Prepare for the “Worst Case Scenario”: 6 Ways to Protect Yourself from Business Hardships
March 28, 2017
Prepare for the worst, hope for the best. That’s a motto every business should follow.
Unexpected business hardships can happen at any time, putting your business, your finances and your future in jeopardy. It’s easy to put your mayday plan on the back-burner. After all, you’re busy generating revenue, keeping customers happy and all of the other seemingly endless tasks that business owners must deal with day-to-day. But a quick browse of the daily news will reveal dozens of tragedies – from natural disasters to technology failures to economic crises. It can and does happen to businesses every day. No one is exempt from facing an unexpected hardship.
Sometimes these events are beyond our control but, in other instances, they’re hardships within the business itself that could have been predicted and planned for (e.g. the loss of a major client or the resignation of your best contractor).
As a business owner, it’s your responsibility to prepare for these challenges. Here are some effective ways to prepare your business for the worst case scenario.
Practice #1: Protect Your Data
Papers can easily be burned, torn, lost or dissolved. Computers can malfunction, break or completely crash. Consider what would happen if some kind of disaster wiped out all of the data stored on your computer or company server. Do you have off-site backups? Would you be able to recover the lost data?
One of the best ways to protect your data is through an online backup service. With these services, you’ll install software on your desktop that scans for files, encrypts them for security and sends them to the cloud. Once your files are stored on cloud servers, they can be accessed if you ever need to restore missing files. There are several options for online backup services, including Carbonite, IDrive and CrashPlan. You may be able to sign up for a free trial account to test it out and shop for one that meets your needs at an affordable price.
Practice #2: Purchase Business Insurance
Computers, printers, phones, and office furniture can cost quite a bit to replace. If you face an office fire or natural disaster, you don’t want to worry about spending thousands to replace your vital business equipment.
People who work from a home office often assume that they’re covered under their homeowner’s insurance in the event of a fire or other disaster, but it may be wrong to assume this is always the case. Certain homeowner’s insurance policies provide limited coverage for business property. What’s more, losses because of floods or earthquakes may not be covered at all.
Limits vary, but replacing a desk, office chair, laptop and printer can be a lot pricier than it seems and can easily exceed policy limits. Talk to your insurance agent about your options. You may be able to get an endorsement to your homeowner’s policy to expand coverage for your home-based business or purchase a separate commercial policy. Just a few dollars a month can truly pay off if you ever encounter business hardships.
Practice #3: Create a Backup Team
What would happen if you couldn’t work for a week and a huge deadline was on the horizon? If you have a small team, what would happen if one of them couldn’t come to work or suddenly quit? Do you have anyone who can take over?
If you haven’t worked with a contractor before, consider hiring someone on an occasional basis. That way, you can build a rapport with someone reliable in case you ever need to hand off projects in an emergency. If you are a freelancer, you may be able to connect with other freelancers in your line of work and agree to serve as a backup for each other.
Protip: Work with someone in a different city from yours. That way if it’s a widespread scenario, they will be able to take on your work while you deal with the hardship.
Practice #4: Prepare a Communication Strategy
Taking the time beforehand to correspond with clients shows how much you care about their business.
There aren’t many hardships that give you time to prepare. However, on the off-chance you even get a few days of notice (e.g. bad weather is headed your way), give your clients a heads up.
Take some time to craft a personalized email informing them that you will be affected and what that may mean for them and their projects. If at all possible, don’t wait until after disaster strikes to address your absence and unavailability. Taking the time beforehand to correspond with clients shows how much you care about their business.
Also, consider others you may need to contact in an emergency. Will you have access to your team’s phone numbers, so you can make sure everyone is safe and accounted for? Ensure that you have access to important phone numbers so you can start reaching out.
Practice #5: Diversify Your Money
Setting up an emergency fund is a common financial tip. But have you thought about diversifying the location of your savings?
Scenarios that impact an entire city or county can have a devastating impact on your savings as well. A local financial institution may be unable to dole out cash immediately after a tragedy. Securing money in multiple locations can help you access important funds in a pinch.
If you do most of your banking with a local bank or credit union, consider setting up a savings account with a national or online bank. Wherever you keep it, make sure it is highly liquid. An emergency fund won’t do much good if you need to wait until the stock market recovers from a dip to get your money. A savings account may not yield high returns, but at least the money will be there when you need it, regardless of what the stock market is doing.
Practice #6: Plan Your Back-to-Work Transition
Being flexible can help reduce stress so everyone can be more focused and productive while they get back to work.
Once you’ve overcome the hardship, you’ll need to transition back to your working environment. In the event of a natural disaster, you might not have access to landlines or the internet for an extended amount of time.
Invest in portable phone chargers that run on batteries. That way, you’ll be able to make calls, receive emails and communicate with clients, contractors and employees.
If you have time to prepare, you should keep note of locations where you can access Wi-Fi in case you need to get online to access your bank account or necessary documents.
In some cases, you may need to allow employees to work remotely for a while or put their work on hold until they can safely return to the office. You and your employees may still be taking care of personal issues from the disaster. Being flexible can help reduce stress so everyone can be more focused and productive while they get back to work.
How Prepared Are You Against Business Hardships?
Rare, unforeseeable business hardships do happen and can leave devastating marks on your business. So, take the time now to plan for the worst—it will make all the difference in your future. Keep in mind that disaster recovery planning may not only happen once. You should take a look at your plan occasionally to make sure it reflects changes in your business operations and processes. If you’re prone to looking on the bright side, anticipating the worst may feel like a waste of time and money, but remember this quote from Max Mayfield, Director of the National Hurricane Center: “Preparation through education is less costly than learning through tragedy.”
How are you preparing for the worst? Would love to hear any additional tips you may have in the comments below!
about the author
Forbes, Parachute by Mapquest, Capitalist Review, Guyvorce, BonBon Break and Kard Talk. Janet lives in Arizona with her husband and son and their rescue dog, Dexter. Outside of work and family time, she enjoys cooking, reading historical fiction and binge-watching Real Housewives.Janet Berry-Johnson is a CPA and a freelance writer with a background in accounting and insurance. Her writing has appeared in