A year ago, small business rent delinquencies hit three-year highs with 43% of businesses not able to pay the full rent on time. With economic uncertainty, it’s a good time to prepare to pay rent even if finances get tough.
From preparing with the best business insurance to building an emergency fund to fostering a good relationship with your property owner, we have the tips to keep you current.
Tip # 1 – Prepare for the Unexpected
One of the most cost-effective ways to prepare for unexpected disasters is with a business insurance policy. These policies can be customized to cover lost wages, revenue, and other losses following a covered loss.
For example, if there’s a hurricane and you can’t get to the office for a week, you could have an insurance policy that keeps your company afloat while you figure out how to reorganize and rebuild.
A cyber insurance policy is another vital way to protect yourself from the risk of online attacks. There are many ways you could get into financial trouble online. Someone could hack your client information, disable your online shop, or hit your website with ransomware.
Without insurance, if you face a financial loss, you may be unable to pay rent. With insurance, you’re more likely to be able to keep up with rent because the insurance payments offset your losses.
Tip #2 – Build an Emergency Fund
An emergency fund is important for personal finances, but it’s just as critical for business finances. An emergency fund is a buffer for when you have made financial mistakes or faced hardship, resulting in a rough month. Instead of facing falling behind on your bills and missing your rental payments, you can tap into your emergency reserves.
Many businesses neglect an emergency fund because they’re focused on investing in themselves and growing. Before you decide to expand, make sure you’re ready to face economic challenges. Prioritize your emergency fund and hold off on investments until you have what you need to keep your company operable through a couple of bad months.
Tip #3 – Foster a Strong Relationship With the Property Owner
Even if you’ve done your best to prepare, you may get into a position where you can’t make your rent payment. If you have a good relationship with your landlord, there’s a better chance they’ll work with you than if you have a hostile relationship.
Business relationships are critical to your success in nearly every aspect of your operation. Remember that you’re dealing with people. You need them to stay in business, and they need what you provide.
Your property owner may be willing to work with you in several ways. They may allow you to make your payment a few days late, agree to a short-term lower payment amount, especially if the local rental economy is slow, or even have a different and less expensive property available that they’d be willing to let you move into.
By preparing for the worst, you can set yourself up for success. Make sure your insurance policy is updated and robust, you have an adequate emergency fund, and you build a good relationship with your property owner.
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