For organizations and businesses that want to grow and survive tough economic times, having an available cash buffer is imperative. And from what we’ve seen when the pandemic started, small businesses needed emergency funds in order to stay afloat or carry on with their operations. A lack of cash forced some to temporarily stop operations, while others are forced to completely closed.
If you’re not prepared, any kind of emergency can potentially decimate your company. Read on to discover the most common emergencies that businesses face nowadays and how you can prepare or handle them properly.
1. Loss of valuable clients
Losing any of your company’s highly valuable clients can be one of the worst financial emergencies that you could face. The truth is, it is almost unavoidable too. Your clients are essential for keeping your business afloat, and losing them can cause a major rip into your revenue. To reduce the impact of this kind of challenge, focus on client diversification. Not planning to take on new clients for now? Make sure you still have an updated and healthy list of leads that you can use in case a big patron leaves. Or, you can continue pursuing great leads to spread your business a bit more.
2. Company vehicle incidents
If your company issues vehicles for your workers, car accidents are definitely something you should prepare for. To prevent workplace vehicle accidents, make sure you have a distracted driving policy to set strict guidelines when it comes to making phone calls or cellphone use while driving. You should also enforce safety measures to your employees based on traffic laws, from knowing defensive driving skills to checking the speed limits.
But since most vehicular accidents are unavoidable, it’s best that you have a plan in terms of handling such situations. To save you or your employees from serious traffic violations like unsafe lane changes, reckless driving, speeding, or even hit and run, be sure you have a good criminal defense attorney to represent you. You can also consider getting auto insurance to cover costs of vehicle damage like vandalism or theft.
3. Worker injuries
Having injuries in the workplace can happen any time regardless of what type of business you’re running. While office employees are not much exposed to physical accidents, workers in the engineering, transportation, and construction industry are more likely to get injured on the job. For you to be legally and financially prepared for this, have appropriate business insurance and worker’s compensation in place. These two will help you manage costly medical bills or acquire a manageable settlement. Call your insurance provider and plan what policies are best for protecting your business from the huge costs of having an injured employee.
4. Investment failure
As you probably already know, any kind of investment comes with risks. And whether you like it or not, taking on investments is a crucial part of growing a company. To prepare for potential investment pitfalls, make sure you have enough emergency savings that you can use to continue your operations. Having enough working capital can help your business survive unexpected challenges. You can also develop a financial risk mitigation plan that you can refer to before making any new investments. As to minimize the risks, diversifying your portfolio is key.
5. Natural disaster
Natural disasters have the power to shut down even the biggest companies in the world. Imagine what it can do to a small business like you. Disasters such as wildfires, floods, and storms can lead to major property and financial losses. Be prepared by having an operational plan consisting of the most important assets you should protect, the safety of your employees, and communication with customers and clients.
Talk to different insurance companies to find the best disaster packages or interruption policies to keep your business covered. If your location is prone to weather disasters, you can consider getting a flood insurance policy to cover the damages, especially on your company property. These may include septic or plumbing systems, electrical equipment, and foundation walls.
6. Data loss
It would be impossible for an organization to function with data. It keeps your processes in place and your business running. Loss of data can be one of the most catastrophic things that a company could face. It can risk you from also losing your clients and investors, or even force you to shut down operations. When dealing with this kind of problem, it’s best to call on a company that specializes in data recovery that moment you lost your data. Time is vital in increasing your chances of getting the data back so act fast.
Unexpected challenges are normal for any business or industry. Some can be prevented with smart preparation, while others are just totally unavoidable. But by being informed of these potential emergencies and financial crisis, you can better protect your company from shutting down.