Financial emergencies can be caused by economic downturn and natural disasters, neither of which you will have any control over. Natural disasters and emergency situations can arise out of nowhere. During an emergency, your goal should be to keep your business operating. This requires planning and research well before an emergency occurs to be sure that your business is ready when the unexpected happens. But how can you plan for the unexpected, if it is so, well, unexpected? The following are five ways to prepare your business for financial emergencies.
1. Create and Maintain a Backup to Secure Data
First, you should endeavor to create and maintain a backup of all necessary data to keep your processes and necessary information secure. Natural disasters, such as fires and floods, or man-made disasters, such as theft or cyber-crime, can put important business and financial documents at risk. You can protect yourself by creating a backup and regularly backing up digital records. It may be advisable to store your backup in a safe location that is off-site or in a trusted cloud storage server. If disaster does strike, you will feel safer knowing you have a backup.
2. Get Insurance for Your Business
You should always make sure you have business insurance. Business insurance can get your company functioning again when things go wrong. This insurance could include protection against business disruption and natural disasters. The money received may allow you to cover your losses as your business recovers. If your business is already insured, then be sure to review your policy to make sure it covers all the risks you might face, including floods, fires, and acts of vandalism. By getting and reviewing business insurance plans, you will be certain to feel comfortable and confident in your ability to get through disasters.
3. Create an Emergency Action Plan and Communicate This to Team Members
Communication is key to handling emergencies. However, during emergency situations, the lines of communication may be severed. For this reason, you should create and implement an emergency management plan. This plan should include people who are responsible to react in an emergency. They should know what their roles are, and they should have received the needed training. Your emergency staff will communicate key information to your employees and customers. The goal is for you to continue to provide services to your clients with little to no interruption. Be sure to communicate to your team members what and who the emergency communication contacts are so they know who to turn to in the event of a disaster.
4. Prepare for Losing Your Biggest Client
Big clients may be responsible for the bulk of your company’s revenue. They put your business at financial risk when they leave. If you realize that your company has a small group of clients or one client in particular that makes up the bulk of your business, now may be the time to expand your business. Even if you are not ready to take on new clients, having a list of potential leads may help you keep things afloat if a big client walks away.
5. Prepare for the Loss of Funding
Financial backing is a must if you will get your company into the marketplace. It’s best to prevent funding loss. However, you can prepare for the unexpected by having a list of potential backers you can turn to and lines of credit you can open in an emergency.
All businesses will have to face unexpected difficulties. Some problems can be avoided, and others must be faced head-on. Facing these financial challenges is easier if you prepare for them in advance.