It would be nice to think that you could start a business and then, as the fairy tales say, live happily ever after. Unfortunately, even the most successful business and the most diligent business person will sometimes hit hard times.
This could be for any number of reasons that are not really within your control. The economy could take a downturn. There might be supply chain issues, cash flow issues, or personnel issues. The key to success is not avoiding every kind of difficulty, because this just isn’t possible, but to handle the difficulties well. You can come up with strategies ahead of time that will help you when times get tough.
Do Crisis Planning
Effective crisis management planning is a smart move for every business. This involves anticipating things that might go wrong and planning your response. Your first step should be to assess various risks. You can’t make a robust plan for every single possibility, so what you need to do here is figure out what the most likely threats are. Next, you need to determine how those things will impact your business. Finally, you should create a plan of action. This is a simple outline of what can actually be a complex process; there are people who specialize in crisis planning. If you are struggling to figure out what the threats are or how to respond to them, you may want to consider bringing in a consultant.
It’s also a good idea to think in general terms of how you would deal with various tough situations. For example, do you have a cash reserve to hand if suddenly everyone you work with is late in paying the invoices you’ve sent out? If not, it’s a good idea to create one, even if it has to come from your own savings. In fact, this kind of uncertainty is why some business owners keep their regular job for a while. To build up a cash reserve to guard against this kind of problem, look at ways to reduce your monthly expenses.
You might do this by taking a less expensive vacation, saying no to happy hours, and cooking more at home instead of eating out. You could take more drastic measures, such as trading in your car for a cheaper one. There may also be expenses you can reduce that appear invisible until you really comb through your expenditures to find them. Could you reduce any of your bills? If you are paying off student loans, find out whether refinancing them can reduce your monthly expenses. See as well if there are things you are being billed for monthly that you no longer need, such as subscriptions or a gym membership.
You can do everything you can to get the most out of your employees, but even still, another type of crisis you should be prepared for is employee issues. Policies should be clearly communicated and available for employees to peruse at any time. Document everything, particularly if you are moving toward terminating an employee.
If your business is not big enough to have an HR department, and sometimes even if it is, it may be worth paying an attorney to advise you on how to proceed in certain situations.