Monday, September 9, 2013

Could Your Business Handle a Disaster or Another Economic Downturn?

In the past few years, several large corporations--mostly banks--have been called "too big to fail." This is the type of security that small business owners often wish they could have for their own operations, for their own peace of mind. But the tumultuous economy keeps slinging different statistics into the fold, reporting one month that everything is going swimmingly and then, in the following month, that everyone is in danger of drowning. Mix in the precarious nature of the planet and you have a recipe that could leave many owners without the ownership they once treasured.

So, we know this: The American status quo is uncertainty. With conflicting data and vague standards, economists and organizations are struggling to agree on the current economic state of the country. As scary as that might be, it gives some businesses the chance to thrive and others the chance to close their doors--not all owners can manage well under the chaotic reign of unpredictability.  (And obviously a blizzard can be a windfall for a snow removal business while being a mini disaster for a shipping company.) The anxiety caused by this may force an owner to shut down before becoming a victim of uncontrollable factors. But it is when owners are caught by the unknowable variables of the volatile world--be they related to money, weather, whatever--that their own determination and resilience can shine through.

Serious infographic on businesses
and disasters. | Courtesy of et al.
Let's say that a tornado hits your business. Or a flood. Or a drunk driver crashing through your storefront. Or an(other) economic downturn. In case you don't get the picture, there are a lot of independent elements in the world that can inflict damage upon your business. In order to counteract the consequences of such occurrences, small business owners should prepare. Euphemistic individuals often call these "rainy day" funds, but in reality, they are disaster prevention/reaction funds.

According to the U.S. Small Business Administration, an estimated 25 percent of businesses that have been struck by a natural disaster will fail due to the ramifications of such an event. This likelihood is too risky to leave to chance. In response, intelligent owners create a plan and tuck away money, providing hopeful longevity for the business. But what about economic issues? A recent report from payroll services provider ADP indicated that, in August, businesses with less than 50 employees added the least amount of jobs since May. But 71,000 jobs were still created; reports suggest that many of them were part-time positions. Meanwhile, a survey of members belonging to the National Federation of Independent Business indicated that hiring trends for small businesses declined for the fourth month in a row. Before you get worried, remember that uncertainty I mentioned earlier? Polling performed for the CBIZ Small Business Employment Index indicated that hiring trends for small businesses rose 1.23 percent, the first increase since May. Be sure to note that this index asks approximately 3,500 companies, each with less than 300 workers, about individual hiring trends.

With so much conflicting data, what is an owner to do? If you are holding the reins of a business, you should do your best to be ready for the worst while maintaining a positive attitude. If you get caught up in paranoid preparation, you may find yourself becoming resentful toward the world--this could get in the way of running a quality business. It's impossible to be ready for everything, so do your best with what you have to ensure that your business is protected to the best of your ability.

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