5 Areas That Require Every Business Owner’s Attention in order to safeguard their business’s future.
It’s easy to go about your day-to-day not considering what could happen, should an illness, unexpected interruption, or dilemma pop up. We all do it. However, if you’re a business owner, it’s vital that you are covered for the unexpected. What would happen if you weren’t?
1. Your Health
Unfortunately, most of us don’t even consider what would happen to our life’s work if we were suddenly struck with an injury or worse a life-threatening illness. What would happen to the business if you were laid up? Would it survive? If not, what would you do for income? How would you handle the debt? How would it affect your family?
2. Key Staff Member Resigns
If a key employee leaves, what’s your plan? Is there someone trained and ready to assume that position? One of the best things you can do is to cross-train individuals. The secondary person doesn’t have to be as well versed as the key person, but they should have been given enough exposure that they could perform the job being vacated even though they may be less efficient.
3. Business Interruption
Covid-19 aside, there are lots of things that can cause business interruptions. A flood, a fire, or even vandalism can shut your business down for weeks, if not months. A closed business can’t generate cash flow yet bills still need to be paid.
It is estimated that over 80% of small businesses have no form of business interruption insurance that would pay out a set £ amount in the event of a catastrophe. This is different than typical commercial/business insurance, whereby the physical damage to your business is repaired. Business Interruption on the other hand can cover Gross Earnings, Profits, and Extra Expenses. Certainly, worth considering.
What would happen if a new competitor came into your market and how would you deal with it? Being so focused on the here and now, is a great way to get caught off guard.
One of the best ways to avoid getting sideswiped is to stay in touch with all your customers on a regular basis. Too often the only time business owners talk with their customers is when they call in an order. The thought is, “they know where we are if they need us, and I don’t want to bother them.” Staying in regular contact with customers signals that they are important to your business and can also provide you with competitive intelligence. Most customers don’t change on a whim unless you’ve treated them poorly
5. Bad Debt
This one item alone has contributed to the demise of many businesses. Aside from not being diligent in collecting receivables, having one customer representing more than 15% of your business can be potentially fatal if they close their doors or refuse to pay.
When you consider that many small businesses have net incomes of less than 10%, taking a hit from a major customer can be devastating. For example, if a client reneges on a £20,000 invoice and you only net 10%, you’ll need to generate £200,000 in additional revenue just to recover that loss.
When you think about it, most small businesses are not flush with spare cash, missing out on a major payment means you can’t cover payroll, rent, or suppliers.
If you do find yourself with a client that represents more than 15%, you have three choices. First grow your business to get them below that threshold, collect early and often, or alternatively take out a Trade Credit Insurance policy.
Want to know more? Contact Maggie Brotherson for any Trade Credit enquiries on 07497 199 978 or email, firstname.lastname@example.org