Most business owners get so pre-occupied by the here and now that they forget the future. However, disaster can strike at any time. The list of potential crisis events seems endless, from hurricanes and earthquakes to terrorist attacks and pandemics. Fraud and intentional sabotage within your office can also manifest into a full-blown crisis.
Crisis situations may come in different ways, but they all have the ability to cause significant financial damage. Even if your account recovers, your brand image could take years to rebuild.
Luckily, you can give your business a much better chance at survival with the tips below.
1. Solidify liquidity
Access to cash is one of the major challenges that small businesses face. Studies show that only about half of new enterprises last longer than five years. Fixed costs like rent, payroll and utilities often leave little liquid cash to owners. So, when a crisis hits and revenue takes a slump, entrepreneurs usually end up devastated.
To prepare for this short-term challenge, aim to have a plan to gain immediate liquidity on standby. The cash you unlock must be enough to cater for your short-term debt obligations for a while without any sales revenue.
Once your cash reserves are guaranteed, turn your attention to day-to-day cash flow. Renegotiate terms of contracts like rent and loan payments.
Another solid strategy for increasing cash flow is to prioritize your customer experience. Eliminating any friction in the payment acceptance process, for instance, can minimize the rate of shopping cart abandonment and promote customer retention. As a retail merchant services review explains, a proper merchant account provider can help its clients to achieve and sustain cash flow.
2. Look for capital
To effectively wade through a crisis, you must do more than just guarantee liquidity. When disaster hits, demand goes down and paid leave becomes a reality. Even if you have a good amount of cash in the bank, you will still need a way out for when it runs out.
Thankfully, the government often launches relief plans tailored to small businesses, so that they can make payroll and cover expenses. In the private sector, large companies tend to offer grants and interest-free loans as aid packages. Applying for these solutions rather than normal loans can help you sustain your business without incurring heavy damage when the crisis ends.
3. Engage policymakers
In times of crisis, policies change, and proposals to aid one sector or the other start floating in government chambers. As a small business owner, you may feel out of reach working from your town far away from the capital.
Nevertheless, it is crucial that you try your best to make your voice heard. Mediums of engagement are endless, from social media and emails to phone calls and letters. You can also partner with other entrepreneurs to make a more powerful entity that speaks of small businesses as the lifeblood of the community. Remember, the wrong legislation will hit you too.
You will survive
Making a business 100 percent recession-proof is impossible. However, implementing the right practices will give you the best chance of survival. Accessing capital and maintaining liquidity are the most important steps for enduring a crisis. Since you need help to achieve both, you must do as much as you can to get yourself heard by the legislators that hold the key to your economic future.
Author Bio: Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of merchant accounts. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie on his backyard porch, as should all right-thinking people.