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As a barber, you dedicate your time and energy to honing your skills and crafting a successful career. While your trajectory will ideally be consistently upward, life can be unpredictable. From personal events to unforeseen economic downturns, the road to success is often characterized by peaks and valleys.
Being prepared for difficult financial times or unexpected expenses is essential. Not only can it keep your business afloat when challenges arise, but it can also give you the confidence and peace of mind you need to pursue your barbering goals ambitiously. This is where an emergency business fund shines.
Understanding the Importance of a Barbering Niche
Why Every Barber Should Start an Emergency Business Fund
You Can’t Predict Emergencies– You Can Prepare for Them
Small businesses, like barber shops, are susceptible to emergencies that can leave them high and dry. The impact of a disaster of any variety on a small business can be swift and severe, changing the trajectory of your barber business abruptly.
There are numerous examples of such events that range from legal issues to economic recessions. Just a few short years ago, many barbers experienced hardship due to a global pandemic. These things are unpredictable and can have immediate and lasting effects on your business.
- Economic downturns
- Health issues
- Legal problems
- Theft
- Property damage
- Natural disasters
None of these things are particularly predictable, but they can wreak havoc on an unprepared business. Setting aside resources for the unknown allows you to weather the storm, and an emergency business fund is a phenomenal way to ensure you are ready for whatever life throws at you.
Increase Your Growth Potential
When opportunities present themselves, you need to be ready to pounce. Unfortunately, a lack of available funds can limit your ability to take advantage of your growth potential. Often, these opportunities are time-sensitive and easy to miss if you are not prepared.
While your emergency business fund’s primary purpose should be providing protection in the face of financial struggle, it can also serve as capital to expand your business by meeting demand or filling a gap in the market. Whether it be a new product or service, having funds on hand to seize the moment is a tremendous benefit.
Protect Your Assets
Disaster can strike at any moment, and if you’re like many other business owners, the repercussions could extend beyond your barber shop. Yes, your business assets could be at risk, but if you signed a personal guarantee when securing your business loan, your personal assets could also be impacted.
In addition to your tangible assets, your credit history could also be impacted. This includes both your business and personal credit history, potentially impacting your ability to secure financing in the future. In other words, the repercussions could extend well into the future.
A small business emergency fund helps you avoid these negative outcomes by covering your vital expenses–including loan payments–when the going gets temporarily tough.
Protect Your Assets
No barber wants to consider the possibility of legal problems, but they are a reality every business must be aware of. Even if you perform your services with flawless precision, the potential for a lawsuit remains. Whether it’s an allergic reaction to a product or a wet spot on the floor that leads to a client falling, some accidents are simply out of your control.
Investing in general and professional liability insurance for barbers serves as a preemptive emergency fund of sorts by protecting your business, your assets, and your reputation in the event of a legal claim. Not only does such insurance save you thousands in potential expenses upfront, but it also contributes to a brighter future by protecting your assets and your professional standing.
Reduce Your Reliance on Debt
There is nothing inherently wrong with leveraging a business credit card or securing a business loan. Both of these tools can be beneficial when managed responsibly, but there are–by definition–debts.
If you have already accumulated debt and find yourself in an emergency situation, things can quickly snowball. From using debt financing to missing payments, the pitfalls of debt can add up in a blink.
Creating an emergency business fund allows you to reduce your dependence on debt, especially when it comes to covering the financial fallout from unexpected events. In turn, this makes the debt snowball effect less likely, giving you the financial flexibility and confidence needed to navigate your way out of troubled waters.
