Businesses are organizations or entities engaged in commercial, industrial, or professional activities with the aim of generating revenue, profits, and providing goods or services to meet the needs of customers. There are various types of businesses, each with its own structure, purpose, and characteristics. Here are some common types of businesses:

1. Sole Proprietorship:
   • A sole proprietorship is a business owned and operated by a single individual. The owner is personally responsible for the business’s debts and liabilities. It’s the simplest form of business structure, and the owner has full control over business decisions.
2. Partnership:
   • A partnership is a business structure where two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Deed. There are different types of partnerships, including general partnerships and limited partnerships, each with its own set of rules regarding management and liability.
3. Corporation:
   • A corporation is a legal entity that is separate from its owners (shareholders). It has its own legal rights and obligations and can enter into contracts, sue, and be sued. Shareholders have limited liability, and the corporation’s structure includes a board of directors and officers.
4. Limited Liability Company (LLC):
   • An LLC is a hybrid business structure that combines the limited liability features of a corporation with the flexibility and simplicity of a partnership. LLCs provide limited liability to their owners (members) and can be managed by the members or appointed managers.
5. Cooperative:
   • A cooperative is an organization owned and operated by a group of individuals for their mutual benefit. Members of a cooperative contribute resources, share profits, and have a say in the decision-making process. Common examples include agricultural cooperatives and credit unions.
6. Franchise:
   • A franchise is a business model in which individuals (franchisees) purchase the right to operate a business using the branding, products, and services of an existing and established company (franchisor). The franchisee follows the franchisor’s established business model.
7. Nonprofit Organization:
   • Nonprofit organizations operate for the purpose of serving a particular cause or mission rather than making a profit. They can take various legal forms, such as charitable organizations, foundations, or social enterprises. Profits generated are typically reinvested to further the organization’s mission.
8. S Corporation:
   • An S Corporation is a special type of corporation that meets certain Internal Revenue Service (IRS) criteria to avoid double taxation. Like a traditional corporation, it provides limited liability to shareholders while allowing income to be passed through to shareholders for tax purposes.
9. B Corporation (B Corp):
   • B Corporations are businesses that meet specific social and environmental performance standards. They are certified by B Lab, a nonprofit organization, and aim to balance profit-making with positive contributions to society and the environment.
10. Joint Venture:
    • A joint venture is a business arrangement where two or more parties come together to collaborate on a specific project or business activity. Each party contributes resources, and profits and losses are shared based on the agreed-upon terms.

These are general types of businesses, and there can be variations and subtypes within each category. The choice of business structure depends on factors such as the nature of the business, liability considerations, tax implications, and the preferences of the owners.

People running businesses have a lot of risks to consider every day. One of the things that scare business owners the most, especially those with startups and small businesses, is the thought of a financial crisis.

There are various reasons why a financial crisis can hit a business, an industry, or a country, and no matter how much you prepare, it eventually affects people.

For example, consider how a virus outbreak in one country can strangle the GDP of many other countries worldwide.

Planning to succeed in every aspect of your enterprise, including staff, sales, marketing, and how you bankroll development, is prudent to survive in business.

How to fund a business to manage your budget and everything related is covered in the five ways mentioned below. These approaches can help ensure minimum impact on your business in a financial crisis.

Table of Contents

1. Maximize Your Liquid Savings

Your assets, easily converted into cash, are called your liquid savings. Since they are readily converted into cash, they are like cash itself. The impact on their value is minimal when they are sold.

Several factors need to be present for assets to be called liquid savings. These include the fact that when the market is established, there are a lot of buyers interested in purchasing, and the ownership of your assets can be transferred easily and quickly.

Liquid items can include but are not limited to checking accounts, savings accounts, money market accounts, certificates of deposit, and short-term government investments.

• Cash – Physical currency, such as banknotes and coins, or funds held in a checking account
• Savings Accounts – Bank savings accounts are considered liquid as they allow easy withdrawals.
• Money Market Accounts – These accounts often offer higher interest rates than regular savings accounts and maintain liquidity
• Certificates of Deposit (CDs) – While not as liquid as savings or checking accounts, CDs can still be converted into cash before their maturity date, though penalties may apply
• Treasury Bills (T-bills) Short-term government securities that are highly liquid and considered low-risk
• Short-term Investments – Some low-risk, quickly tradable investments like short-term bonds or certain mutual funds can be considered liquid savings

Liquid assets are the resources you look at in a crisis, as they can be turned into instant cash at any time. Usually, there are no penalties for taking them out before maturity.

Having liquid savings is crucial for financial stability, providing a safety net for unexpected expenses or emergencies. It ensures that individuals or businesses can access funds quickly and without incurring significant losses due to market fluctuations or penalties for early withdrawals.

2. Make a Budget

Understanding your financial inflows and outflows is essential for businesses and individuals. It allows you to track your savings, establish an emergency fund, and assess whether you live within your means. Without this knowledge, it becomes challenging to make informed financial decisions.

How To Create A Business Budget

There is more to creating a business budget than knowing your revenue and expenses. In saying this, if all you know is your sales and costs, it’s a starting point for a budget. This information can let you know if you’re breaking even or growing, but you’ll need more data to set your business to consistently perform in the years ahead.

1. Goals, Targets

Experts say it’s best to start your budget with your business goals – creating short- and long-term goals and setting financial targets to achieve them once you have them.

To help with the financial targets, you need to know what’s happened to date, and that requires a dig into any historical data, e.g., financial statements, balance sheets, and so on.

2. Expenses, Revenue

Do you know your fixed from your variable costs? Fixed costs include rent, salaries, and insurance; variable costs include marketing, office supplies, and utilities. Any expense can be cut or reduced without the business suffering too much.

Once you have listed your expenses, including any one-off costs, e.g., technology, equipment, relocation, etc., estimate your revenue from all sources. Use your historical data and knowledge of future sales contracts to generate a revenue forecast.

3. Contingency

It is advisable to have a contingency fund to prepare for any unexpected expenses and potential loss of revenue.

Allocating a portion of your overall budget, typically between 5% to 10%, as a contingency fund allows for a margin of error in expense calculations.

If you feel this percentage is insufficient, you can increase it accordingly.

4. Allocate, Monitor, Review and Revise

You’ve now allocated the financial resources to not exceed your projected income. Track your cash flow to ensure that you have enough liquidity to cover your operational needs.

Regularly review your budget against your actual financial performance. Adjust your budget as needed based on changes in the business environment.

3. Minimize Your Monthly Bills

Ensuring your spending is as little as possible is an excellent practice. That doesn’t mean to start living a minimalist lifestyle immediately.

Still, identifying the expenses you can live without is always a good idea, even if you don’t have to cut back on them immediately. But you must be prepared to do it if financial adversity comes your way. You are at an advantage if you are prepared to cut back on your expenses immediately. So keep an eye on your recurring monthly bills.

Maintaining a budget will make looking at your monthly spending more accessible and help you determine where you are wasting your money. It could include paying for a landline that you never used to pay the extra fee for a checking account.

Regarding the checking account, you can easily opt for a bank that offers free checking accounts. It can also include little things like leaving the heater or the air conditioner on when you leave the office or paying high insurance rates. Whatever the case, it is better to start cutting down immediately. If you don’t, then at least be aware of your expenses.

4. Closely Manage Your Bills

Avoiding penalties and late fees is crucial for financial stability. You can ensure you don’t have to pay any extra charges by taking a few simple steps.

Start by reviewing all your accounts and bills each month, either manually or with the help of a financial app.

Set reminders for payment due dates and consider scheduling automatic payments for recurring bills.

Creating a list of all your accounts can also assist with budgeting and keeping track of your expenses. With some planning, you can stay on top of your finances and avoid unnecessary financial burdens.

5. Get Out of Credit Card Debt

If you have credit card debt, you can get buried underneath the interest charges you must pay monthly. Pay your credit card debt to reduce your worries and put yourself in a position to build a plan for the future. Once your debt is gone, you can start investing in more important things.

Alternatively, you may be using a credit card to fund your business – if so, consider a virtual credit card for managing spending and tracking transactions per user.

Conclusion

In business, you need to expect the unexpected and plan for every eventuality. We live in a global economy, so the industry is wildly unpredictable. Your business can weather any storm when you have a well-thought-out plan. As the saying goes, ‘People don’t plan to fail; they fail to plan.’

When times get tough, you can avoid falling into business failure by taking the time and resources to adequately prepare for the challenges that lie ahead so your business can thrive no matter what.

The best opportunities are often found during adversity, and the prepared businesses come out on top.