An emergency can happen in any business and at any time. As a business owner, you should have a resilience plan, so you have clear backup actions in emergencies. Here are seven emergency scenarios that a business can face in today’s world and ways to mitigate their risk.
One of the top business emergencies is a natural disaster such as flooding or fire. It can happen at any time to any business and can be devastating. Mitigate your risk by taking out a comprehensive insurance policy. When you decide where to locate your business, check for obvious risks such as flood plains or earthquake zones.
Cash flow can seriously compromise a business and even lead to the collapse of a company. It just takes one or two slow payments or a problem in the supply chain to cause an emergency in your business. Keep on top of your cash flow by implementing terms for payments, taking deposits, and using invoice factoring. If you don’t know what a factoring company is, you’ll be surprised by how they can help. From chasing bad debt to scheduling payments, a factoring company could be just what your company needs to stay on track.
Loss of Skilled Workforce
Losing staff who have business-critical skills can place your company at risk, especially in professions where there are global shortages. You can avoid risk by having good working conditions for your employees, so they are not tempted to look elsewhere. Spreading skills across the workforce is another way to avoid this problem. You can also implement a notice period, so you have time to look for a replacement before an employee leaves. It is also sometimes possible to get someone trained in specific skills before an employee leaves so you can at least have some continuity.
Major Client Loss
Losing a major client can seriously impact cash flow and your business. This can happen overnight and can also be a result of bankruptcy which means that you also stand to lose any money owed. Ensure you have money in reserves to cover this type of emergency, so you can at least pay wages and bills as an interim measure. Use a factoring company to chase bad debtors. And monitor your clients so you are aware of their spending with you, which gives you an idea of what could be lost. Continually look for new clients and businesses, so you do not risk your business on one client.
Another issue that can cause an emergency in your business is sickness. Employees may need to isolate, or several may be sick at one time, compromising productivity. You may need to close a sector or hire temporary staff to cover. Build a list of reliable interim workers you could use if there was significant sickness. Always keep reserve finances in place for this type of emergency. You can also avoid problems by offering your staff opportunities, such as getting an annual flu vaccine. If you employ someone new, take time to check references from others to see whether that person is absent a lot from work. That’s a warning sign they may behave similarly when working for you.
A complaint or the threat of litigation can cause an emergency in your business. If you are a food business, for example, and there’s a complaint about environmental health, it can potentially shut your company down. Someone who decides to sue you can also cause an emergency as other companies could lose confidence in you. Always make sure your staff is compliant with any training and procedures. Take out a comprehensive insurance policy. To deal with complaints, work proactively with people as this often reduces the risk of litigation.
One of the biggest risks to companies today is cybercrime, either through hacking, viruses, or phishing. If a lot of your business is online, you can easily fall victim to a hack that will effectively shut down your company trading. Always back up your files externally and make sure your staff is trained in IT security. It is also important to make sure you have virus scanning in place and that your system is regularly updated to reduce the risk. If you do have a problem, make sure staff know not to forward emails to others. Try to work offline as much as possible. Use a reliable IT system engineer to fix the problem.
There are lots of small things that can lead to an emergency for a company. Do ensure you have a risk assessment in place and have plans to counter any major threat to the company. That can range from using a factoring company to investing in IT training for staff. By being proactive, you can significantly reduce the risk to your business.