As a small business owner, you probably think about the risks to your business. You may spend quite a bit of time thinking about these risks. After all, you’ve invested time, energy, and 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 develop 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 the small businesses will survive to the five-year mark
– Over sixty percent of small businesses have to rely on their funds to get started
– Over forty percent fail because their product becomes obsolete
These stats could comprise a grim picture as far as small businesses go. And yet, your company 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 essential for any entrepreneur.
This article looks at a few of the more common dangers that could threaten a small business. And we also look at some of how 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 world’s biggest and most successful companies began this way. The key is to plan to sustain 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. This is why it is crucial solving potential problems before they become problems.
Below are five of the biggest dangers that small businesses face…
1. Business interruption from external factors
Before 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. And sadly, numerous companies had no choice but to close up shop for good. Other external risks could include significant shifts in the market or economy, such as during the Great Recession of 2008, political upheavals, natural disasters, and significant 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. Many companies had to completely remap their strategy during the pandemic—switching to online-only or instituting stringent safety measures, among other implementations. Think about the worst-case scenarios and devise a plan for dealing with them—leave nothing off the table; after all, who could have anticipated COVID.
2. Burnout leading to apathy
This is 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 terrible.
You began your business because you had a passion for it, right? If you spend every hour of every day trying to make that business “go,” you will inevitably resent it. That passion will dwindle and fade, and then what will you have left? The key here is delegate, delegate, delegate. You hired your team because you thought they qualified to handle the job. It is time to see what they can do.
3. Cashflow crunch
Perhaps the number one reason small businesses end up shutting their doors is cash flow issues. Money is tight, or worse. It’s nonexistent. There’s far more leaving the company monthly 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 collecting those invoices. This is 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 wasteful or overlapping spending is.
4. Inefficient customer service
What is at the heart of your business endeavor? The customers, of course. Without customers, you would have no business. If your customer service efforts are less than ideal, if you are only putting half action into providing customers with superior service, your business will fail. Remember, customers, report their experiences online, on social media, and via word of mouth. You will have a couple of bad reviews, and your company will take a significant hit.
You need to make sure everyone is on the same page about 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, 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 significant 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 regarding cyber breaches so that if something does happen, you do not have to spend tons of money. You don’t have to alleviate the issue. Conducting regular security audits, updating passwords, and watching out for employee misuse are critical to improving cyber security and preventing possible breaches that could be catastrophic for your business.
First Union Lending has the answer.
If you are a small business owner who needs 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!