with regulatory requirements.
3. Forecasting
Many business owners take a relaxed approach to financial forecasting by ballparking cash flow in or coming up with seemingly plausible sales projections in their heads. These things can somewhat work when a business is very small, but the accuracy quickly diminishes once more than the first few customers are acquired.
True financial forecasting—the type that becomes increasingly essential and complex as a business grows—involves analyzing historical data, market trends, and external factors to create informed projections for revenue, expenses, and cash flow. These insights allow you to anticipate challenges, allocate resources effectively, and identify opportunities for sustainable growth.
4. Business Budgeting
Budgeting is a fundamental skill for managing business finances, yet it’s the second most common struggle for business owners, according to Xero surveys. While many small businesses start with informal spending plans, the lack of a structured approach can make it difficult to align financial decisions with long-term goals.
By developing a business budget, you can create a clear roadmap for managing resources, controlling expenses, and planning for growth. A well-crafted budget ensures that every dollar has a purpose, helping you avoid overspending while prioritizing key investments. It also serves as a benchmark, allowing you to measure progress and adjust strategies as needed.
5. Financial Statement Analysis
One of the most important ways to improve your finance skills is by learning how to read key financial reports—income statements, balance sheets, and cash flow statements. These documents offer a clear view of your business’s health and help guide smarter, strategic decisions.
By analyzing this data, you’ll uncover trends, spot issues early, and gain valuable insights into your company’s financial performance. For example, profit and loss reports help manage expenses, while balance sheets support debt and asset planning.
You don’t need to be an expert. Start with the basics, stay updated, and take a course or work with a pro to develop your skills. Strong financial analysis, paired with excellent communication, empowers you to explain results clearly and align them with your business strategy.
6. Credit and Debt Management
Managing credit and debt is a key skill for keeping your business financially healthy. Learning how to build business credit can open the door to better borrowing terms and even lower insurance rates. This often starts with simple strategies, like making early payments instead of just paying on time, to demonstrate financial responsibility and improve your credit score.
It’s also important to recognize the difference between good debt vs. bad debt. Debt that helps you grow, like investing in equipment or inventory, can be an asset, but relying on high-interest loans for everyday expenses can quickly become a liability. By managing credit mindfully, you can secure the resources your business needs while avoiding unnecessary financial strain.
7. Cash Flow Management
Effective cash flow management is essential for keeping your business running smoothly, but it’s also one of the top challenges for business owners, according to Xero surveys. Without it, even a profitable business can struggle to cover day-to-day expenses or plan for growth.
Avoiding common cash flow management mistakes, like failing to monitor cash inflows and outflows regularly, can help you maintain financial stability. Additionally, improving accounts receivable processes, such as by implementing clear payment terms or following up on overdue invoices, can keep your cash flow consistent and predictable.
8. Strategic Cost Management
Strategic cost management focuses on analyzing your spending to ensure it supports your business goals. Rather than simply cutting costs, the process involves identifying inefficiencies, eliminating waste, and redirecting resources toward areas that offer the greatest value.
This could include renegotiating supplier contracts, streamlining operations, or reallocating funds to initiatives that drive growth. By carefully managing costs, you can maintain financial stability while positioning your business for long-term success.
9. Risk Management
Just 38 percent of small businesses have a reserve fund, and 13 percent don’t have a plan for handling unexpected expenses, according to Xero surveys. While these may seem like obvious needs for a business, the lack of implementation highlights deeper issues. Misperceptions about risk, barriers to putting safeguards in place, or competing priorities often push risk management to the back burner, especially for smaller companies.
Risk management skills empower you to identify potential threats to your business, assess vulnerabilities, and create strategies to address them. By learning to anticipate challenges and prepare for them, you can build a more resilient business and reduce the impact of unexpected events.
10. Funding Option Assessment
Understanding your funding needs and finding the right solution can make all the difference in keeping your business moving forward. Yet, when tested on borrowing knowledge, the average American scores just 59 percent, according to the latest P-Fin Index.
Funding option assessment requires a clear view of when financing is necessary, what options are available, and how they align with your goals. Whereas traditional financing may work well for long-term investments, it’s not always ideal for short-term needs or speed. It’s also out of reach for many small businesses due to stringent qualifications. Plus, it can lead to loan stacking, which can create a financial hole that’s difficult to climb out of. Credit cards create similar issues. If the balance isn’t paid in full immediately, interest can eat away at your profitability.
Because of this, options like merchant cash advances (MCAs) and factoring are often favored for their accessibility and speed, though MCAs can have APRs that reach into the thousands and have unpredictable payback speeds. Conversely, factoring allows you to turn unpaid invoices into immediate cash, providing flexibility without debt.
By learning to evaluate funding options, you can confidently choose solutions that support your business’s growth while avoiding unnecessary financial strain.
5 Quick Tips for Building Essential Financial Skills
Now that we’ve covered what you should know, let’s explore how to build up your acumen.
1. Leverage Business Accounting Software
While it’s important to understand the logic behind your financial metrics and know how to perform calculations, that doesn’t necessarily mean you need to do everything manually. In fact, automating processes helps ensure accuracy and speeds up processes so you can focus on strategies to improve your numbers.
Use accounting software to simplify financial management and keep your records organized. Tools like QuickBooks, Xero, and Wave help with tasks such as expense tracking, invoicing, and generating financial reports. They can also be great resources for learning more about your company’s financial health.
2. Work with a Pro
Pros can handle complex issues, like financial forecasting or navigating compliance, and even basic tasks, like bookkeeping, for you. If you don’t have experience in a certain area, working with a pro will allow you to ensure the job is done right and help you understand how things should be done. Consider hiring a CPA, bookkeeper, or tax expert, or financial consultant when something is outside your area of expertise or simply commands more of your time than you have to give. A good advisor will save you time, ensure you’re complaint, and help you avoid costly mistakes, which often more than covers any associated costs.
3. Map Out Priorities and Focus on One Area at a Time
Focus on one financial skill at a time instead of trying to learn everything at once. Start by identifying where your business needs the most improvement, such as cash flow, budgeting, or forecasting, and dedicate your energy there first. This approach makes learning feel manageable and helps you build confidence. As you improve, you’ll see the impact in your business and feel more prepared to move on to the next area.
4. Learn in the Way That’s Best for You
Find learning methods that suit your style. Hands-on learners might prefer workshops or online courses, while others may enjoy books, blogs, videos, or podcasts for quick insights. Audiobooks are perfect for busy schedules, too. You can listen during your commute or while exercising.
5. Fit Lifelong Learning into Your Routine
Turn financial education into a habit by working it into your schedule. Listen to a podcast while walking the dog, read a blog post over your morning coffee, or set quarterly goals to tackle new financial topics. The key is consistency. Small efforts add up over time. Keep learning part of your routine to ensure you’re always sharpening your skills and staying ready to tackle new challenges.
Improve Your Small Business Financial Management with Invoice Factoring
Virtually all businesses require capital at times. Shortfalls can happen due to seasonality, rapid growth, and unplanned expenses. A gap isn’t always a sign that your business is unstable, but how you handle that gap can make a world of difference in your company’s stability and growth.
Invoice factoring closes those gaps by providing instant payment on your B2B invoices, so you get immediate working capital and are freed from tedious tasks like chasing invoices. Plus, you can set up your factoring account and not factor any invoices until the need arises, ensuring your business is prepared even in uncharted waters or challenging situations. To take the next step, request a free Charter Capital rate quote.
Profitability slipping or cash flow feeling tight? One of the biggest culprits for small and growing businesses is overhead. By mastering the art of managing business overhead costs and using practical cost-saving strategies, you can boost your bottom line and create financial stability. On this page, we’ll walk you through the nuances of business overhead, why managing it effectively is so impactful, and cover some tips you can implement to start seeing results right away.
Business Overhead: Definition and Types
Before we break down how to reduce overhead expenses, let’s take a quick look at exactly what overhead is and why it’s key to improving profitability.
What Are Overhead Costs?
Overhead costs are ongoing expenses that support your operations but don’t generate revenue.
Common Types Overhead Expenses
Overhead costs can be categorized into production, administrative, selling, and financial expenses. Each plays a unique role in your business operations.
Production Overhead / Manufacturing Overhead
Production overhead, also referred to as manufacturing overhead, includes costs that are indirectly tied to producing goods or services. While they don’t include materials or labor, they’re essential for production. Being able to identify and isolate these expenses makes it easier to set accurate pricing and improve profit margins. Let’s take a quick look at some examples.
Equipment Maintenance: Servicing machines used in production.
Factory Utilities: Power and water used at a manufacturing site.
Depreciation: Gradual wear and tear on machinery or factoring buildings.
Supervisory Salaries: Payroll for production managers or quality control staff.
Factory Supplies: Tools, cleaning materials, and lubricants.
It’s worth noting that not all businesses will have production overhead. For instance, many service-oriented businesses, such as consultancies, security firms, or staffing agencies, won’t have these expenses because they don’t engage in manufacturing or product creation. If you’re in an industry that does not have production overhead, you’ll want to use terms like “operational overhead” or “project overhead” instead, as these will reflect costs that are indirectly tied to delivering your services. For instance, a staffing company would likely include recruitment tools, such as access to LinkedIn Recruiter or job board subscriptions, in these costs. Things like background checks and payroll management for temporary staff would also fit into this category.
Administrative Overhead
Costs related to running the day-to-day operations of your business are considered administrative overhead. These expenses are not tied to production or sales but are essential for keeping the business functional. Some examples are covered below.
Office Supplies: Common office supplies such as pens, paper, and software subscriptions for general use.
Salaries: Human resources, accounting, IT staff, and other salaries that impact the whole company.
Compliance Costs: Legal fees, licensing, and regulatory filings.
Selling Overhead
Costs that are associated with promoting or selling your products or services are considered selling overhead. These expenses support revenue generation and ensure your product reaches your audience and stays competitive in the market. They do not include the cost of goods sold (COGS). A few examples are highlighted below.
Advertising: This includes everything from social media campaigns to Google Ads and billboard rentals.
Sales, Salaries, and Commissions: Pay for sales reps and incentives for hitting targets or commission for referral partners.
Promotional Materials: Flyers, brochures, and branded giveaways.
Travel Expenses: For salespeople meeting with clients or attending trade shows.
Customer Relationship Management (CRM) Software: Tools to manage customer relationships and track sales pipelines.
Financial Overhead
Costs that are tied to the financial management of your business are considered financial overhead. These expenses don’t directly drive revenue or production but are critical for financial health. Effectively managing financial overhead keeps your borrowing costs low and improves cash flow. A few examples of financial overhead are covered below.
Loan Interest: Payments on loans or lines of credit.
Factoring Fees: Costs related to cash advances secured through invoice factoring.
Bank Fees: Charges for account maintenance or international transactions.
Accounting Services: Fees for bookkeeping or tax preparation.
Bad Debts: Money lost from customers who fail to pay.
Insurance: Coverage for assets like vehicles or accounts receivable.
Fixed vs. Variable Overhead Costs
Oftentimes, you’ll hear of an overhead expense being referred to as “fixed” or “variable.” It’s easier to manage them effectively when you evaluate these categories individually.
Fixed Overhead
A fixed overhead cost stays consistent regardless of how much your business sells or produces. These expenses are often predictable and unavoidable. Examples include rent or lease payments, equipment depreciation, and salaries of administrative staff.
Variable Overhead
A variable overhead cost fluctuates with your business activity levels. These expenses are more flexible and can provide opportunities to cut costs during slower periods. You’ll want to track them separately so that you can easily spot places to cut costs in slow months without impacting critical operations. Examples include office supplies, shipping costs, and temporary labor.
Direct vs. Indirect Overhead Costs
Another way to look at overhead is to determine whether the cost is directly tied to specific business activities or spread across the organization. Being able to split expenses into these categories is useful for cost allocation, especially if you’re budgeting for multiple projects or lines of business.
Direct Overhead
Expenses that are linked to a particular project, product, or department are considered direct overhead. Examples include rent for a dedicated manufacturing facility and maintenance of a specific machine used for production.
Indirect Overhead
Broader expenses that benefit the business as a whole are considered indirect overhead. Examples include utilities, office supplies, and salaries for your human resources department or accounting team.
Overhead Costs vs. Operating Expenses
The terms “overhead costs” and “operating expenses” are often used interchangeably, but they mean different things.
Operating Expenses
Operating costs include all expenses required to keep your business running every day. This is a broad category that encompasses both direct and indirect costs.
Direct Operating Costs: Expenses tied directly to producing goods or services, such as raw materials or direct labor.
Indirect Operating Costs: Expenses that are not tied directly to production but that are still essential for operations, such as rent, utilities, or administrative salaries.
Overhead Costs
Overhead refers specifically to indirect costs that support your business but aren’t directly tied to production or sales. It’s a subset of operating costs.
Why Overhead Management Matters for Reducing Business Overhead Costs
Effectively managing your overhead is crucial to maintaining a healthy and profitable business. Let’s take a quick look at the reasons behind this.
Your Protect Your Profit Margins
Overhead costs don’t directly generate revenue but they eat into your profits. By keeping them under control, you ensure your business remains profitable even when sales fluctuate.
Cash Flow Improves
Lower overhead means more cash is available for essentials like payroll, inventory, or growth supplies.
Operational Efficiency Increases
Streamlining overhead costs helps you eliminate waste and focus resources on what truly drives value for your business.
You Can Price Your Offerings More Competitively
A lean overhead structure allows you to price products or services more competitively without sacrificing profitability.
Financial Resilience Gets a Boost
Efficient overhead expense management prepares your business for unexpected challenges, like market downturns or rising costs.
Calculating and Benchmarking Overhead Costs
For most businesses, the goal is to keep overhead costs as low as possible without damaging quality or creating inefficiencies. But, you might wonder how you stack up to your peers. Are your operating costs normal? Do you need to keep chipping away at them or is it ok to divert your attention to other things for a while?
Measuring Overhead Costs
To understand where you sit, find out what percentage of your monthly sales goes to covering overhead using the following equation:
Monthly Overhead Costs ÷ Monthly Sales x 100 = % of Sales for Each Month
For instance, let’s say your monthly revenue is $250,000 and your overhead is $50,000. Your overhead rate is 20 percent.
Benchmarking Overhead Costs
Generally speaking, your overhead should be 35 percent or less of your total monthly sales. However, there are variances by industry and even within industries. For instance, a large trucking fleet might have an overhead rate of 25 percent, while an owner-operator might be closer to 20 percent. But, bear in mind this only reflects overhead costs. A typical trucking company has a profit margin just 2.5 to six percent, as Boss Magazine reports. Operating costs eat up the rest.
Meanwhile, manufacturing businesses tend to sit around 35 percent, Harvard Business review (HBR) reports. There are also some outlier industries. For instance, an SaaS company may be able to whittle their overhead rate down to five to 15 percent, while professional services firms often sit on the higher end of the spectrum, funneling 50 to 70 percent of their sales into overhead.
Understanding where your business fits on the spectrum can help you identify areas to optimize. For instance, low-overhead businesses will likely want to focus on scaling revenue and maintaining cost discipline, while high-overhead businesses should evaluate whether costs like office space or marketing align with their business growth.
9 Cost-Saving Strategies for Managing Business Overhead
Now that we’ve covered the basics of business overhead, let’s explore some overhead cost reduction tactics to leverage in your financial planning activities.
1. Review Overhead Costs Quarterly
Reviewing overhead costs regularly allows you to take a proactive approach to managing them. Perform quarterly reviews to identify trends, spot unnecessary spending, and make adjustments before costs spiral out of control.
For example, you might notice rising subscription fees for software you no longer use or excessive utility costs due to inefficient equipment. Addressing these issues promptly can save your business significant money.
A quarterly review also ensures your overhead aligns with revenue. If revenue dips, you can scale back on non-essential expenses like temporary labor. Conversely, during growth periods, you can invest in critical areas like new technology.
2. Review Contracts Regularly
Aim to review contracts at least annually. This will help ensure you’re getting the best value for services like leases, software, and vendor agreements. Over time, contracts may become outdated and you could end up overpaying or locked into unfavorable terms.
For instance, your internet provider may have introduced faster, cheaper plans, or a supplier could offer discounts for bulk orders. By revisiting contracts, you can renegotiate terms, seek competitive bids, or cancel unnecessary services.
Additionally, reviewing contracts ensures compliance and keeps your business protected. For instance, liability insurance may need adjustments as your business grows.
3. Manage Inventory Carefully
Careful inventory management minimizes overhead costs tied to storage, insurance, and obsolescence. Excess inventory can result in missed sales or production delays.
Implement strategies like just-in-time (JIT) inventory to order supplies only when need, reducing storage costs. Use inventory management software to track stock levels, identify slow-moving items, and forecast demand accurately.
4. Leverage Tech
Streamlining business operations through technology and automation can produce impressive savings. Tools like accounting software, CRM systems, and inventory management can replace time-consuming manual tasks and increase accuracy. Even small investments in tools that leverage artificial intelligence (AI) can make a major difference.
For example, automating payroll reduces the need for administrative staff, while scheduling software ensures optimal workforce allocation to avoid unnecessary labor costs.
Cloud-based tools also eliminate the need for costly physical infrastructure like servers, plus may allow teams to collaborate remotely and reduce office space needs.
5. Reduce Energy Consumption
Reducing energy usage is a simple yet impactful way to cut overhead costs. Start by auditing your energy consumption to identify inefficiencies. Replace outdated equipment with energy-efficient alternatives, such as LED lighting or ENERGY STAR-certified appliances.
Smart thermostats and motion-sensor lights can reduce waste even more by optimizing usage based on activity. For instance, adjusting HVAC systems to operate only during business hours can significantly lower utility bills.
Encourage energy-saving habits among employees, like powering down devices at the end of the day. If feasible, consider renewable energy options, such as solar panels, for long-term savings.
6. Go Paperless
A typical business saves more than $7,500 annually per employee by cutting out paper, according to Pearson research. Transitioning to a paperless system reduces overhead costs associated with printing, storage, and waste management. Switching to digital tools for invoicing, recordkeeping, and communication saves money on paper, ink, and office supplies, while also streamlining workflows.
For example, employees and clients adopt paperless practices by using tools like email for communication and electronic payments for billing. This reduces costs and also aligns with sustainability goals, which appeals to eco-conscious clients and partners.
7. Go Remote
Businesses can save over $10,000 per year per employee by going remote, Lemon.io reports. Adopting a remote work model, even partially, can significantly reduce overhead costs by cutting expenses like office space, utilities, and on-site amenities. With employees working from home, businesses can downsize or eliminate physical offices, saving thousands or more annually in rent and maintenance.
For example, a consulting firm that shifts to a fully remote model no longer needs to lease a downtown office, reducing overhead while maintaining productivity. Cloud-based tools and video conferencing software ensure seamless collaboration without needing to physically share the same space.
Remote work also offers flexibility to hire talent from lower-cost regions, reducing payroll overhead. Hybrid models, where employees only come in occasionally, further minimize costs while preserving a physical presence when necessary.
8. Cross-Train Your Team
Cross-training your employees helps reduce overhead by creating a more versatile and efficient workforce. When team members are trained in multiple roles, you can handle fluctuations in workload without relying on additional hires or temporary staff.
For example, during peak periods, an administrative assistant trained in customer service can step in to handle client inquiries, reducing the need for overtime or extra staff. Similarly, employees who can cover each other’s roles minimize downtime due to vacations or unexpected absences.
Cross-training also improves operational flexibility, so you can redistribute resources to critical areas during transitions or growth phases. Plus, it boosts employee engagement by fostering new skills and career development.
9. Outsource Non-Core Tasks
Outsourcing non-core tasks helps reduce overhead by allowing you to focus on your primary business operations. Functions like payroll, IT support, customer service, or marketing can be handled by external experts at a lower cost than maintaining in-house teams.
For example, a small business might outsource bookkeeping to a third-party accounting firm and avoid the expense of hiring a full-time accountant. Similarly, outsourcing IT support eliminates the need for costly infrastructure and salaries for an in-house team.
When Cutting Overhead Costs Hurts More Than It Helps
Reducing overhead costs is essential for maintaining profitability, but cutting the wrong expenses can disrupt operations and hinder growth. While there are many ways to reduce overhead costs, eliminating critical business expenses without a strategy can lead to inefficiencies, reduced productivity, and higher long-term costs.
One common mistake is reducing semi-variable overhead costs, such as software subscriptions, equipment maintenance, or employee training. These ongoing costs may seem like an easy target, but cutting them can negatively impact efficiency, service quality, and future scalability. Similarly, slashing fixed costs like rental costs or essential administrative costs may create operational disruptions that outweigh the savings.
Before making cuts, small business owners should first calculate their overhead expenses and evaluate whether reductions will genuinely improve financial health. Instead of drastic cuts, a better way to reduce your overhead costs is by renegotiating contracts, improving efficiency, or shifting certain expenses to variable costs where possible.
Careful cost management ensures that overhead costs remain under control without sacrificing the resources needed to grow your business and maintain stability. Thoughtful adjustments, rather than indiscriminate cuts, help businesses keep costs low while preserving essential operations.
Leverage Factoring for a Multifaceted Overhead Win
Invoice factoring provides businesses with immediate capital for their unpaid B2B invoices. Because of the unique way it works, it can help address overhead costs on a number of fronts. For instance, with factoring, you’re in control of when you factor, which makes it easy to manage financial overhead costs. Plus, when you work with a factoring company like Charter Capital, we’ll take steps to help ensure your receivables are paid in full, reducing the risk of bad debt. We also take care of collecting the balances for you, similar to the way collections outsourcing works. If you’d like to start getting paid faster for your hard work and want to improve your overhead with invoice factoring, request a complimentary rate quote.
Some stress is inevitable when you’re running a business. But, letting it go unchecked can have serious consequences for you and your company. Below, we’ll cover a few reasons why it’s essential to destress, then explore some proven business owner stress relief tactics to help you feel better and boost business growth.
The Importance of Stress Management for Business Owners
How our bodies respond to stress serves an important function—it helps us understand when things aren’t right and nudges us to make changes that will keep us safe. However, these systems weren’t created with long commutes, finances, and other demands of modern life in mind. The buildup of responsibilities and the “always on” culture we live in results in chronic stress for many, especially business owners who must not only lead their companies but often do so alone. Let’s take a quick look at why managing this stress is so important.
Stress Affects Your Decision-Making
We’re constantly deciding whether to try something different or keep doing what we’re doing. These are referred to as explore/ exploit problems. Do we explore something new that we don’t have much information on, or do we exploit what we know and stay the course?
Stress, whether acute or chronic, impacts how we make these decisions, according to research published in the Journal of Neuroscience. We tend to stick with what we’re doing, even if we’re only achieving lackluster results that way. Some scientists believe this is a form of self-preservation; we’re more likely to survive an encounter we’ve experienced before.
Because successful businesses are constantly pivoting and exploring new methods, this reduced tendency to examine the unknown caused by stress can have profound implications.
Stress Impacts Your Health and Productivity
A few years back, researchers turned heads when they revealed that exposure to stressful events can make people more susceptible to illness. While the mechanisms are not fully understood, stress weakens the immune system and increases inflammation. Plus, it impacts sleep and can lead to habits such as drinking and smoking that can hamper the immune response. Because of this, even short-term stressors can affect your health.
However, chronic stress can have even greater consequences due to overexposure to cortisol and other stress hormones. For instance, the risk for everything from heart disease to digestive problems and memory impairment increases for those with chronic stress, per the American Psychological Association (APA).
Your Team Feels Stressed When You Are
As the leader, your emotional state sets the tone for your entire organization. If you’re constantly stressed, it can trickle down to your team. Research shows this may lead to decreased morale, poor communication, increased conflict and tension, a lack of creativity, and reduced wellbeing, Impact reports.
Your Business Needs a Visionary, Not a Firefighter
When you’re stressed, you’re stuck putting out fires instead of focusing on growth. Long-term strategies, networking opportunities, and creative problem-solving take a backseat to daily emergencies. A calm, well-rested mind is essential for thinking beyond immediate challenges.
5 Tried and True Ways to Destress
The case for stress reduction techniques and mental health for entrepreneurs is clear. If you want your business to perform well, you must be at your best. Let’s take a look at how to make that happen.
1. Practice Mindfulness and Meditation
Mindfulness is the practice of being fully present in the moment without judgment. You can do it at any time, just by focusing on whatever you’re doing, be it catching up on emails, attending a meeting, or even eating lunch.
Meditation, however, requires that you stop what you’re doing for a few minutes. Busy business owners tend to have more trouble with this because their minds wander to what they must do next rather than calming. It’s important to note that this is an acceptable and normal response to meditation for some people. However, if you’re trying to shut off your thoughts for a few minutes, try focusing on your breathing, repeating a mantra, or using guided meditation.
Research shows these relaxation methods can help quiet the emotional noise in your brain, reduce stress hormones, and boost emotional resilience. They can also be great for managing work-related stress—just find ways to work them into the natural rhythm of your day.
For example, set aside five minutes near the start of your day or after lunch for a quick meditation exercise or just take a few minutes to breathe before making a major decision or responding to a stressful email.
2. Regular Physical Exercise
Exercise lowers cortisol and causes your body to release endorphins or feel-good hormones. It also increases blood flow to the brain, which can improve cognitive function and help people sleep better at night.
If you like the gym, block out time on your schedule for it. If not, consider participating in another activity, like dancing or pickleball. If your schedule doesn’t have room for these things, or you struggle to meet goals when you set them, work it in just like medication and mindfulness throughout your day. For instance, you might spend ten minutes of your lunch break walking or try using a stand-up desk instead. You can also use little hacks throughout the day to increase your movement, such as taking the stairs instead of the elevator or parking further away from the doors. Every little bit helps.
3. Time Management and Delegation
You can always earn more money, but you’ll never get more hours in a day. Poor time management leads to working long hours, skipping personal priorities, and ultimately increasing stress. Delegation is a major component of effective time management, as it allows you to focus on high-value activities without burning out. Use the tips below to improve in these areas.
Prioritize Your Tasks
Consider using an Eisenhower Matrix to visualize where to apply your efforts. In one quadrant, list tasks that are urgent and important. Next, list tasks that are important but not urgent. Then, list tasks that are urgent but not important. In the final quadrant, list tasks that are not urgent or important. These can typically be delegated, giving you more room to focus on tasks that align with your long-term goals rather than just putting out fires.
Time Block Your Calendar
Dedicate blocks of time to specific tasks or meetings and stick to them. Reserve an hour of focus time each day for deep work and ensure you’re not interrupted during this time.
Limit Decision Fatigue
We’re only capable of making so many decisions in a single day. Save yours for things that matter most. For instance, you can decide how to handle lunch beforehand or create routines that take the guesswork out of which task you’ll tackle next. It may also be helpful to batch similar tasks, such as responding to emails or reviewing reports, instead of switching between tasks all day.
Learn to Say No
Not every opportunity or meeting is worth your time. Politely decline or delegate commitments that don’t align with your priorities.
4. Prioritize Work-Life Balance
It can be challenging to create work-life balance for entrepreneurs. After all, there’s no other authority greater than you in your business. Regardless of what someone needs or what needs to be done, you’re likely going to be the most knowledgeable and invested person that can help. Of course, if you’re always in go mode, stress skyrockets, and burnout may occur. Plus, everyone has personal matters to tend to. Leaving things undone can boost stress, too.
At the same time, having a fulfilling life outside of work, including supportive relationships, reduces stress levels. It’s essential to structure your time in a way that creates work-life balance. Let’s take a look at some quick tricks to make that happen.
Define Your Work Hours
Decide when you’ll start and stop work each day and communicate these hours to your team.
Create “No Work” Zones
Reserve time for activities like family dinners, exercise, or hobbies without interruptions.
Turn Off Notifications
Silence notifications when the workday ends to avoid being on call 24/7.
Delegate Routine Tasks
Pass on work that does not require your unique skills.
Automate
Platforms like Zapier, Wrike, or HubSpot can streamline repetitive tasks and save hours of your time.
Block Out “Me Time” on Your Calendar
Treat your personal activities like essential meetings that cannot be canceled or delayed.
5. Seek Support from Peer Groups and Mentors
Relationships with peers and mentors are vital. They can become a safe place to vent or springboard ideas, provide new approaches, and help you maintain focus.
For in-person events, try connecting with your local chamber of commerce or industry-specific associations. You can also find many opportunities online, through Facebook, LinkedIn, or platforms like Meetup.com.
Include Factoring in Your Stress-Relief Strategy
Waiting on slow-paying clients can create unnecessary stress, especially when payroll hits, or a growth opportunity that requires a capital investment emerges. Invoice factoring addresses this by providing you with instant payment on your unpaid B2B invoices. Plus, we take care of collecting the balances on those invoices for you, allowing you to focus your energy on high-value tasks that propel your business forward. To explore how factoring fits into your goals, request a complimentary rate quote.
More than two-thirds of small businesses are leveraging artificial intelligence (AI) solutions, according to the latest Small Business AI Adoption survey. However, adoption rates are lower among those with lesser revenue. This is an unfortunate catch-22, as those with reduced revenue often hold off on investing in AI solutions due to cash constraints, which in turn hinders growth and profitability, leaving the business stuck and unable to scale.
Because of this, it’s not really a question as to whether your business can afford AI solutions. The odds are that you can’t afford not to implement them. But knowing this doesn’t necessarily make it easier to select the right tools or find the cash to implement them. That’s what we’ll do here. Below, we’ll explore how AI solutions can benefit your business, what type of return on investment (ROI) you can expect from various tools, and how to begin including AI in your business operations in a cost-effective way.
AI Benefits for Small Businesses
Before we get into the costs associated with AI solutions, let’s take a quick look at some of the ways small businesses benefit from implementing them.
Time Savings
Time savings is one of the biggest reasons small businesses turn to AI solutions, and it tends to pay off. For instance, a typical small business owner saves 13 hours per week on their own tasks with AI, plus manages to shave another 13 hours off employee hours, per the Small Business AI Adoption survey.
Not surprisingly, most choose to reinvest these savings back into their companies. For example, just over 40 percent apply the time to higher-value work.
Improved Decision-Making
AI can process vast amounts of data quickly and provide actionable insights. Because of this, many small businesses find it invaluable for tasks like forecasting demand or cash flow and analyzing customer behavior.
This, of course, has other implications. More than half of executives say it has increased their productivity, according to Forbes. Meanwhile, supply chain errors reduce between 20 and 50 percent with AI. This leads to more efficient use of capital and allows businesses to meet customer demands with greater ease.
Cost Savings
The median annual savings for businesses that implement AI solutions is $7,500, per the Small Business AI Adoption survey. A quarter say their annual savings exceed $20,000. Roughly two in five small businesses say they reinvest this into their business by purchasing new equipment and technology, while others pursue growth opportunities, build emergency funds, pay down debt, and more.
3 Ways Small Businesses Use AI Solutions
Now that we’ve covered the key benefits, let’s take a quick look at how businesses are applying AI technology in their everyday work.
1. Business Process Automation
Business process automation (BPA) is one of the easiest and most cost-effective ways small businesses can tap into AI solutions. Think of it as using AI to handle routine tasks so you and your team can focus on growth, strategy, and serving your customers.
For instance, you might automate administrative tasks, like scheduling and payment processes, or leverage it to manage your supply chain.
2. Improving Customer Experiences
By leveraging AI, you can anticipate customer needs, respond faster, and personalize interactions more effectively and efficiently. These things lead to improved customer experiences, which directly translates to greater loyalty and increased sales.
For instance, many small businesses leverage AI in customer service by integrating chatbots and other self-help tools or by triaging and streamlining customer service queues.
3. Enhancing and Expanding Marketing and Sales
Monumental gains can be seen by incorporating AI in marketing and sales functions because it can be leveraged every step of the way. For instance, your digital marketing team might use targeted advertising to reach the people who are most likely to convert and match them with a message that’s likely to resonate with them. Once the person expresses interest via an online form, their data then flows freely into a customer relationship management (CRM) platform where they’re assigned a score based on their readiness to buy and automatically assigned to an agent. In the background, they begin seeing content that’s tailored to their needs on the website and receiving personalized emails that help overcome their objections and take the next step. This is only the tip of the iceberg, but it has a tremendous impact on the number of sales a team closes and the level of effort that goes into each sale.
AI Costs and ROI Explained
Investing in AI might seem a little intimidating at first, but the cost-to-benefit ratio makes it an easy choice. Understanding the costs, potential ROI, and how to start small can help you make a confident decision.
How Much Does AI Cost?
It might help to know that a typical small business spends just $1,800 a year on AI, according to the Small Business AI Adoption survey. It can be quite affordable, depending on the type of investments you choose to make. Let’s take a quick look at some of the common price points.
Free and Affordable AI for Small Businesses
Many platforms integrate AI features into their basic plans. For instance, the design program Canva has a free option that includes access to its AI art generator. For content creation, there’s ChatGPT. It’s also free to use.
Subscription-Based AI Tools For Small Businesses
Platforms like Canva and ChatGPT that start free often transition into low-cost monthly subscriptions. Once you move into this bracket, you have even more options. For instance, QuickBooks accounting software includes AI features and costs less than $40 per month. They often offer a free trial and other perks to make getting started more affordable. Meanwhile, brands looking for more robust solutions relating to marketing, sales, service, and more can leverage HubSpot as a subscription-based model. While it also starts free, the options with AI enhancements start to kick in at around $50 per month.
It’s worth noting that many of these subscription-based AI solutions charge by the “seat” and may tack on extra charges for each feature, so it’s important to carefully evaluate the tool and your exact needs before signing up.
Custom AI Solutions
If your business has unique needs, you can invest in custom development of an AI tool. Systems tend to start at around $5,000 but can rise to $50,000 or more depending on the complexity, so they tend to be more common for midsized businesses and those in unique niches.
Calculating AI ROI
It’s important to consider the ROI of AI because, even though there are upfront costs associated with implementation, many AI solutions pay for themselves and increase profitability. When performing a cost-benefit analysis, be sure to include the factors outlined below in your calculations.
Time Savings
Each AI solution is different. Identify specific tasks your tool will automate and how much time you’ll save by not manually completing those tasks. Then, multiply the hours by the hourly rate of the person performing the task.
If you’re unable to calculate accurate time savings, work with estimates. Again, a typical small business owner saves around 30 hours per week between themselves and employees. The average business leverages four AI tools, meaning a typical AI solution will save a small business 7.5 hours per week.
Increased Revenue
Businesses boost revenue by implementing AI solutions across a wide variety of business functions, as McKinsey reports. For instance, 80 percent of those who leverage AI for marketing and sales see a revenue boost, with 40 percent seeing gains of six percent or more. Those implementing AI in product and service development see similar gains. While typically more modest, more than half of all businesses see revenue increases when they implement AI solutions in areas like supply chain management, manufacturing, service operations, strategy and finance, risk, and HR.
Cost Reduction
Major cost reductions are also seen across a wide variety of areas, depending on how AI solutions are implemented. For instance, manufacturing and supply chain management are standouts for most businesses, with 64 and 61 percent of businesses reporting cost reductions, respectively. More than a quarter say they’re able to cut costs by at least ten percent.
Scalability
It’s also worth noting that implementing AI solutions often allows businesses to help more customers or manage larger volumes of work without increasing their headcounts.
AI Cost Breakdown: Understanding Expenses for Small Businesses
For small businesses, understanding AI costs goes beyond general pricing. The expenses depend on the type of AI system, the complexity of the application, and the intended use case. While simpler AI projects, like chatbots or automated scheduling tools, involve minimal costs, advanced systems such as generative AI or predictive analytics require higher investment.
Generative AI Tools as a Cost-Effective Entry Point
Generative AI platforms, like ChatGPT or DALL·E, provide pre-built AI capabilities that drastically lower the cost of implementation. These tools require no custom development and offer flexible subscription tiers, making them an ideal starting point for small businesses looking to explore AI without significant upfront costs.
Pre-Trained Models vs. Custom AI Development
Businesses across industries can save significantly by using pre-trained machine learning models instead of building custom AI from scratch. For example:
Pre-Trained Models: These models are ready for deployment, reducing costs associated with training AI algorithms. They are ideal for common use cases like data analysis or customer behavior prediction.
Custom AI Development: This approach is necessary for unique needs but comes with a higher total cost. Businesses may need to allocate $5,000 to $50,000 or more, factoring in development, software licensing, and ongoing maintenance.
Factors That Influence AI Costs
When it comes to AI, several variables affect the overall cost, including:
AI Capabilities: Advanced systems like generative AI or predictive analytics cost more due to higher computational and storage needs.
Compliance Needs: Ensuring AI systems comply with industry regulations can increase development costs, especially in industries like healthcare or finance.
Ongoing Costs: Maintenance, updates, and scaling often add recurring expenses that businesses must budget for.
Industry-Specific Cost Implications
AI pricing also varies by industry. For example:
AI Marketing Tools: These often have lower upfront costs and provide scalable pricing, making them accessible for small businesses.
Operational AI Systems: AI applications in logistics or manufacturing may involve higher hardware and integration costs but deliver significant ROI in efficiency and scalability.
By carefully evaluating the specific AI tools and services they need, businesses can prioritize high-ROI applications while managing costs effectively. Whether leveraging pre-trained models or exploring generative AI tools, small businesses can deploy AI solutions that fit their budgets and goals.
Quick Tips for Managing Costs During AI Implementation
With the long-term benefits and ROI businesses achieve through implementing AI solutions, the case for leveraging them is clear. However, many small businesses still put it off due to the upfront costs. Below, we’ll cover a few tips to help you navigate the transition.
1. Start Small and Scale Gradually
Don’t try to implement multiple new systems at once. Instead, identify a single pain point your business needs to solve, such as enhancing customer service or improving inventory management. Then, explore AI solutions that address it.
2. Leverage Free and Low-Cost Tools
Many AI-powered tools offer free tiers or affordable starter plans. Start with these to get a feel for how the tool impacts your workflows.
3. Prioritize Cloud-Based Solutions
Cloud-based AI platforms eliminate the need for expensive hardware or IT infrastructure upgrades. For instance, Google Workspace comes with Gemini to boost productivity and works on most systems, so there’s no upfront cost beyond the monthly fee.
4. Use Pay-as-You-Go Models
Whenever possible, choose AI tools that have flexible subscription models that allow you to scale usage and costs as your business grows. Many offer discounts for longer commitments, which can be an excellent choice after you’re confident the tool meets your needs.
5. Focus on ROI-Driven Use Cases
Choose AI tools that deliver measurable results, such as saving time, reducing errors, or increasing revenue. For most businesses, this means starting with marketing and sales tools, as they directly impact the sales pipeline.
6. Tap into Free Training and Resources
Many AI vendors offer courses, tutorials, webinars, and other support options to help you maximize the tool’s value without hiring experts. For instance, HubSpot has an entire library of free courses that help users navigate their products.
7. Monitor Usage and Adjust
Regularly assess how your team uses AI tools. If certain features go unused, consider downgrading to a more cost-effective plan. It may be helpful to assign a single person to track ROI and identify areas to optimize.
8. Combine AI Solutions with Existing Tools
Instead of replacing your current systems, find AI solutions that enhance them. For instance, you may be able to find AI add-ons for your current CRM or accounting software to keep costs down.
9. Use Invoice Factoring
If upfront costs are a concern, consider using factoring to free up cash. Factoring involves selling your unpaid B2B invoices to a factoring company like Charter Capital. You get most of the invoice’s value upfront and can apply the funds wherever they’ll do the most good for your business.
Kick Off Your AI-Driven Growth Plan with Help from Charter Capital
With decades of experience in the industry and competitive rates, Charter Capital makes it easy for businesses to obtain working capital for investments in AI solutions or everyday needs like covering payroll and seizing business opportunities. To learn more or get started, request a complimentary rate quote.
Eleanor Roosevelt once said, “The future belongs to those who believe in the beauty of their dreams.” Although her words have stood the test of time, that doesn’t necessarily make having that belief or betting on yourself any easier. On this page, we’ll walk you through why it can be difficult, plus cover actionable steps to help you overcome the barriers that prevent you from betting on yourself and achieving the personal and business growth you deserve.
What Betting on Yourself Really Means
Betting on yourself means making a conscious choice to trust in your abilities, decisions, and potential, often by employing risk-taking strategies or investing resources such as time, money, and energy toward your growth. To bet on yourself is to have enough belief in yourself to pursue opportunities or tackle challenges, even when the outcome isn’t guaranteed.
What Betting on Yourself Looks Like in Practice
It’s sometimes hard to see what betting on yourself looks like when you’re analyzing your own life and choices, so let’s quickly review a few situations where this might come into play.
Starting a Business or Project: For many, this is the ultimate bet. You’re putting time, energy, and money into an idea with the hope that it will succeed despite knowing there are risks.
Investing in Learning or Business and Personal Development: Whether it’s learning new business skills on your own, taking courses, or working on a new degree, investing in education is a way of betting on future returns.
Making Bold Business Moves: This might mean expanding your offerings, moving into a new market, changing your business model, or pivoting in some other major way. You’re stepping out of your comfort zone because you trust in your potential to adapt and excel.
Prioritizing Health and Wellbeing: When you commit to improving your mental or physical health, such as by improving your work-life balance, you’re betting that taking care of yourself will enhance your quality of life and work.
The Link Between Personal Growth and Business Success
Personal growth and business success are deeply intertwined. A business owner who invests in personal growth and professional development gains the skills and knowledge necessary to navigate the challenges of the business world. This relationship between personal and professional growth creates a foundation for long-term success.
When you think of personal development, it’s about more than just learning new things. It’s about building problem-solving skills, improving your ability to set goals, and achieving success in all areas of your life. A strong personal development plan can help you stay motivated and focused, both personally and professionally, which is essential for any business leader.
Growth-minded business owners understand that personal development helps them boost their business by enhancing their ability to lead and inspire their teams. This type of mindset can also improve your business performance by fostering professional relationships and encouraging opportunities for personal growth within your organization.
Whether it’s through hiring a business coach, creating a strategic development plan, or focusing on time management skills, personal growth is a critical driver of professional success. Remember that personal growth for business owners isn’t just about achieving goals—it’s about staying with the company of growth-minded individuals who share your vision for success.
Why Betting on Yourself is Essential for Business and Personal Growth
When you choose to invest in yourself, you’re embracing a mindset that’s willing to take calculated risks, act decisively, and push through discomfort. This impacts a lot of different areas.
You Build Resilience and Confidence
Self-confidence and resilience are like muscles. The more you use them, the stronger they become. Betting on yourself gives you firsthand experience with problem-solving and critical thinking, especially when things don’t go as planned.
Self-efficacy works similarly. Psychologist Albert Bandura described it as an “attitude of positive thinking.” A belief in your ability to succeed increases the likelihood that you will, studies show.
You Create New Opportunities
Doors open when you put yourself out there. When you bet on yourself, you’re taking actions that you otherwise might not have, such as launching a new product, speaking at a conference, or investing in professional development.
You Own Your Successes and Failures
Growth comes from learning, and failure is part of that. When you own both your wins and your losses, you develop the mindset of an entrepreneur, someone who’s accountable for their growth and proactive in finding solutions.
This is often referred to as having an “entrepreneurial mindset” or “growth mindset,” where you believe that abilities and intelligence can be developed to achieve greater business and personal success. Interestingly, this belief can actually influence real results. Those who have a growth mindset are more likely to thrive despite difficulties and continue to improve, research shows.
Why People Don’t Bet on Themselves
Betting on yourself isn’t always easy. If you’re struggling in this area, one of the following things may be holding you back.
Self-Investment Can Seem Self-Indulgent
Particularly when looking at areas like ensuring work-life balance or investing in learning, it can seem like you’re rewarding yourself before you’ve “earned” it. Although this makes sense at a superficial level, investing in yourself is one of the most important things you can do for your business.
Fear of Failure
Most people have at least some fear of failure. This is normal and healthy. However, when people tie their personal value or self-worth to a specific outcome, that fear can become paralyzing and prevent you from moving forward.
Impostor Syndrome
Impostor syndrome refers to repeated feelings that you’re not good enough or are incompetent, even when there’s proof of your skill or evidence of your successes. This can happen to people in settings where worth is directly tied to achievement, and the bar is set exceedingly high, or others involved are critical.
Comfort Zones
Humans are wired to seek familiarity and safety. It’s a trait our ancestors needed to avoid potential threats. When we step outside our comfort zones, we genuinely feel discomfort as a warning sign to return to safety. The problem is that our brains no longer have a reason to keep experimenting with new ways of doing things when we’re stuck in this rut of familiarity, and so we stop learning, as Inc. reports.
How to Get Started Betting on Yourself
Betting on yourself may not seem natural at first, especially if it’s not something you’re accustomed to doing. Using a framework like the one outlined below can help you approach it more methodically and improve your odds of success.
Identify One Area to Work On
Rather than trying to work on everything all at once, choose one area of your business or life where you feel a mix of excitement and discomfort. For example, maybe you’re struggling with networking, finance, business expansion, or career growth but know that investing in it would be transformative.
Set a Goal
When setting a goal, most people instantly think of outcome-related goals, such as opening a second business location. While you can work with those types of goals, it may be more beneficial to focus on things that can lead to the desired outcome. For instance, you might set a performance-related goal of increasing demand by 20 percent or develop a process-related goal like contacting five additional prospects per week to help spur business growth. Whatever you choose, define a tangible goal that’s realistic but a bit of a stretch.
Commit and Track Progress
Make sure your goal is measurable and hold yourself accountable with regular check-ins to assess your progress. Self-trust builds over time, and each small win reinforces that you’re on the right track.
How to Address the Challenges and Pitfalls of Betting on Yourself
Despite knowing the benefits of betting on yourself and using a framework for success, you may still hit roadblocks along the way. Below, we’ll explore some of these challenges and strategies for handling them.
Dealing with Self-Doubt
“Our doubts are traitors and cause us to miss the good we oft might win, by fearing to attempt.” – William Shakespeare
Even the most confident people face moments of self-doubt, especially when stepping into new or uncertain territory. You might question if you’re skilled enough, experienced enough, or if you even belong in the room.
Reframe self-doubt as a signal that you’re pushing your limits in a good way. Remember that growth rarely happens within your comfort zone. It might help to keep a record of your past wins. For example, consider filling a binder with positive feedback, completed projects, or reminders of risks you’ve taken that worked out.
Nixing Fear of Failure
“Failure is only the opportunity more intelligently to begin again.” – Henry Ford
Failure can be intimidating, and the fear of it often stops people from moving forward. You might worry that failing will hurt your reputation or impact your confidence.
To address this, shift your perspective on failure. Instead of seeing it as an endpoint, view it as a learning opportunity. Failure isn’t a reflection of your worth. It’s part of virtually all successful journeys.
It might help to conduct “failure rehearsals.” Think through the worst-case scenario and make a backup plan. Knowing you have a way to recover can make the risk feel more manageable.
Handling Setbacks and Plateaus
“A bend in the road is not the end of the road… unless you fail to make the turn.” – Hellen Keller
You might experience setbacks that make you question your direction, or plateaus where growth feels stagnant. These moments can be demotivating, especially when you don’t see immediate results.
In these cases, it can be helpful to adjust your metrics for success. Focus on progress, not perfection. Celebrate incremental gains, like a small increase in revenue or even feedback from a mentor. It’s also a good idea to break larger goals into smaller milestones. When you hit a roadblock, revisit these milestones to remind yourself that growth is cumulative.
Managing Time and Energy
“The key is not to prioritize what’s on your schedule, but to schedule your priorities.” – Stephen Covey
Betting on yourself often means taking on extra responsibilities, such as side projects, additional training, or new client work. Without careful planning, this can lead to burnout.
Be sure to prioritize self-care as part of your growth plan. This includes setting boundaries, delegating where possible, and scheduling regular breaks.
Applying the 80/20 rule can be helpful, too. Also known as the Pareto principle, this idea simply means that 80 percent of outcomes arise from 20 percent of causes. If you understand which activities will lead to your desired result, you can zero in on those to achieve your goal faster.
Facing Criticism and Skepticism
“I have yet to find the man, however exalted his station, who did not do better work and put forth greater effort under a spirit of approval than under a spirit of criticism. – Charles Schwab
When you bet on yourself, not everyone will understand or support your decisions. You might encounter skepticism from colleagues, friends, or even family.
Differentiate constructive feedback from negativity. Seek input from those who understand your goals and have a track record of constructive advice. It’s helpful to build a support team of mentors, peers, or friends who believe in you. These people can provide encouragement and remind you why you started when outside criticism feels overwhelming.
Combating Imposter Syndrome
“The greatest obstacle for me has been the voice in my head that I call my obnoxious roommate. I wish someone would invent a tape recorder that we could attach to our brains to record everything we tell ourselves. We would realize how important it is to stop this negative self-talk. It means pushing back against our obnoxious roommate with a dose of wisdom.”– Arianna Huffington
Imposter syndrome is common when you step into new roles or take on bigger responsibilities. It’s the feeling that you don’t really deserve the success you’re pursuing.
Overcoming self-doubt isn’t easy, but it is possible. Acknowledge your achievements. Remember, you wouldn’t be in this position if you hadn’t earned it. Reflect on the skills and experiences that got you here. You can also use evidence-based thinking to combat it. For example, make a list of your past successes, completed projects, or client testimonials. Whenever imposter syndrome creeps in, revisit this list as proof of your capabilities.
Address Financial Barriers to Betting on Yourself with Factoring
Sometimes, it’s not so much the barriers created in our minds that prevent us from betting on ourselves but accessing the resources necessary to push forward. That’s where invoice factoring comes in. Instead of taking out a loan, which you then have to pay back with interest, factoring provides you with instant cash through the sale of your invoices. You can use this cash for anything you wish, such as additional training, business expansion, or upgrading your systems. To take the first step, request a free factoring rate quote.
Imagine logging onto your work computer one morning, only to be met with a notification informing you that your data has been stolen by hackers. To get it back, you need to pay $100,000. What are your next steps? The answer likely hinges on whether you’re set up with cybersecurity insurance.
Although many business owners think they’re immune from attacks like this due to their size, there are more than 700,000 attacks against small businesses each year, StrongDM reports. Alarmingly, just 17 percent of small businesses have cyber insurance, and more than half of those that fall victim to ransomware wind up paying the ransom.
This alone is enough to make most business leaders uneasy but the reality is that ransomware is only one potential threat. Hackers are active. They want your website, financial data, customer data, cash, and more. And, the risks are growing. On this page, we’ll walk you through some of the most common threats, how to determine if your business needs cybersecurity insurance, and information you’ll need to know if you decide to set up a policy.
Cybersecurity Risks for Small Businesses
Before we get into cyber risk coverage, let’s take a quick look at what the actual threats are that may impact your business.
Phishing Attacks
Phishing is one of the greatest cyber threats to businesses today. It involves tricking your employees into sharing sensitive information such as passwords or financial details. This is often done by sending them an email that looks like it’s from a legit vendor or business partner but isn’t. While many businesses think their firewalls and antivirus software will protect them, 70 percent of files or links containing malware are not blocked by these measures, according to the Cybersecurity and Infrastructure Security Agency (CISA). Moreover, eight in ten small businesses have at least one person who takes the bait in agency assessments, and one in ten people overall executes malicious links or attachments.
Ransomware
In a ransomware attack, a hacker prevents you from accessing your data. They may encrypt it and leave it intact on your systems or pull a copy for themselves and delete your files. In either case, the business typically discovers the breach by finding a notice from the hacker directly on their system. The notice informs them of the incident and provides the steps to have the data returned, which usually involves making a hefty payment. Not surprisingly, cybercriminals aren’t exactly known for their code of ethics, so businesses that pay don’t always get their data back. Sometimes, the hacker comes back for a second round, too.
This presents two major issues. First, the business likely has to report to the government and its customers that their data is now compromised. Secondly, the business has now lost its data. This is concerning because three in four small businesses do not have a backup strategy or disaster recovery plan, NinjaOne reports. This means the data is simply gone with no hope of recovery in most cases.
Insider Threats
Malicious attacks like those covered above comprise 55 percent of data breaches, according to IBM. However, hackers aren’t your only threat. Sometimes, those creating the risks for your business are those you trust most. Human errors, such as clicking a bad link or unintentionally emailing data to someone outside your organization, account for 22 percent of breaches.
IT Failure
In all, 23 percent of breaches are tied back to IT failure, IBM reports. These can be caused by anything from using outdated software to failing to apply patches in a timely manner or even coding errors.
Weak Passwords
More than 40 percent of data breaches involve unauthorized access, meaning someone gains access to a system or information they shouldn’t have been able to. In situations that did not involve a misuse of privilege, such as an IT pro checking out payroll numbers, or an error, 62 percent involve stolen credentials, Astra reports.
Unfortunately, people make it very easy for hackers to crack their passwords. For instance, the top password of 2023 was “123456.” Most people use the same password for multiple accounts and most never change or reset them either.
The Cost of Cybersecurity Incidents
The cost of a cybersecurity incident varies greatly depending on the nature of the incident and the business. For instance, the average ransomware payout now sits at $1,542,333, Varonis reports. But, even if you don’t wind up paying a hacker, you may still be hit with:
Data Recovery Costs
Consulting and Legal Fees
Losses Due to Downtime and Business Interruption
Client Losses Due to a Damaged Reputation
Public Relations Costs
Government Compliance Fines
Lawsuits
Increased Insurance Premiums
And More
All this can add up to millions of dollars in expenses stemming from a single incident. It’s no surprise, then, that 60 percent of small businesses that experience a cyberattack close permanently within six months, according to The National Cyber Security Alliance (NCSA). Cyber liability insurance can help cover many of these expenses, giving small business owners a practical way to protect their operations from cyber threats.
What Cybersecurity Insurance for Small Businesses Covers
Cybersecurity insurance, sometimes called cyber liability insurance, helps protect your business from the costs associated with cyberthreats and data breaches, but what it covers and how it works varies from one policy to another.
First-Party vs. Third-Party Coverage
There are two main types of cybersecurity insurance: first-party and third-party.
First-Party Coverage Protects Your Business
First-party coverage deals with the costs that directly impact you and your business in the aftermath of a cyber incident. It covers a wide range of expenses to help you get back on your feet quickly, such as:
Data Recovery Costs
Business Interruption
Costs to Notify Customers
Crisis Management and PR
Cyber Extortion Payments
Forensic Investigations
Third-Party Coverage Protects You from Others’ Claims
Your third-party coverage steps in when your business is held liable for a cyber incident that impacts others. This typically includes expenses like:
Legal Defense Costs
Regulatory Fines and Penalties
Customer Notification and Credit Monitoring
Settlements or Judgments
What Cybersecurity Insurance Doesn’t Cover
Cybersecurity insurance is designed to protect you against many potential losses, but it’s not a catch-all. There are gaps and exclusions that businesses should be aware of.
Pre-Existing Vulnerabilities
Negligence or Failure to Follow Security Best Practices
Loss of Intellectual Property or Future Profits
Reputational Damage Beyond PR Costs
Regulatory Fines Due to Gross Negligence
Social Engineering and Fraud Losses
Cost of Improving Security After an Incident
Cybersecurity Insurance vs. General Liability Insurance: What Insurance Covers What?
Oftentimes, business owners wonder if insurance for cyber attacks is the same as business liability insurance or if their general liability policy covers cyber threats. The short answer is no, you’ll usually need to purchase these coverages separately. Although you may be able to get both types of business insurance from the same company, general liability is usually limited to things like bodily injury, property damage, and advertising injury.
Cyber insurance is also not typically part of a business owner’s policy (BOP), which typically bundles general liability, commercial property, and business interruption insurance.
With that said, it’s always a good idea to read through your current policies to see if you purchased a cyber add-on or if some of your coverages may apply to cyber incidents.
How Much Does Cyber Liability Insurance Cost?
A typical small business pays $1,740 annually, or $145 per month, for cyber liability insurance, Insureon reports. One-third of small businesses come close to this mark, landing between $100 and $200 monthly, while just over one-third come in under $100, and the remaining group invests over $200 monthly. This is based on a variety of factors, such as:
Your Business Size and Industry
Coverage Limits and Deductibles
Cyber Threat Protection Measures in Place
Claims History
To give some context, a sole proprietor might be able to get $250,000 in coverage for as little as $500 a year, whereas a small business might be able to get a $1,000,000 policy for $5,000 a year or less.
Bottom Line: Is Cyber Insurance Worth It?
Whether cyber insurance is a worthwhile investment for your business is a personal choice that only you can make based on your level of risk tolerance. If you’re unsure, ask yourself the questions below.
Can Your Business Absorb a Major Financial Loss?
As explored earlier, a single cyber incident can cost a business millions of dollars. While this is more of a worst-case scenario, if your business cannot absorb any kind of significant loss, a cyber insurance policy may be worth it.
Would a Data Breach Significantly Damage or Close Your Business?
It’s important to remember that the upfront losses are only part of the equation. How customers view your business after, and the costs associated with making things right by them after an incident, such as credit monitoring and government fines, can really add up. This is why cyber incidents are catastrophic for most small businesses that are impacted by them. If your small business will need help bouncing back, insurance may be worthwhile.
Are You Required to Have Cyber Insurance?
Sometimes, cyber insurance is required as part of a licensing process or as part of the requirements for participating in a professional organization. If something like this applies to your business, you will likely need a policy.
Is it Better for You to Have a Predictable Expense vs. Unpredictable Loss?
Sometimes businesses can absorb a loss from a cyber incident, but it makes more sense from a budgeting standpoint to pay predictable insurance premiums rather than potentially face a loss of unknown value. If you appreciate the predictable nature of premiums, a policy probably makes sense for you.
Will Cyber Insurance Boost Trust with Customers or Stakeholders?
Sometimes, insurance is a selling point. For instance, let’s say that you run a cloud-based software-as-a-service (SaaS) company in the medical industry. Your systems, therefore, host sensitive patient data. Your customers and prospective customers are likely to have more confidence in your software if they know you have an extra layer of protection in place. Equally, leadership and potential investors may feel more secure knowing that your business won’t suffer a major loss in the event of a cyber incident. In situations like these, it usually makes sense to obtain a policy.
Things to Consider When Setting Up a Cyber Insurance Policy
Although you can just choose an insurance company and select your coverage, you’ll get a more tailored fit by keeping a few points in mind.
Your Risk Profile
Identify your vulnerabilities, data sensitivity, and industry-specific threats to help determine your needs.
Coverage Types
Determine whether your business needs first-party or third-party coverage and identify how much coverage you need based on your unique risks.
Exclusions and Fine Print
As you review potential policies, keep an eye out for exclusions to avoid surprises if you need to make a claim later. For instance, some policies don’t cover unpatched vulnerabilities, while others won’t cover negligence.
Deductibles and Premiums
Higher deductibles mean lower premiums, though you’ll pay more out-of-pocket if there’s an incident. Find the right balance for your business.
Compliance Requirements
Find out if you’re required to have specific coverage based on your industry and make sure any policy you’re considering aligns with requirements to avoid non-compliance fines.
Value-Added Services
Some insurance companies offer extras such as incident response support, risk assessments, or training programs. These perks can help you avoid issues and be a major source of relief if you experience an issue.
Add-Ons
Some plans offer add-ons for things like social engineering or direct cybercrime to cover growing threats like phishing. These can be very helpful for those with larger teams.
Incident Response Requirements
Many policies have requirements for reporting and handling incidents. For instance, you may be required to report a ransomware attack within 24 hours. While these aren’t usually dealbreakers when choosing a policy, you’ll need to familiarize yourself with them to ensure you handle incidents in a way that ensures you’re covered.
Choosing the Right Insurer
Go with an insurance company that’s known for strong cybersecurity expertise and has a good track record on claims.
Policy Reviews and Updates
Set a reminder to review your policy before it renews each year so you can make adjustments to ensure it covers new threats and addresses any changes in your business operations or technology.
Cybersecurity Best Practices to Reduce Your Premiums
Investing in cybersecurity is more than just protecting your business; it can also help reduce the cost of cyber insurance. Insurers evaluate your organization’s security posture and risk level to determine premiums. Implementing robust cybersecurity measures can make your business less risky to insure and help you qualify for cyber insurance at a lower cost. Below are some actionable strategies to reduce your premiums while strengthening your defense against cyber threats.
1. Implement Advanced Network Security Measures
Insurance providers often assess the level of network security coverage your business employs. Firewalls, intrusion detection systems, and secure VPNs are essential for protecting your computer systems from unauthorized access. By enhancing your network defenses, you can mitigate cyber threats and demonstrate to your insurer that your business is proactive about security. Insurers may offer reduced premiums if your security tools are up to date and configured properly.
2. Train Employees to Prevent Cyber Incidents
Even the best cybersecurity tools are only as effective as the people using them. Human error is a leading cause of data breaches and other cyber events, making employee training a critical element of your security strategy. Educating your staff on basic cybersecurity practices, such as identifying suspicious emails, safeguarding personally identifiable information, and using secure file-sharing methods, can significantly reduce risks.
Beyond recognizing phishing attempts, training should include guidance on secure password creation, safe internet usage, and how to report potential security issues. For businesses that handle sensitive customer information, such as social security numbers or financial data, regular training sessions ensure employees are equipped to prevent errors and maintain compliance with privacy regulations.
Organizations with well-trained teams demonstrate a strong security posture to insurers, which can lower cyber insurance costs and improve eligibility for network security coverage. Many cybersecurity insurance policies also offer access to training programs as part of their insurance products, making it easier for businesses to foster a culture of security.
3. Establish a Comprehensive Incident Response Plan
Having an actionable plan in place for responding to a data breach or cyber attack is crucial. This should include protocols for identifying and containing threats, notifying affected parties, and documenting the event for regulatory compliance. Insurers value businesses with response plans that can cover the cost of downtime and recovery, which can make your business more appealing to a casualty insurance company offering cyber insurance coverage.
4. Invest in Cybersecurity Solutions and Regular Audits
Regularly auditing your computer systems and network security ensures vulnerabilities are addressed promptly. Tools such as endpoint protection, encryption, and automated backups provide an additional layer of protection. These measures help manage and mitigate cyber risk, enabling your business to qualify for cyber insurance coverage at competitive rates. A commitment to ongoing audits demonstrates a high level of cyber readiness to insurers.
5. Secure Compliance with Privacy Regulations
Many businesses of all sizes handle sensitive data such as Social Security numbers and other personally identifiable information. Ensuring compliance with privacy regulations such as GDPR or CCPA shows insurers that your business takes data protection seriously. This can make you eligible for discounts on cyber insurance policies that provide coverage for legal expenses associated with breaches.
6. Bundle Cyber Insurance with Other Policies
Some providers offer discounts when bundling cyber liability coverage with traditional liability insurance policies or property insurance. If your business uses a single casualty insurance company, inquire about bundled insurance products that include first-party coverage and privacy liability coverage to protect your business holistically. This approach not only saves costs but also simplifies claims management in the event of cybercrime.
7. Adopt Multi-Factor Authentication (MFA)
A simple yet effective way to improve your security posture is by implementing MFA across all business systems. This extra layer of defense helps protect your computer system from unauthorized access, reducing the likelihood of breaches. Insurers are more likely to offer favorable rates to businesses using MFA, as it directly addresses one of the most common vulnerabilities.
By following these best practices, your business can reduce its cyber risk, improve its eligibility for cyber insurance coverage, and lower premiums. Cyber insurance provides coverage for legal expenses, breach recovery, and mitigating cyber threats, but insurers reward businesses that proactively invest in cybersecurity solutions. This not only protects your operations but also ensures long-term cost savings and peace of mind.
Get Immediate Funds for Your Premiums or Cybersecurity Upgrades
Most business owners understand that having the right people, technology, and insurance in place is crucial to avoiding catastrophic outcomes from cyber incidents, but finding the cash for these investments can be challenging, especially if you’re growing your business. Invoice factoring can provide you with the capital you need instantly through the sale of your unpaid invoices. Instead of taking out a loan with interest and having to pay that back over time, you simply sell your invoices to a factoring company like Charter Capital at a slight discount. Use the cash to expand your IT team, upgrade your security, cover premiums, and more. To get started, request a complimentary rate quote.
Most small businesses think they’re prepared for disasters, yet just a quarter actually are, according to U.S. Chamber of Commerce Foundation research. Perhaps as a sign of the times, most businesses that aren’t truly prepared cite finances. Simply put, planning for emergencies is difficult when you’re worried about making payroll or covering other vital expenses. Even still, each business disaster planning step you take today has the potential to ensure continuity of operations and accelerate recovery tomorrow. Below, we’ll walk you through the steps involved in developing an airtight disaster preparedness plan or shoring up your existing plan, including budget-friendly options you can take right away.
The Importance of a Disaster Preparedness Plan for Small Businesses
People often think of worst-case scenarios regarding disaster preparedness, such as the likelihood of business closure following an incident. This is an important consideration, as 43 percent of small businesses do not reopen after a disaster, according to the Federal Emergency Management Agency (FEMA). An additional 29 percent close within two years. However, there are many reasons beyond business failure to develop a disaster recovery plan now.
Financial Protection: The best time to obtain disaster recovery insurance is before you experience an incident. A good insurance plan will cover everything from property damage to liability claims and business interruption costs.
Business Continuity: Around a third of businesses take six months or more to fully recover from an incident, per the U.S. Chamber of Commerce Foundation. More than one in ten takes over a year to recover. Effective planning helps you avoid these disruptions and recover faster.
Cost Efficiency: By minimizing business disruptions and losses, your business will save money over time.
Employee Welfare: A strong business emergency plan enhances employee safety. Your crisis management response is also one of the greatest factors in how employees cope with a disaster. A prepared business fosters trust and builds confidence, which will help minimize downtime and losses.
Maintaining Customer Trust and Reputation: Certain industries are particularly sensitive to disruption. For instance, if you’re in an industry like trucking, manufacturing, oilfield services, staffing, or security, your clients will have greater confidence in your business if you’re prepared for disasters. You may also win more business if an event occurs and you’re better prepared for it than your competitors.
Regulatory Compliance: Many industries have preparedness standards and laws, especially regarding safety, security, and privacy. Shoring up your plans can add a layer of legal protection to safeguard your business in the future.
Critical Components of an Effective Disaster Preparedness Plan
Each business will have unique emergency planning needs. As you develop yours, address the areas outlined below.
Communication: Have a plan for sharing information quickly and clearly. Ensure the plan covers who is responsible for communicating with whom, when communication should occur, and the proper method of communication.
Training and Drills: Train the team on their roles during an emergency and run drills to ensure the steps become second nature.
Evacuation Plans: Outline the safest and quickest routes to exit the building, as well as emergency meeting points and procedures for ensuring everyone’s safety.
Emergency Supplies: Develop an inventory of supplies and equipment that might be needed during an emergency. This includes things like fire extinguishers, medical kits, and communication devices.
Emergency Funding: Understand the likely costs of addressing various scenarios and set aside savings or have a backup funding source like invoice factoring that can provide cash quickly.
Security Protocols: Identify any security protocols necessary to protect people and your property during an emergency.
Risk Assessment: Create a list of existing and potential dangers, identify the risk of an issue occurring, and predict likely outcomes if an event occurs.
Planning: Work through as many emergency scenarios as possible to determine what needs to be done if an incident occurs.
Steps to Drafting Your Disaster Preparedness Plan
Now that we’ve covered the background let’s explore the steps involved in creating a disaster preparedness plan.
Step 1: Conduct a Risk Assessment
Identify and prioritize the risks that could impact your business operations. A few examples of typical risks are covered below.
Technological Incidents: Power outages, fire, hazardous materials accidents, chemical/biological/radiological incidents, vehicle or aircraft crashes, etc.
Human-Caused Incidents: Civil disorder, vandalism, cybercrime, etc.
Once you have a list of potential emergencies, assess how likely your business is to be impacted by each one.
Step 2: Develop a Business Impact Analysis
Analyze how different types of disasters could affect your business and the financial impact. For instance, a winter storm could potentially cut power to the business, limit communication, create safety risks, and prevent people from getting to or leaving the business.
The anticipated costs will vary greatly from one business to the next. For instance, the 2024 CrowdStrike software glitch grounded airlines, shut down medical facilities, and paused banking, resulting in a net loss of over five billion dollars, CNN reports. Meanwhile, an Amazon outage costs the company more than $66,000 per minute, according to Forbes. Your figures are not likely to reach this magnitude, but understanding the potential cost of each event can help you prioritize various planning activities and allow you to focus on the most disruptive events first.
Step 3: Create Emergency Response Procedures
Emergency response planning focuses on how your business will protect people and minimize harm in the event of a disaster. For instance, a power outage can make navigating an office difficult, presenting injury risk for everyone inside. Your plan might involve having emergency lighting kick in, followed by managers performing sweeps of their departments and evacuating people to a safe area.
Go through your list of potential emergencies and identify how you’ll keep people safe during each one.
Step 4: Develop a Continuity of Operations Plan
Whereas the emergency response plan focuses on protecting people during an emergency, your continuity of operations plan (COOP) is dedicated to minimizing downtime. Ideally, your COOP will help you avoid downtime altogether. For instance, you might install a backup generator or alternate power source that allows you to continue operating even if your main power is cut. However, your COOP should also consider methods to get your business up and running fast if it is taken offline altogether. For instance, you might consider backing up your website or data to a secondary server to switch over quickly if the primary server is down.
Again, go through each item on your list, identify all the ways you can think of that would prevent your business from operating at full capacity, and brainstorm strategies to restore operations as quickly as possible.
Step 5: Train Employees and Test the Plan
Ensure your plans are documented and accessible. For instance, consider having written copies distributed to the team and stored in your building. Also, have digital copies that can be accessed via computer or phone.
Run drills with your team to help ensure everyone can fulfill their role without issue. Think of this like fire drills. The more often you do it, the faster and more fluid your team will become, thus ensuring things will go quickly and smoothly if there is ever an incident. These drills will also allow you to test your plan so you can make adjustments as needed to ensure your people and business are truly protected in the event of an emergency.
Strengthen Your Business Continuity Planning with Factoring
Having backup funding is crucial to business continuity planning, as it allows you to address issues quickly without waiting for approval or disbursement. Factoring is ideal because you can set it up in advance and not leverage it until you need it. Plus, same-day funding is available when you work with a company like Charter Capital, ensuring you have cash when it’s critical. Many businesses also leverage factoring as they’re putting preparedness plans in place, as it can provide a quick cash injection without creating debt. If you’d like to get set up with factoring services so your business is prepared, request a complimentary rate quote.
