This simple practice could save your business from disaster!
Every business has risks! Without knowing it, we unconsciously carry the stress of potential disasters in our business! Implementing simple solutions to mitigate these risks can have an incredible impact on our well-being because knowing we have things in place enable us to focus on more important matters.
In this article, we look at essential and pragmatic ways to de-risk your business. Forethought and planning can provide not just risk mitigation, but comprehensive paths to survive nearly any sudden change in your operating environment.
Think about what happens if something goes wrong in your business
Do you have resources in place?
How effective are your backup plans?
Do you have ways to prevent or prepare for these moments?
What will you do if something unforeseen happens?
Today we walk through nine easy ways you can disaster proof your business because you definitely want to reduce the risks of something going wrong.
Either read this article or listen to the podcast episode
Overview
What Disasters are we talking about?
Business failures can be caused by internal or external factors . In other words, we need to keep our scope broad. Additionally, they may be foreseeable or completely unpredictable and will have varying levels of impact. Our role as business leaders is to make sure we understand our risks and put plans in place to limit their likelihood or impact.
In summary, disasters happen!
We are not about talking about acts of God! Instead, we are referring to events that could disrupt your business, and at the worst, take it down. These are things you won’t see coming! Firstly, let’s look at the data from the Bureau of Labour Statistics:
- 40% of businesses fail within the first three years
- 50% within five years
- 66% within 10 years
- 73% within 15 years
- and nearly 80% within 20 years.
For a business to succeed despite these statistics, you must be aware of all threats which are likely to have a significant impact on your business. In other words, to survive and thrive, you need to de-risk your business!
This articles provides nine easy ways to be prepared and disaster proof your business, covering:
- Your Team
- Technology
- Cashflow
- Supply Chain
- Business Continuity
- The Market and Products and Services
- Your Customer
- Key Person Risk
- Business Focus
Business Failure is Rarely Caused by One Issue
Its important to understand that businesses rarely fail due to one cause, a collection of issues are typically responsible. Therefore, mitigating the risks and having plans in place puts yourself in a position of being prepared which will give your peace of mine. De-risking your business is a simple activity with huge benefits but is often out of mind for many busy business owners.
Hopefully, you will make this a standard practice in your business.
A Real Life Example
When consulting to a medium size business, I noticed they had all their important membership and business information on one desktop hard drive. I asked if they backed up regularly, they were happy to report they did. However, when I asked if they took any backup copies offsite on a regular basis, they said they did not. I explained, if there was a break in, a fire, or another type of disaster, they would lose everything. As a result, they agreed to do double backups and take one offsite (which was home) as a standard practice.
Lucky the did because two months later, they had a break in. The computer and all the backups were taken, as well as a lot of stock and other valuables.
They recovered their business easily because of the off-site backups. Without the simple practice of off-site backups, they would have no records of their members, their activities, outstanding payments, etc. Not to mention, stock management and planning outputs!
Another example happened to me 2 days ago. My husband edits my podcast, using a software I am not familiar with. He was advised his double knee surgery was booked in 5 days’ time. This surgery was going to put him out of action and in hospital for 5 days, and not mobile for many weeks once home. This meant he would unavailable for around 3-4 weeks, therefore adding risks to my publishing schedule. So, I jumped into action to get three episodes in the can over the next two days. Additionally, I realised i need to start learning the software just in case he is out of action for much longer.
Nine Easy Ways to Disaster-Proof Your Business
To disaster-proof your business, here are nine ways you can reduce the risks and put your mind at ease.
For each risk, we detail:
(1) the likelihood of the risk happening
(2) ways to mitigate the risks
(3) what to do if it the risk happens
1. Technology
The likelihood of the risk happening:
- 45% experience hardware failures
- 37% have lost data using cloud storage
- 72% were forced to recover lost data from a backup at least once within the previous year and 33% said they had to restore a backup multiple times.
- 1% of hard drives fail
The risk is, you lose data that directly impacts your ability to operate.
The more we store online, the more likely this risk will occur.
To mitigate this risk
- Review your digital assets and determine what needs to be backed up and how often.
- Put regular backups in place as soon as possible
- Test your backup works to ensure you can restore what you need
- Find a reliable data recovery service, somewhere local
If the risk happens
Restore your digital assets and ensure you can continue operating. Otherwise, get your data recovery service to fix any issues and restore your online world.
2. Your Team
The likelihood of the risk happening:
- 21% of businesses fail due to disagreements with their employees.
- 5% of businesses fail because they didn’t assemble the right team
The risk is, you employed the wrong person and they disrupt the team or the business, or they do not deliver as planned.
To mitigate this risk
- Have clear roles and responsibilities.
- Create clear decision making scope
- Employ a quality recruitment process
- Request a minimum of two references from recent jobs
- Implement a probation process to give you time to ensure the right fit
- Put time into explaining expectations
- Keep a journal of any issues for future reference
If the risk happens you will need:
- A willingness to stop unacceptable behaviour in a timely manner
- Courage to coach them back on track.
- The resolve to let them go if they do not fit your requirements (this is why a probation agreement and journal is important)
Additionally, this podcast episode helps if you need to move an employee out of your business.
3. Security Breaches
The likelihood of the risk happening:
- 33% of network folders are not protected
- 20% experience ransomware causing on average 16.5 days downtime (consequently, the longer you are down, the more likely your business will fold)
- 74% of data breaches are caused by human error in the form of deceptive or phishing emails – where staff accidently click a link etc.
- 83% of cyber attacks happen externally to a business. Therefore, 17% come from inside a business.
To mitigate this risk
- Engage a data security expert to advise on your security needs
- Password protect all private or important data
- Train your team how to recognise ransomware emails and to not click links if they are concerned.
- Install a security application (as per advice from an expert)
If the risk happens
- Engage your security expert to sort it out because they will know all the tricks.
- Restore your backups on a new system and get your business up and running.
4. Cashflow
The likelihood of the risk happening:
- 40% of businesses fail due to lack of cashflow
To mitigate this risk
- Do sufficient forward planning to know your cashflow needs
- Secure finance for future needs for unforeseen circumstances
- Monitor your cashflow as per your planning and adjust as needed
If this risk happens
- Draw on your preplanned finance
- Ensure your planning steers you back into the black
5. Supply Chain
The likelihood of the risk happening:
- 75% of businesses experience supply chain disruptions
To mitigate this risk
- Work closely with your suppliers because they are your lifeline
- Find a back up supplier, just in case
- Ask your suppliers if they have any risks in their business that could impact you
- Create a plan for any disruptions to your supply chain – consider transport, payments, goods and services, etc.
Action to take if this risk occurs
- Execute your ‘what if’ plan and engage another supplier immediately
6. Business Continuity
The likelihood of the risk happening:
- 54% of businesses experience a break in continuity
- 51% of businesses operate without a continuity plan
For example, what if you lose internet for a day, or electricity, or water. Additionally, what if your deliveries don’t arrive etc.?
To mitigate this risk
- Put a business continuity plan in place. It is wise to review this annually or when major changes occur with your business.
If the risk happens
- Execute your business continuity plan
7. Business Continuity
The likelihood of the risk happening:
- 44% businesses fail due to a lack of market need for products/service
- 14% businesses fail because of poor marketing skills
- 21% businesses fail because of market competition
- 7% businesses fail due to pricing issues
To mitigate this risk
- Do your research to ensure the market has a need for your product and service. In addition, ask them what they want!
- Engage a marketing expert because you want to invest wisely on your marketing and get results
- Know your competition. For example, research them periodically to know who they are and what stands you apart.
- Research the markets response to your pricing. in other words, consider if you need to put up your price and by how much?
If this risk happens
- Review your marketing performance and discuss with your marketing expert. Similarly, you can always get a different expert.
- Review your products and services. For example, don’t be afraid to drop a product or service or reinvent it if the market tells you it is not what they need.
8. Customer Needs
The likelihood of the risk happening:
- 14% of businesses fail because they ignored their customers needs
To mitigate this risk
- Get out there and know your customer and what they want.
- Research, research, research.
If the risk happens
- Be agile enough to pivot to what your customer needs.
- Engage an expert. For example, get yourself a busiess coach.
9. Key Person Risk
A key person risk is where you have someone in your business who is a critical resource and if they leave your business will be in trouble.
This area of risk is getting a lot of press lately and has resulted in an increase in Key person insurance being taken out by many large organisations. A ‘Key person’ can be an employees or contractors, one of your suppliers or external vendors or service providers, or could be you!
If you are the key person risk, we have a problem! This means, you cannot go on holidays without being tied to your phone or laptop, you cannot take leave to recover if unwell, and your business is at risk if you ever have an emergency and cannot be there. In other words, how can you possibly work ON your business if you are a key person working IN your business.
To mitigate this risk
Implement succession plans for every identified key person risk.
Ensure at least one other person has the necessary skills and knowledge to do any task, including setting up more than one person for key external relationships with suppliers, vendors, service providers, affiliates and critical customers.
Implement defined processes and Operating Procedures so anyone can step in and do a task per the procedures.
If something happens
- execute your success plans
- Recruit for the position immediately and ask your key person to remain until the new recruit arrives and ensure sufficient handover.
BONUS RISK – Leadership Direction
The likelihood of the risk happening:
- 49% of businesses fail due to a lack of managerial direction
- 7% of businesses fail because the leader loses focus and fails to pivot
This risk is so easy to mitigate – Go to Episode 4 – What is a Business Model and Why Do I Need One Anyway? Learn about how to create a simple one-page business model.
This busiess model is a critical business component to mitigate all nine risks. Specifically, it calls out your customers, your products and services, your suppliers and what they supply, and your processes.
Get your Business Model in 90 Minutes!!
If you have 90 minutes available, we can get this done! Contact me and lets arrange a zoom meeting – Go to quickwinsforbusiness.com/offer to snag yourself a special rate for my podcast listeners.
You will be so glad you have this foundational business element.
– OVER TO YOU –
Disaster-proofing your business is a critical success factor for the longevity of business success. In addition, it give you peace of mind!
To recap…
Mitigating risks in your business reduces stress, gives you confidence that everything is covered, and sets you up for future sustainability.
Implementing these strategies, enables you to work more ON your business instead of IN your business.
- Do regular backups of your systems and data and keep one off-site just in case
- Employ the right people and don’t be afraid to let them go if they are not a good fit
- Get good security on your systems and teach your team how to identify spam
- Plan your cashflow and have access to already approved loans just in case
- Regularly check in with your suppliers and have a back-up plan ready to go
- Create a business continuity plan for those weird and wonderful disruptions
- Do your research and ensure your products and services meet the market needs, are appropriately priced, and engage a marketing expert to execute effective marketing campaigns
- Speak to your customers to know what they want and pivot accordingly
- Identify your key person risks and put succession plans in place.
Finally, get your business model done to enable you to de-risk your business with ease!
A little note from Deb
I know this article is a little doom and gloom, but as you can see by the percentage of businesses experiencing these issues, putting these simple practices in place is an easy way to reduce your stress and protect your business.
I hope this Quick Win has given you loads of value because you are worth it! Please share this article or the Podcast Episodes with people you know and love.
Have a great day!!
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