Very few businesses go through their life span unscathed. Although our commercial landscape has undergone an incredible evolution during the rise of our digital age, it doesn’t mean that businesses are any less at risk from ruin. Even a recent Standard & Poor 500 listing has detailed the average life span of companies falling from 67 years in the 1920s to 15 years today. This suggests that there are still challenges that companies find difficult to overcome.
As an entrepreneur, you want to make certain that your enterprise lasts as long as possible, and that it makes a positive impact on your industry and your community. As such, it’s vital to understand what challenges you will likely face, and how you can best prepare for them. This can not only mitigate the potential damage you face, but it also helps to minimize the stress of running a business.
While stress and disaster may be imminent in your business, there are some strategies and tools you can utilize to give your enterprise the best chance of recovery.
Natural Disaster
Natural disasters can be a terrifying prospect for small businesses. You won’t always get a much-advanced warning that they’ll occur, and the damage they cause can be devastating. Our recent pandemic has been a harsh demonstration for us all in this regard. The damage has come from multiple angles at once — ranging from a limitation of operations to the absence of customers. No one was left unscathed.
When it comes to disasters, you can’t always predict or prepare for them. You can, however, recover. One of the best ways to do this is with a disaster preparedness plan. Bring employees from all departments together, and examine how disasters are likely to disrupt the business and customers. Use this to start putting in place staged contingencies that help you survive the immediate fallout, and keep you moving toward recovery.
Your disaster response plan needs to include space for you to take actions that make a difference to your recovery. Perhaps chief among these is to assess what the true financial impact of the disaster is, in both the immediate and the long term, as this will inform your measures moving forward. This should be followed by strategies to assess your business structure and maneuver assets and employees to where they are most needed. Formalize all of these reviews in documents that are accessible to all key staff. However, you should remember to keep your plans agile to adapt to the unexpected nature of natural disasters. Otherwise, it could prevent your transition toward recovery.
Cybercrime
Since we live in a technologically enhanced world, natural disasters aren’t the only things that can present a danger to your business. Businesses rely on technology now. They use more advanced tools to give them a competitive edge. Unfortunately, this also means that tech can be a common source of conflict in your business. Virus infection and data breaches are a key concern today. In every interaction with clients, you’re gathering financial, personal, and commercial information that can make you an attractive target for cybercriminals.
While you should be reducing the risk of a data breach through steps such as process reviews and robust security tools, you may still find yourself victim to cybercrime. To recover, you need to:
- Contain the Issue
Once you are aware of the breach or attack, your first step should be to mitigate the potential for further damage. Identify the systems that have become entry points for the attacker, and seal them off. Preferably, isolate the impacted systems from the rest of the network. Then seek to eliminate the threat by removing the virus, or changing the access protocols.
- Assess and Communicate
You must undertake a full audit of your systems to understand what damage has been caused and, perhaps most importantly, who has been affected. Contact the key stakeholders whose data has been breached or who will be affected by the disruption, and be frank about what has occurred. A data breach can damage trust, but you can start to regain it with honesty and continual communication as the recovery progresses.
Financial Downturn
Finances are a necessity, and, unfortunately, a common cause behind business disasters. Financial disasters come from a variety of sources, from premature growth to not keeping enough funds in reserve for emergencies. But once you hit those financial dire straits, how can you come back?
Often it depends on how bad things have gotten. Whenever possible you should be limiting outgoing cash. Having a clear month-to-month profit and loss statement is a vital tool here. It helps you understand exactly what the current state of the business is, and predict the future of the business as well. This makes the identification of the most problematic areas clear and gives you points to focus on for additional funding or cutting.
Taking out additional lines of credit is generally not the best idea for businesses going through tough financial times. However, if you have clear plans to emerge from your issues, it can be wise to seek additional capital. U.S. Small Business Administration-backed loans and grants can be of use here along with state or county localized grant programs. That being said, to recover successfully, you must also adopt behaviors with this capital that will actively avoid future problems. Pay close attention to planning, budgeting, and your reliance on credit.
Conclusion
It is an unfortunate fact of our commercial environment that your business is not immune to problems. Natural disasters, technological threats, and financial issues can all negatively affect your ability to thrive. However, by implementing solid preparation, understanding your business’ vulnerabilities, and adjusting in response you can enact a successful recovery.
By Indiana Lee, BOSS Contributor
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