Expect the Unexpected? Tips for Protecting Your Business

Small and medium sized business owners understand that operating a business is no small task. Regardless of whether you have placed yourself in charge of all day-to-day operations, or if you are a hands-off owner that prefers to let their staff run the show, there are still countless tasks that need to be taken care of throughout the day-to-day grind of running a business. With that also comes the various uncertainties that business owners face over the course of running a smooth operation. Uncertainty is a broad term, especially in business, so there are plenty of aspects you need to at least be prepared to potentially encounter. You will have to withstand the same regulatory changes, inflation, interest rates, and other economic disruptions as everyone else doing business in the country, which is often decided by outside factors. In addition to those uncertainties, you will also see niche and specific issues related to your industry or even just for your business alone. Depending on your line of work, you are also likely to see things like consumer-demand swings, supply chain disruptions, unexpected expenses, and more. It is common for these extenuating circumstances to cause businesses to falter or struggle, but they are not a death sentence even if you fall behind in one way or another. Through various ways of preparation, you can consistently be on the right track. Keeping constant updates of your finances is vital to ensure liquidity, testing your operational resilience, and properly managing risk are the best ways to keep your business in a good spot financially in the event financial uncertainty arises.

On a macro-level, your business will likely face the same challenges as other small business owners. As previously stated, there are a litany of things that could potentially throw a wrench in your business such as regulatory changes, interest rate volatility and inflation. Just recently, the Small Business Association (SBA) modified their underwriting requirements on some of their loan programs, which could hinder the plans of hundreds, if not thousands, of small businesses that were considering applying for financing through the SBA. Things such as interest rates or inflation can be a bit easier to see coming, but that does not necessarily make them easy to prep for. Even if you are prepared for those unexpected occurrences as a business owner by cutting back on extra expenses or stocking up more inventory, there is still a chance that they have affected consumers enough to have an impact on your business.

Financial literacy and planning is of course going to be a top priority and source of concern for the most part in these instances. As a business owner, understanding your financials beyond the surface level can save you a lot of trouble and maybe even money on the back-end. In addition, small business owners should stress-test their businesses to find potential weak spots to become aware of where they should be building in more safeguards. During this process, run through different scenarios that you think are possible, such as a shift in customer behavior or a slight drop off in sales to see how it would affect your business. It can also be helpful to come up with and test some less probable, yet still possible, scenarios just to get a full grasp on what your businesses’ current weaknesses are opposed to what they could be. From there you can develop a plan for how to strengthen those weaknesses moving forward.

Oftentimes it is hard to see any further beyond your current situation financially as so much of the future is dependent on where you are standing as of now. Even with thorough planning and projecting, things happen and unexpected expenses can occur which can make growth or long-term planning difficult, which is why it is imperative to have sufficient working capital available at all times. It is recommended that small business owners build some semblance of an emergency fund to fortify their financial position. This is something that can vary in difficulty based on your financial situation, but even taking baby steps can someday save your business. Simply starting with a few dollars per month (or simply whenever you can) to be stored away for any future potential needs can begin to really add up over time. Ideally, you would be able to reach a point in which you are able to actually decrease the amount of money you are saving weekly or monthly due to it accumulating to a certain threshold you consider to be safe. However, as all business owners know, the more cash available the better.

If the company does not have a “financial security blanket” in the form of a line of credit or cash reserve available to cover unexpected expenses or unforeseen circumstances, it is highly recommended to do so immediately. Working with a source such as Penhurst Capital makes the process of applying for financing easy and they specialize in helping small businesses like yours secure the much needed working capital needed to not only help cover any financial uncertainty or hardship that may arise, but also allow the company to use the funds to help the company grow or continue to thrive for years to come.

In addition, staying adaptable is always going to be a beneficial idea in terms of strengthening your strategic foundation and helping to prepare for uncertainties that may arise. Many businesses have their primary revenue stream as their sole contributor to their business. But branching out and expanding/diversifying your revenue stream (in the form of developing a new product line, service offering or even expanding into new geographic markets outside of your primary service area) can help increase and stabilize cash flow and allow you to feel more secure if any circumstances change. This is often easier said than done but starting small with something like offering a subscription add-on or even a digital product can help begin to allow revenue to flow in from more than one avenue.

There are many ways in which business owners can prepare their businesses for uncertainties that could potentially arise over the course of day to day operations, but the important thing is that the preparedness is there for better or worse. This is not to say that business owners should be operating in fear, nor do they need a contingency plan for every little thing; it is merely a safer way to help keep your day-to-day functions safer than ever. As ironic as it does sound, planning for uncertainty could save your business, or even help it ascend to the next level when opportunity presents itself.