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July 13, 2019

How Can Cottage Industries Ensure Financial Independence

A small scale industry and a cottage industry are only limited to a certain amount of development. They are not meant to compete in the market with the business giants. The cottage industries are generally formed by taking small loans from the banks or investors and remain under debt with an amount to be paid every month, which becomes difficult if they are not doing good in the market. These cottage industries are formed out of curiosity and the need for implementing art and ideas of the individuals to get appreciated among the crowd. But since there are no marketing methods used by these industries, they do not expect high profits for their work. Sometimes the scarcity of demand results in collapsing of such home businesses. So what measure should be taken to ensure financial independence for the cottage industries as soon as possible?

Savings and harsh measures

measures

Commitment is required in saving some part of the savings for extreme times. Investing at least 20-25 percent of the profits with little interest can prove beneficial in generating extra capital, which can help is repaying the loan faster in one go. The harshest measures can be to start with repaying loans in the first few months without collecting any profit. This might seem troublesome in the beginning, but once the loan is repaid, all the profit can be freely enjoyed by the industry.

Planning for goals

It is important for the industry to plan future goals and checkpoints. It should understand the importance of creating their own benchmarks. If the progress for an industry stops, the revenue will slowly start to become insufficient with the growing needs. Planning of investment on different schemes and insurances is required. This will prevent any drastic losses during emergencies, and the decisions can be taken with a much cooler head.

 

Managing Risks

The industry should have liquid funds for any emergency. Contingency funds should be defined to work during the time of loss in the market to keep generating the goods. The idea is that the financial plans should not get hit by contingency during the blooming of the business. Job issues, health issues, repair, and renovation of physical assets are a few of the risks that can be solved with liquid funds.

Keeping track of investment

A good business needs a good investment plan to keep track of all the money business. The main focus should be on the fundamentals of loans and investments. Sometimes the finance becomes volatile, and the improper record on inbound and outbound transactions of funds can affect the business. Maintaining data for all transactions can help is saving unwanted expenses, and the loans can be paid off at the beginning of every month easily.

 

Financial Independence
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