What would you do if your business suffered a ransomware attack tomorrow? Do you have a contingency plan in case of a tornado, hurricane, or earthquake? The unexpected can happen anytime, and small businesses can get hit particularly hard.
Small businesses are the backbone of our small and large economies. They are critical for job creation, innovation, and community development. Much of the money and jobs created in small businesses stay in the communities in which they are founded. But running a small business comes with significant risks. This includes financial uncertainty, market volatility, and natural disasters.
60% of small businesses fail within 6 months of falling victim to a cyber-attack.
You, as a small business owner, already know you must prepare for the unexpected. This is to ensure longevity and success. Here are ten things you can do to prepare yourself and your small business for the unexpected.
1. Create a Contingency Plan
One of the most critical steps in preparing for the unexpected is to create a contingency plan. A contingency plan is a set of procedures that help a business respond to unforeseen events, like natural disasters, supply chain disruptions, or unexpected financial setbacks.
Your contingency plan should outline the steps the business will take in the event of an emergency. That plan should include what emergency procedures are, and who will handle the tasks. A good contingency plan also includes communications guidelines, like how to communicate with employees, customers, and suppliers.
2. Maintain Adequate Insurance Coverage
Insurance is a broad industry, and business insurance should be discussed with an insurance expert. Small businesses should always maintain adequate insurance coverage to protect them from unexpected events. Insurance policies should include things like:
- Liability coverage
- Property damage coverage
- Business interruption coverage
- Data breach costs
One important type of insurance to consider is business interruption coverage . It can help cover lost income and expenses during a disruption (such as a natural disaster or supply chain disruption).
One of the newer types of policies that you might ask your insurance broker about is cybersecurity liability insurance. In today’s threat landscape, it has become an important consideration. Cybersecurity insurance covers things like costs to remediate a breach and legal expenses.
3. Diversify Your Revenue Streams
Small businesses that rely on a single product or service are at greater risk of interruption to that supply or business. Unexpected events can cause them significant harm. Something like a raw material shortage could cripple an organization without alternatives.
Diversifying your revenue streams can help reduce this risk. It ensures that your business has several sources of income. It might not be immediately obvious how to diversify your income streams, but doing the investment to do so can pay off in future security.
4. Build Strong Relationships with Suppliers
Small businesses should build strong relationships with their suppliers. Ensuring that you have a reliable supply chain is vital to your survival as a small business. This is particularly important for businesses relying on one supplier for their products.
In the event of a disruption, having strong relationships matters. It mitigates the risk of a supplier bankruptcy or supply chain issue. Having supplier options can help reduce the impact on your business.
5. Keep Cash Reserves
We know that suggestions like this one can be hard for small businesses to implement, but can be a vital part of surviving the unexpected. Cash reserves are important for navigating unexpected events like repairs, legal fees, or loss of income. As a general rule of thumb, businesses should keep at least six months’ worth of expenses in cash reserves.
6. Build Strong Outsourcing Relationships
If business owners try to do everything in house, they’re at higher risk. For example, if a key IT team member quits. In this case, the company could face major security issues.
Build strong outsourcing relationships with an IT provider and other critical support services. If something happens to a company’s staff or systems, they have a safety net.
7. Check Your Financials Regularly
Small business owners should check their finances regularly. This is to ensure that they are on track to meet their goals and to identify any potential issues early on.
This includes:
- Tracking income and expenses
- Creating and reviewing financial statements
- Regularly meeting with a financial advisor
8. Invest in Technology
Investing in technology can help small businesses prepare for unexpected events. For example, cloud-based software can help businesses store their data off-site. This ensures that it is safe in the event of a natural disaster or cyber-attack. Technology can also help businesses automate processes. Automation reduces the risk of errors and improves efficiency. Switching to a monthly maintenance plan with an I.T. provider can also make sure that your security is up to date and maintained properly, which can mitigate cybersecurity risks.
9. Train Employees for Emergencies
Small businesses should train their employees for emergencies. This helps ensure that everyone knows what to do in the event of an unexpected event.
This includes training for natural disasters, cyber-attacks, and other emergencies. Businesses should also have a plan for communicating with employees during an emergency. As well as ensure that everyone has access to the plan.
10. Stay Up to Date on Regulatory Requirements
Small businesses should stay up to date on regulatory requirements. This helps ensure that they are compliant with all laws and regulations. This includes tax laws, labor laws, and industry-specific regulations. Non-compliance can result in fines, legal fees, and damage to your business’s reputation.
In conclusion, small businesses face many risks. But by following these tips, they can prepare themselves for the unexpected.
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Get started on a path to resilience and protect your business interests. We can help you prepare for the unexpected. Give Hop-A-Long I.T. a call at to schedule a chat.
Article adapted with permission from The Technology Press.