As a small business owner, you probably think about the risks to your business. You may actually spend quite a bit of time thinking about these risks. After all, you’ve invested your time, energy and potentially a lot of money in getting your company off the ground. What dangers could be lurking? What threats might force you to close your doors? There are risks, yes, but you don’t necessarily have to let the threat of these risks derail your dreams.
The key here is to understand what may potentially threaten your company, face the issues head on and come up with a plan of attack should something occur that could jeopardize your organization. Planning is imperative. How does the saying go, people don’t plan to fail they fail to plan—yes, this pertains to you.
A few things to consider:
– Half of small businesses will survive to the five-year mark
– Over sixty percent of small businesses have to rely on their own personal funds to get started
– Over forty percent fail because their product becomes obsolete
All told, these stats could comprise a grim picture as far as small businesses go. And yet, your business does not have to meet a dismal end. Again, it is about knowing what is out there, what could potentially await you and then doing something about it. Being proactive is so important for any entrepreneur.
In this article, we take a look at a few of the more common dangers that could threaten a small business. And we also look at some of the ways in which you can avoid becoming just another statistic.
5 Of the Biggest Threats to Small Business
You started your business most likely with an idea and a dream. And this is wonderful. Some of the biggest and most successful companies in the world began this way. The key is to have a plan in place for sustaining that dream and vision long term. No one goes into business thinking, well, I am eventually going to fail anyway so I may as well not even try. Of course, this isn’t their attitude. Which is why having a solution for potential problems before they actually become problems is crucial.
Below are five of the biggest dangers that small businesses face…
1. Business interruption from external factors
Prior to 2020 this was a problem—after the events of 2020, this became an all too common reality. The pandemic interrupted just about every business in the country, in the world for that matter. And sadly, numerous businesses had no choice but to close up shop for good. Other such external risks could include major shifts in the market or economy—such as was seen during the Great Recession of 2008, also political upheavals, natural disasters and major regulatory overhaul. You name it, it can happen. So what can you do?
You have to have backup plans in place, and you have to be agile enough to pivot. During the pandemic, many companies had to completely remap their strategy—switching to online only or instituting stringent safety measures among other implementations. Think about the worst-case scenarios and devise a strategy for dealing with them—leave nothing off the table; after all, who could have anticipated COVID.
2. Burnout leading to apathy
This is actually one of the leading causes of why businesses start to head down the wrong path. Business owners try and do too much, sometimes too quickly. They believe that they are the only ones capable of handling the many tasks involved with operating a company. And so, they fail to delegate. This failure will almost always lead to burnout. Burnout in turn, can lead to downright apathy and this, without question, is bad.
You began your business because you had a passion for it, right? If you are spending every hour of every day trying to make that business “go,” you will inevitably come to resent it. That passion will dwindle and fade and then what will you have left? The key here…delegate, delegate, delegate. You hired your team because you thought them qualified to handle the job. It is time to see what they can do.
3. Cashflow crunch
Perhaps the number one reason why small businesses end up shutting their doors is because of cashflow issues. Money is tight, or worse, it’s nonexistent. There’s far more going out of the company every month than is coming in and as a result, you are scrambling to figure out how to make it from one day to the next. Lack of funds is the primary culprit for small business closures.
What can you do, how can you solve this problem and decrease the risk to your company? For one, you need to make sure you get paid. Small business owners aren’t always as diligent as they should be when it comes to collecting on those invoices. This is absolutely killing you. Have a system in place to facilitate payment collection. Also, revisit your budget. Look at ways you can cut costs and see where there may be wasteful or overlapping spending going on.
4. Inefficient customer service
What is at the heart of your business endeavor? The customers of course. Without customers you would have no business, right? If your customer service efforts are less than ideal, if you are only putting half effort into providing customers with superior service, then your business will end up failing. Remember, customers report their experiences everywhere—online, social media, via word of mouth. A couple of bad reviews and your company is going to take a major hit.
You need to make sure everyone is on the same page as far as how to interact with customers. Offer training to this end if need be. Also, be sure to answer all relevant questions and concerns. If someone leaves a negative comment somewhere, then be sure to respond to it. Don’t automatically go on the attack either but figure out how to address it meaningfully and tactfully. Customer service most definitely counts!
5. Cyber security breaches
The fastest way for a small business to crash and burn is to suffer a major cyber breach. You may be housing sensitive customer information. If this information is compromised and those customers suffer as a result, you could be in for a massive crisis. The problem is that many small business owners don’t necessarily think about cyber security and the consequent steps they need to take to protect their business.
You have to have a plan in place here. You also need to look into small business insurance in regard to cyber breaches so that if something does happen, you are not having to spend tons of money you don’t really have to alleviate the issue. Conducting regular security audits, updating passwords, and watching out for employee misuse are all critical to improving cyber security and preventing against possible beaches that could be catastrophic for your business.
First Union has the answer
If you are a small business owner in need of additional capital, we have the funds to help. With short-term loans and lines of credit among other programs, we get you the cash you need fast—sometimes in as little as two days. Call today!Published in