Preparing For A Business Disaster


Business owners seem to have endless items to complete each day yet never enough time to accomplish all of the items. Increasing sales, improving marketing, motivating employees, or even satisfying customers all rank quite high on the list of priorities. However, alleviating the drastic effects of a potential business disaster, should one materialize, never seems to make the list.


Plan In Advance

Although planning in advance for a business disaster appears simple enough, it certainly requires forethought. For example, “if we cannot completely eliminate a potential business disaster, then what do we do?” is an important yet often unasked question by business owners. Businesses will always have some type of external threat that could become a business disaster if not planned for in advance. In comparison to internal business threats, which can be controlled, external business threats cannot. As a result, while external business threats may not be eliminated, implementing effective plans may reduce the amount of exposure of the threat to the business should it materialize.


What Can Be Done?

Business owners should either list or at a minimum, mentally consider the potential threats existing for their businesses. Since each business is unique regardless of industry, size, and location, a “one-size fits all” solution cannot apply. Businesses have different internal resources and strengths that can help compensate for any external threats should they develop.


Planning needs to be based on each potential business disaster such as:

  • Major equipment replacement - Establish a reserve (emergency) cash account that is funded on a periodic basis, so cash is available for at least a down payment if and when needed. Excess funds in this type of account can always be transferred back into a general operating account if and when the funds are no longer needed.

  • Vendor cannot deliver inventory needs - Whether inventory is needed for resale, used in a service business, or needed for manufacturing, business cannot come to a halt because of vendor problems. Rather than depending on one vendor, businesses can broaden their buying power to either include several vendors or have alternate vendors available should one vendor not be able to deliver.

  • Sales decreasing or remaining stagnant - Although this is a common problem for many small businesses and SMEs, there are ways to combat this trend. Some ways include but are not limited to: keeping a database of current and potential customers and contact them on a regular basis, diversifying current product or service line of business, adding new products and services to complement products and services already being sold, and creating an emergency cash reserve fund (similar to an equipment reserve fund), so working capital is available when sales are slow as bills & employees still need to be paid.

  • New competitor enters the market - Few monopolies exist in today’s business world, so businesses must be prepared for the inevitable. This might be either a new marketing campaign with a broader scope or different focus. Perhaps, it might be either a special promotion that worked in the past or a new one still to be tested.

  • Key employee resigns - Although one goal of every business should be employee retention, a fact is that a certain number of employees will leave for various reasons (i.e. health, relocation to another city, different career path or better job opportunity). With that being said, both cross-training and mentoring employees is key to filling any gap left by a departing employee.

Disaster Averted

Being proactive is preparing for a business disaster before it becomes a business disaster. Decisions made today can have positive results depending on what tomorrow may bring. Business disasters will happen but can either happen and be devastating for a business or happen, yet with proper forethought and planning, result in reduced exposure and minimal impacts for the business. Ultimately, the choice lies with the owner.

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