What steps would you take if a ransomware virus attacked your business tomorrow? Have you prepared an action plan in case of hurricane, tornado or earthquake damage? Small businesses are particularly susceptible to unexpected events.
Small businesses form the cornerstone of many economies, providing jobs and innovations which support community development. While owning one may present many risks like financial instability, market fluctuations and natural disasters.
60% of small businesses that experience cyber attacks fail within six months after being victimized by such attacks.
Small business owners must always be prepared for the unexpected in order to ensure success and longevity for their venture. In this article we provide some helpful advice on how small businesses can prepare themselves for whatever may come their way.
1. Establish a Contingency Plan
A contingency plan is one of the key steps to planning for unexpected events and helping your business deal with sudden disruptions, including natural disasters, supply chain interruptions or financial setbacks. Contingencies provide procedures designed to deal with such scenarios - they could include natural disasters, disruptions in supply chains or sudden setbacks to business finances as examples of situations that necessitate contingency planning.
Planned contingency action must include what steps will be taken by your company in an emergency, who is accountable for what tasks and how communication will occur with employees, clients and suppliers.
2. Accumulate Adequate Coverage
Small businesses must ensure they carry adequate insurance, which protects against unexpected events. Policies include coverage such as:
- Liability insurance and Property Damage Coverage, along with Business Interruption Coverage are essential to protect any company in case of any liability claims or property damages that require repairs, or disruption in their daily activities.
- Data Breach Costs
Business interruption insurance is important. This policy can cover income and expenses lost during an interruption to operations due to natural disaster or an interruption in the supply chain, for instance.
- Cyber liability insurance is an emerging form of cover and an increasingly crucial element of today's risk landscape. Cybersecurity policies cover legal fees associated with remediating any breaches.
3. Diversify Your Revenue Streams
Small businesses who rely solely on one product or service are at increased risk from unexpected events that could cause irreparable harm, while any shortage in raw materials could prove fatal for an enterprise. To reduce this risk and ensure business survival, diversification is vital.
Diversifying revenue streams is one way to reduce risk. Doing this ensures your business has multiple streams of income - for instance, restaurants could offer catering and clothing stores can sell products both in-store and online.
4. Cultivating Strong Relationships With Suppliers
Small businesses must develop solid relationships with suppliers in order to secure a steady supply chain and product supply. This is especially crucial if the business relies on just one provider for product deliveries.
Strong relationships are crucial when disruption strikes; having options can help lessen its effects and ease problems with suppliers or chains.
5. Establish Cash Reserves
Cash reserves can provide small businesses with protection against unexpected expenses. Having six months' worth of expenses saved up is generally recommended as a minimum requirement to ensure enough liquidity during unexpected circumstances.
6. Establishing Reliable Outsourcing Relations
Businesses that attempt to do everything themselves run greater risks. Should one member of their IT team quit suddenly, for example, serious security problems could ensue within the company.
Establish strong outsourcing relationships with providers of IT and other essential support services, so your business has a safety net if something unexpected should occur to its staff or system.
7. Regularly Review Financials
Small business owners should regularly review their finances in order to stay on the right path and identify any problems early. In order to do this successfully, regular review should occur.
- Includes tracking income and expenditure
- Prepare and review financial statements
- Meet regularly with your financial adviser
8. Invest in Technology
Small businesses should make investments in technology to prepare themselves for unexpected events, like cyber attacks or natural disasters. Businesses can also automate processes using technology - increasing efficiency while decreasing errors.
9. Prepare Your Employees for Emergencies
Small businesses must train their staff on how to respond in emergency situations. Training ensures employees will have a plan ready in case an incident arises that requires their intervention.
Training should include preparation for emergencies like cyber attacks, natural disasters and other situations of critical importance. Businesses should create a communications plan to inform employees in an emergency and ensure all have access to it.
10. Remain Up-to-Date With Current Regulatory Requirements
It is vital that small businesses stay abreast of all relevant regulations, including tax laws, labor regulations and any specific industry requirements that might impact their business. Failure to do so could incur fines and legal fees as well as damage their reputation - so stay abreast of changes!
Businesses of all types face many risks. By following these tips, small businesses can prepare themselves for what may lie ahead.
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