As small business owners, we feel so vulnerable. It is a little like going into a football game and you are the only one without padding. You know how to play the game. You are pretty talented. But if you get hit, which is inevitable, it is going to hurt a lot at a minimum, and possibly break something.
When your business is small, you have vulnerability. We are at risk when:
- the market or economy dips
- we lose an employee
- we lose a major customer or client
- we have a large expensive equipment repair
- we personally get sick
Any and all of these things can happen and this is what makes entrepreneurship stressful and volatile.
There are risks, but we can do a lot to mitigate the risks and the impacts these types of occurrences have. The key to not only protection, but thriving, is to step out of the day to day consistently to look at the big picture and plan for contingencies.
7 Ways to Storm Proof Your Business
Here are the types of plans and actions that would improve our outcomes in these situations.
1. Always work towards client/customer diversification. When a small business gets a really large client they tend to absorb all of us and our resources quickly. Because they are lucrative, many small businesses just focus on the work at hand and do not continue to scale to continue to diversify. This is understandable but creates the risk of having all of your eggs in one basket. We must step back and develop plans to diversify to stay healthy as a small business.
2. Save at least 6 months of operating expenses. I know this is hard because you are living out of the profits when you start. However, just like the principles of personal savings, you just need to start a few dollars at a time. Trust me when I say that having some backup capital for operations will be the single biggest stress reducer you can find.
3. Plan your organization 5 years in advance including internal team and outsourced backup. If we plan out where our business is going and what types of positions we will need, each hire will be someone who can grow with you long-term. Making good long-term hires helps with turnover, but it isn’t fool proof. Therefore, it is just as important to find outsourced vendors as back up in case of an unplanned hole.
4. Store wealth in good years to make it through bad years. We have to take a page out of Joseph’s book. He read the Pharoah’s dream and knew there would be 7 years of feast before the 7 years of famine. We know it too. We don’t know the exact years, but we know that every year is not always “feast.” So it only makes sense to plan ahead and store up for future bad years. However, we must be careful not to confuse this with storing riches in a selfish, worldly way.
5. Don’t skimp on resources. When you have limited resources it is human nature to look for the deal or the cheap solution. I have done it many times in my business. In most cases, there is never really a deal. Either what I purchase doesn’t last or sometimes it doesn’t work well to begin with. The same goes for people on your team. It is better to have a high quality perfect match for fewer hours than a poor match who is underpaid full time.
6. No roller coaster marketing – consistently be building your pipeline. Similar to #1 above, we tend to do the same thing with our marketing. We do marketing and sales until we get work. Then we focus on the work until it is done. If we haven’t stayed consistent with our marketing and sales efforts, when we are done, we have no work waiting in the wings. We are dry. Then we hurry up and start marketing again to get work. When we stay in this pattern, we are never able to really grow our business. If the economy dries up at the same time, we are in trouble.
7. Multiple streams of income. It is important to have a diverse enough line-up of products and services to focus on. If one area dips because of the economy or the loss of a valuable resource, you have other areas that can still thrive. It is also an excellent strategy to create some passive income streams if possible that will continue to produce without your direct efforts, so that in bad years, you have some base income, and can work on plans to find business in new places.
Trusting God in the Storm
Ultimately, we can’t control everything. No one can. God is the one in control. We can be prudent and good stewards and improve the long term health of our business. This will help to pad us and protect us from the everyday tackles of the world.
We need to do our part.
We need to trust in God for the rest.
It is better to lean into our faith and weather the storms than to react in fear. If we have done what is prudent and proactive, and difficult times come, bring them to the Lord first. Pray and listen. Trying to take control in our own strength when difficulty arises can result in actions that work against all that we have done to prepare in advance.
Look to the Lord for wisdom and discernment and trust in the leading of His Holy Spirit.
Have you built a protective padding around your small business? If not, which of these ideas would you start with? Let us know in the comments so we can support you in praying for your business.