The start up phase of creating a business is exciting. It’s full of potential and possibilities. But what happens if there’s a sudden dip in the economy? What happens if there’s an unprecedented global pandemic? There are sure to be surprises along the way for any start up and the key is riding out those bumps in the road without your new business crumbling.
There are many things you can do as a business owner to mitigate the risk of a crisis. Here are a few areas you can focus on to make your startup crisis proof.
- No one expects a crisis, but by crisis proofing your business, you can ride out the storm.
- The major things to do are: focus on your finances, cultivate the right team, invest in the right tech, create an action plan, and stay relevant.
- Above all, preparing ahead of time can make it much easier to adapt and pivot your company operations when a crisis hits.
Focus On Finances
The financial health of your business is one of the better indicators of whether or not you can ride out a crisis. To secure your financial health, start by reducing your business expenditures. It’s vital that you keep track of your expenditures and profits on a weekly basis.
Along with reducing and monitoring expenditures is the age-old advice to be frugal. Frugality is sometimes viewed negatively, however it’s better to make the sacrifices now by being frugal so that you have the funds in the future during a crisis.
You should also place some attention on your cash flow and cash reserves. Every successful business person has a cash reserve ready in case things go wrong in some way. You can build your reserve by saving a small percentage of your profits every week or every month.
You should also plan on only using the cash reserve if you absolutely need to. Along with building a cash reserve is the task of improving your cash flow. It can be difficult during crisis times to get customers to pay on time, so setting firm payment deadlines and incentivizing customers with discounts and bonuses can be very effective.
Tying in with the above mentioned tips is the advice to build your credit. Most business owners are reluctant to borrow money, but it’s something that can be extremely helpful in desperate circumstances. To get the money you need in a time of crisis, you will need to have good credit already established. That will help you get a loan if needed and with a lower interest rate.
Assess Your Team
When you think about your business, you have to think about the team of people you have in place. As your business grows, you will change the people in your team and add others you may not have expected. The key is developing a team that runs efficiently. Assessing how your team is working together, meeting goals, and accomplishing their projects can give you valuable insight as to how you can better assign tasks and how much work needs to be done.
One way to get the support you need without fully hiring someone is to hire freelancers. With an increasingly digital world, freelancers are available at all hours, every day of the year, whenever you need them. Rather than hiring a full-time, permanent new member of your team because you have a few simple tasks that need to get done, you can hire a freelancer that you pay for the project but who won’t continue to cost you when the project is over.
Someone you should definitely have on your team is a financial planner. One that specializes in business finances could quickly become your most valuable team member. They will help you to manage cash flow, cash reserve, expenditures, and more. Hiring a financial planner before a crisis will help you to prepare in case there is a crisis, rather than hiring one to dig you out of a hole.
You should also cultivate a crisis management team. A crisis management team is a group of people dedicated to handling tactical decision making in the time of a crisis when, on top of whatever is the root cause of the crisis, there’s a sense of anxiety and foreboding. While you may not need a crisis management team until there’s a crisis, it’s good to have one in mind in the event you need them.
Invest In Technology
A key part of business today is technology and one of the most important investments you can make is in adaptable technology. For example, with the rise of the COVID-19 pandemic, many businesses had to pivot their operations so employees could work remotely. By having technology in place that can handle a quick change like that, you’ll be a step ahead of the crowd in adapting to the fall out of a crisis.
You should also spend time learning how to handle security concerns. As technology helps us make quick decisions about changes that need to be made, cyber attacks can often increase. With each new piece of technology you introduce to your company, become very familiar with any potential security risks and how to handle a security crisis.
Form An Action Plan
Just as you have an action plan for the day or the week or the month, you should have an action plan in place for a crisis. One area of this action plan that you should spend some time on is the marketing decisions. You may need to get creative with your marketing in the event of a crisis.
Using the COVID-19 pandemic again, many companies had to quickly adjust their marketing campaigns to better address the issue at hand. You can make these decisions about creative marketing easier if you continuously track how your marketing campaigns are doing by tracking the analytics.
If you already know what types of content your customer enjoys and engages with, you can make a creative marketing decision during a time of crisis without skipping a beat.
You should also make development a priority in your action plan. Even if your business is currently thriving, a crisis can derail that quickly. Having a plan for development during a time of crisis will help you make the decisions you need to make to continue growing your business rather than simply surviving a crisis.
Whether it’s a time of crisis or a time of prosperity, you have to stay relevant to continue getting a steady stream of business. Keep track of what your competition is doing that works well. Watch the industry leaders and see what they are doing. These examples can help you develop your action plan and know that you are staying current with the times.
You should also play to your strengths. If your company blog is thriving but customers don’t open your emails, spend a time of crisis focusing on your blog rather than wasting time and money on tweaking the emails. It will help you stay in tune with what your customer wants and expects from you, making it more likely for them to engage with you and your content.
A time of crisis is a time of stress and strain for all of us, consumers and businesses. As a business owner, you are in a unique position as both a consumer and a business. No one expects a crisis, but you can ride it out and even grow during it by trying these simple tips.