Launching your new business may not be all sunshine and unicorns. In this article, we take a look at how you can prepare for start-up disasters that can, if left unchecked rock the foundations of your new venture. Here goes.
Financial Shocks – Contingency Funds
Ok, so finances is probably one of the key things that start-ups must get to grips with. Unexpected bills, taxes or expenses can cripple a new business before it even has a chance to get off the ground. The first question to ask is, do you have a Business Plan?
If not, it means you are just floating in the wind dealing with issues as and when they arise. A business plan does not need to be a formal document, it can simply be a list of goals that you intend to work towards.
Formulating a business plan means you can incorporate elements into your plan should things not go as expected.
Having a business plan means you should have an idea of how much your budget is for the period and also how many sales you expect to make for the period. With that in mind you can set a contingency fund should those sales not be met.
If you have no budget for a contingency fund, ask yourself what you can do to finance the venture while you build up a contingency.
Do you have any assets you can utilise in an emergency to raise funds? During a financial shock investors or traditional funding routes may be non-existent or hard to come by. Ensure you have other measures in place, just in case.
Unexpected World Events
Unexpected events outside of your start-up can have devastating effects on your venture. Most businesses found this out for real during the recent worldwide pandemic event.
Do not underestimate world events, be it a new disease, conflict or world recession these can cripple our ventures no matter how great they are. Ensure you are ready for the worst by incorporating some measures into your plan.
If possible, consider building a second stream of income should your main one go dry.
Ask yourself, what would you do if all your income went to zero? Do you have anything that could be developed in a sharp downturn? This second stream should be unrelated to your main business.
What would happen if the internet were to shut down for a week? Do you have other means of surviving or generating business offline?
What if transport links were closed for a month? How would that affect your business?
Some unexpected events can be covered by insurance, others can be mitigated by forward planning. Ensure you incorporate both into your plan if possible.
Fire, Emergency and Theft
Ok, so not a pleasant thing to think about but what would you do if your start-up went up in smoke? Losing all your hard work in such an incident can be potentially devastating even for established businesses, never mind for start-ups.
Ensure you have adequate insurance in place at any premises you have. Make sure you have backups of important data offsite and stored safely should the worst happen.
Ensure you put in place adequate security measures to mitigate any risks for your particular business.
Are there any key pieces of equipment you need that if lost would cause serious harm to your business? If so, consider holding a backup offsite or having access to a backup just in case.
Data breaches and Hacking
How would you function if someone hacked your website? Do you have adequate backups or systems in place to revert back to a clean version? If not, you need to incorporate this into your plan as soon as possible.
Data breaches and hacking can cripple any business large or small. Ensure you have up-to-date anti-virus security software in place to detect dodgy files.
PR Disaster
A public relations disaster or PR disaster can be fatal for a new business venture. Be it hideous reviews of a new product or service. A call back of a freshly released product. Or unwanted negative publicity due to the behaviour of a co-founder or employee. Any of these can have catastrophic effects on your business.
Ensure you have measures in place to allow you to release information quickly to give your side of the story. You may need to enlist the services of a professional if your PR disaster is gaining traction.
Try to give reassurance and be honest in your communication. If there is a need to apologise, do so quickly to avoid any future apologies coming across as fake.
No matter how bad the PR disaster is, remember that all publicity is good publicity. Try and think of a way to turn the negative incident around into a positive for your business.
Supplier Shutdown
Are you heavily reliant on one supplier or service provider? If so, what would happen if that supplier were to go bust overnight?
Consider signing up to more than one supplier or service provider for your main income stream. Building a relationship with this second supplier could be a lifesaver should your main provider go under.
Bear in mind that if a well known supplier were to go bust, the next competitor in line may be inundated and overwhelmed with demand. They may even raise prices to new customers. So, preparing for the worst early may be advantageous to your venture.
Final thoughts
As entrepreneurs, we are always thinking positively and looking forward to future growth. Unfortunately, the realities of life can get in the way and the road to start-up success is often winding with a few detours along the way.
By incorporating some of these measures into your business plan you should be able to navigate safely and reach your destination intact.
Good luck!
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