Prospective entrepreneurs always say that starting a business is hard. The thought of striving to raise enough startup capital, conducting research, marketing, and getting your brand known in your local area alone can be overly dismantling to your motivation. But new businesses are started every day, so this should never deter you from venturing into your passion or investing in a great business idea. All the same, the hard part of a business is running and maintaining it.
From providing quality products and services to continuously market your brand, offering excellent customer service, investing in technology, recruiting new staff, bookkeeping, supervising your employees, reputation management, and trying to come up with unique strategies to outdo your competitors, there are just a lot involved in keeping a business afloat and on its feet. However, sometimes life happens and a single mistake could send you out of business within a short while, if not minutes. Here are some pointers you want to read on preparing your business for the worst of scenarios.
1. Financial Turmoil and Unmanageable debts
In the business world, it is not a new thing to find yourself needing to receive crucial supplies or services on credit. From time to time, business organizations also resort to borrowing money from lending institutions to purchase crucial business equipment and real estate assets or to increase their operating capital. However, some businesses find themselves in an endless pit of debt due to poor investment decisions, sloppy management, embezzlement, natural catastrophes, and stiff competition, to mention a few.
Unmanageable debt can bring your small or medium-scale business to its knees and creditors on your neck. When you notice the signs of getting into this pitfall, it’s prudent to take measures to improve your business’s financial situation, some of which may include reworking your business budget, cutting back on expenses, increasing your sales, and even communicating with your lenders and creditors for a more suitable repayment plan. When most of these measures fail to materialize, filing for bankruptcy can provide you with an easy way out, depending on the state, city, or jurisdiction your business is located. Be sure to hire a good bankruptcy attorney to make the process smooth and easy for you.
Columbus, Ohio, for instance, is home to hundreds of Fortune 500 companies and thousands of small and medium businesses. It provides a world of opportunities for wise entrepreneurs, but it is important to note that competition in most industries can be stiff. This also means that without preparing early for the worst, businesses can fall within their first few years or even months of operation.
Especially for partnerships and sole proprietors, experienced Columbus bankruptcy attorney, Danielle R. Weinzimmer, says that while harassment from creditors can be stressful, the thought that you could also lose your property or your home risks foreclosure can be overly intimidating. Seeking proper legal advice before your lenders or creditors start knocking on your door can be a brave and bright move to avoid such frustrations in a worst-case scenario. You could also talk to your creditors and suppliers to renegotiate your repayment plans, ensuring you target better interest rates and longer payment extensions.
2. Ruined Reputation
It goes without saying, that reputation is among the most important factors considered by the consumer of today before making a decision on where to purchase a product or service or which brand to choose. No one wants to buy products/services or even work for a company whose reputation/integrity is questionable. Especially in this digital day and age where news spreads like wildfire, bad publicity or reputation can negatively affect your business’ sales, client base, and brand popularity.
It can even affect your hiring and employee retention rate and, if addressed early enough, could send you out of business. The best way to protect your business’ reputation is to prepare early for the battle by providing quality products/services, carefully monitoring your social media handles, using trademarks/copyrights, and aggressively defending your brand reputation. You may encounter a situation where you need to remove images from Google to protect your business and its reputation.
3. Data Privacy Violation and Hacking
You can consider this point as an extension of the above tip. In this age and day where the internet is what we rely on to do most things, however, you’ll most likely have some of your business operations online and store most of your company’s crucial data online for easy access by authorized employees, their supervisors, and clients where appropriate. However, some individuals who are so smart with computers can easily access such confidential data and information without your knowledge and authorization.
Often known as cyber attacks, such data breaches could be a huge threat to your business’ lifetime. Bad PR can kill your business, and data security breaches could lead to damaged consumer trust, lower sales, and a tarnished brand reputation.
4. Losing Employees to Competition
Nothing is more disappointing than building a team of employees, only for them to leave one by one to join your competitor in the industry after a while. You can easily feel like a bad boss or the owner of a losing business. It could even appear as one of the signs you should close down your business.
However, you may be the best employer alive, but it’s only that you didn’t motivate your workforce enough to make them stay and feel at home. You might also have been a bit harsh on them or had attitude issues.
To avoid all this, you could prepare early by hiring a professional HR agency and using bonuses, performance rewards, and other attractive benefits to boost your employee morale, make them feel at home, and encourage them to stay.
5. Government Policy Pressures and Tax Issues
As long as you’re making money in business it is a legal requirement to pay tax monthly or annually. Depending or the particular industry you’re in, however, government and taxation policies may change from time to time.
As much as you can avoid paying more tax than you are legally required to, willful tax evasion is illegal and can even lead to the closure of your business in some cases. Tax compliance is one of the most important ways to protect the survival of your small business.
Understanding the applicable tax regulations and laws in your state or country and staying updated can help keep you in business. At all costs, some mistakes you want to avoid include the following:
- Underreporting your income
- Overreporting your expenses
- Failure to report/file your taxes (tax fraud)
Such mistakes are considered felonies in most states and countries and a conviction could cost you a minimum of $100,000 to $500,000 depending on whether it’s a sole proprietorship, partnership, or corporation. To steer clear of these felonies, you may also need to hire an accounting professional to guide you through the various important aspects as per the applicable business regulations in your locality. Using enterprise tax software helps you keep accurate records.
6. Natural Disaster
Tsunamis, earthquakes, floods, tornados, wildfires, blizzards, volcanic eruptions, mudslides, and landslides, the list is endless. All these are natural disasters that can put you out of business within a matter of hours. When they happen, they can disrupt business operations and bring them into a standstill. They can cause property damage, affect the supply chain, lead to the loss of equipment and even cause your business to lose crucial personnel as well as its clients.
As a business, it is crucial to get the appropriate insurance to ensure that you’re adequately protected from unforeseeable circumstances.
Running a business and keeping it on its feet is not as simple as most people think. It takes great determination, courage, and perseverance to face the common challenges that come along. Most businesses that survive their first few years of operation actually put a lot of effort into planning ahead on how they can deal with the worst possible circumstances. The pointers above will hopefully be of inspiration to you.
