5 Ways to Prepare for the Unexpected as a Small Business Owner
As a small business owner, you are likely in the process of having to react quickly and make swift decisions constantly. Decisions like: Should I hire more employees? Should I upgrade my cloud storage? Should I become more active on social media? The decision-making seemingly never ends.
In addition to decision-making, you probably are also constantly faced with unique and unexpected challenges. So how can you prepare for the unexpected as a small business owner? Read on to learn 5 ways you can plan for unforeseen circumstances.
1. Budget Early and Often1
If you have a clear picture of your financial landscape as a small business owner, you are better equipped to prepare for unexpected financial needs and can find ways to budget for an emergency.
Preparation Tip: Use the first of the year and periodic milestones like tax season as opportunities to update and revisit your monthly and annual budgets. A budget will help you control financial decisions and should be a reflection of what you can afford to spend vs. how much you are projected to make. Take into account market trends from the previous year to help you determine what this year may look like. Once you have a clear understanding of your business’ budgetary needs, you can accurately forecast what can be set aside for an emergency fund or unexpected costs.
2. Define and Understand Your Risk Landscape
As a small business owner, it’s important to understand the potential risks facing you on a short-term and long-term basis in order to accurately plan for the future.
Preparation Tip: How will changes in minimum wage or healthcare requirements impact your workforce? Do you operate where you are at high-risk of a natural disaster? Do you rely heavily on seasonal workers? As a small business owner it’s important to understand the potential risks facing you on a short and long term basis. Once you’ve mapped out the threats to productivity, a clearer picture can be built around emergency planning, insurance needs and other considerations.
3. Plan for Big Purchases and Investments Carefully
Substantial business changes or large investments in the organization need to be timed carefully, balancing the risk with the reward and done with a full understanding of the financial landscape you’re operating within.
Preparation Tip: Do you need to make a large investment in new equipment? Does your storefront need a face-lift? Are you thinking about bringing on a new payment processor or moving part of your operations online? Large changes that require big investments need to be timed carefully, balancing the risk with the reward. Take a look at your records from the previous year — when were you doing well financially? Did you take a financial hit at any time? Look in your business’ past to move forward.
4. Take Advantage of Expected Downtime2
Understand your sales cycles and take advantage of your downtime to find new ways to invigorate the business while preventing revenue generation from screeching to a halt. Use this time to implement new marketing strategy, train employee and organize records.
Preparation Tip: Don’t let the off-season get you down. Understand your sales cycles and use your downtime to ramp up your marketing efforts while preventing profit generation from stopping completely. In order to keep your company thriving and the revenue coming in, you will have to identify how to market to your customers in new and creative ways and taking advantage of slower times can help you plan ahead for the next sales boom.
5. Understand Your Funding Options
Despite your best efforts, disaster may strike. As a small business owner, you need to understand what financial options exist to help get you back on your feet.
Preparation Tip: According to the Headway Capital survey, small business owners cite not understanding their options as the biggest hurdle when selecting funding options. Take time to examine and understand what sources of funding work best for your business.
References
1Briggs, J. (7 January 2015). Preparation checklist for 2015. Retrieved May 19, 2015 from https://www.headwaycapital.com/blog/preparation-checklist-2015/
2Briggs, J. (14 January 2015). Marketing during the slow season. Retrieved May 19, 2015 from https://www.headwaycapital.com/blog/marketing-slow-season/
