Although it’s not a pleasant thing to think about, if you don’t plan for disasters in your business, you could be leaving yourself open to a great many problems. Of course, in an ideal world, these plans would never need to be implemented, but should the worst happen and you suffer from some kind of disaster, if you have a good plan in place that you can follow, your losses shouldn’t be as big and you can get back to trading sooner rather than later. There are a variety of different business disasters that could befall your company, and although you can’t necessarily plan for all of them, knowing what the most common are and what to do about them is crucial; read on to find out more.
Data loss is one of the most common disasters that can befall a business. It might be due to faulty equipment or software, or it could be due to a cyberattack. Whatever the reason, if data loss is something that happens to your business, your future plans could be seriously negatively affected. You might even face fines or other sanctions if your customers’ details are leaked or stolen because of the strict data legislation that exists. All in all, data loss can spell financial disaster for your business, either because money is stolen, your customers lose trust in you, or you’re unable to fulfill future orders.
To combat this issue, make sure you have a robust IT security system in place. This will need to include firewalls, antivirus software, and a recovery plan. Because this can be a complicated thing to get right, but because it is so important, hiring a third party to implement specialist IT solutions is often the best course of action.
Disrupted Cash Flow
A business relies on its cash flow, and as long as there is a regular stream of money coming in and out (ideally more in than out, of course), then things can run smoothly, bills can be paid, and orders can be sent out. However, if that cash flow is disrupted for any reason, most often because one or more of your clients haven’t paid on time, or even because their businesses have had to close, for example, then the impact this disruption will have on your business could be huge.
Although there isn’t a lot you can do to prevent late payment and there certainly isn’t anything to be done about a business closing when it owed you money, you can plan ahead for such a problem. By putting away a percentage of your money each month so that, if you need it, you have some ‘spare’ ready to be used, you know you can survive for a certain amount of time without being paid. The best amount of money to keep to one side is six months’ worth of outgoings.
Sometimes mistakes and accidents happen, and if someone feels they have a claim against you for an injury or for something that happened that caused them some kind of loss, they may well take your business to court. Litigation can be expensive, and even if you win, your reputation might be damaged and you might not have enough money to continue trading.
The best way to plan for this kind of disaster is to always have contracts in place, even for the smallest of transactions, and have those contracts drawn up by an expert so they are watertight. Business insurance, including liability insurance, should also never be ignored; having this can save you a lot of trouble and expense.
(Cover Image Source: Pixabay)