Survive the Unexpected: Small Business Guide
Living in a cosmopolitan city like Melbourne, getting complacent is easy. We have had a challenging few years during the pandemic but living in Melbourne, or Australia more broadly, we are a lucky country. That’s not to say we don’t have our issues and are not immune from threats ranging from natural disasters to cyberattacks.
As you know, Melbourne has experienced two earthquakes in the last few weeks. Fortunately, they have not caused widespread damage like the 5.8 magnitude Melbourne earthquake that struck near Mansfield in September 2021.
For many Melbournians, the thought of an earthquake does not present a looming threat as floods and bushfires. And until recently, you could assume the threat of cyberattacks was in the same category.
But recent history has shown individuals and businesses are vulnerable to cyber threats.
What would happen if your small business suffered a ransomware attack? What should you do? Do you have a contingency plan in case of bushfire, flood or earthquake? These unexpected natural disasters can happen anytime, heavily impacting business owners.
Small businesses are vital to our economy. They are critical for job creation, innovation and community development. However, running a small business involves significant financial uncertainty, market volatility, and exposure to natural disasters.
Did you know that recent studies have shown that 60% of small businesses collapse within six months of a cyber attack? Therefore, small business owners must be vigilant in preparing for unforeseen events disrupting their operations and success.
Let’s discuss our top tips to prepare you for the unexpected that could disrupt your business.
1. Introduce a contingency plan
Imagine your business suffers a hardware failure or a cyber-attack, and your primary server goes offline, disrupting your IT infrastructure. Without a contingency plan, this situation could lead to prolonged downtime, loss of critical data, and potential damage to client relationships.
A contingency plan helps a business respond to unforeseen events, such as natural disasters, supply chain disruptions, or unexpected financial setbacks. The plan is a set of procedures outlining the business’s steps in an emergency. Your contingency plan should include who will be responsible for what critical tasks and how to communicate with employees, customers, and suppliers.
2. Ensure you have adequate insurance coverage
Small businesses should always maintain adequate insurance coverage that includes the following:
- Public liability
- Property damage
- Business interruption
- Data breach costs
Business interruption coverage is especially vital as it can help cover lost income and expenses during a disruption, such as a natural disaster. With the evolving nature of cyberattacks, you can now insure against this threat. Cybersecurity insurance covers costs to remediate a data breach and any potential legal expenses.
3. Revenue stream diversification
If your small business relies on a single product or service, your revenue is at greater risk as unexpected events can cause significant harm to them. For example, a raw material shortage could paralyse a company without alternatives. Diversifying your revenue streams can help mitigate this risk. It ensures that your business has multiple sources of income. For example, a café can offer a mobile coffee van, and a clothing store can sell merchandise online and in its physical location.
4. Build steadfast relationships with your suppliers
Small business owners should build strong supplier relationships for a dependable supply chain. Building solid relationships is especially important for businesses relying on one product supplier. In the event of a disruption, having stable relationships matter, as it can mitigate the risk of supplier bankruptcy or supply chain issues. And having multiple suppliers can help reduce the unplanned impact on your business.
5. Maintain cash reserves
Small businesses must maintain adequate cash reserves to help them through unexpected events. Cash reserves can help cover expenses such as repairs, legal fees, or loss of income. Generally, small business owners should keep at least six months’ expenses in cash reserves.
6. Nurture outsourcing relationships
Small business owners are at higher risk when they try to do everything in-house. For example, they could face significant security issues if a key IT team member quits. Building and nurturing strong outsourcing relationships with an IT provider and other critical support services ensures a safety net; if something occurs to your employees or systems.
7. Regularly check your financials
All business owners should regularly check their finances to confirm they are on track to achieve their goals and identify potential issues that need to be addressed early on. Financials you should track in your business can include:
- income and expenses;
- creating and reviewing statements;
- regularly meeting with an accountant or bookkeeper.
8. Investing in your technology
Investing in technology can help you prepare for unforeseen events as a small business owner. For example, cloud-based software enables you to store data off-site, ensuring it is safe during a natural disaster or cyberattack. Leveraging technology can also help businesses automate processes to reduce the risk of errors and lift productivity.
9. Train your employees to handle emergencies
No amount of planning can prevent a natural disaster. But knowing how you and your employees respond should be part of regular training in your company. Training should focus on preparing and dealing with natural disasters, cyberattacks, and other emergencies (e.g. medical, bomb threats). All businesses should have a plan for employee communication during an emergency and ensure everyone can access the information.
10. Stay up-to-date on compliance and regulatory requirements
Small businesses must stay current with ever-changing laws and regulations related to tax, industrial relations, privacy and industry-specific obligations. Non-compliance can result in fines, legal fees, and damage your business’s reputation.
Boost Your Business’s Resilience and Disaster Preparedness
Secure your Melbourne business’s future with worry-free IT. Contact us today to discuss ensuring your business is prepared for future challenges.
About the author
Yener is the founder and Managing Director of Intuitive IT. Prior to running his own business Yener worked for a number of corporate organisations where he gained invaluable experience and skills, as well as an understanding of how IT can complement and improve business outcomes.