The recent COVID-19 outbreak took many of us by surprise. Just think, a year ago could you have predicted the impact on your business?
I know I couldn’t. And to be honest, I don’t want to be caught off guard again. If you feel the same way, here are 10 ways you can try to future-proof your business. Taking these steps can help you to be prepared if there’s a recession, natural disaster, accident, or even a lawsuit.
If you’re a sole proprietor, you and your business are still considered “one.” This means that your personal assets, like your car and home, can likely be used to pay off business debts. Depending on what you do, this can be a risky way to operate.
If you’re concerned about financial trouble in the future, you may want to incorporate your business. Sure, there’s paperwork, and you’ll have to complete another tax return, but the benefits can be great. For example, when you own an incorporated business, a person can sue your business—but typically cannot threaten your personal assets. That’s because they’re usually considered legally separated.
You can also likely qualify for new tax deductions, like the federal small business tax deduction. It’s best to talk to an accountant or lawyer about the benefits and drawbacks of incorporating your business, so you can determine if it’s the right move for you.
Want to truly protect your business? Then it's worth your while to get business insurance.
Depending on the policy you buy, it can help protect you in the event of an accident, injury, property damage, and more.
General liability insurance (GL) can help cover the costs if a customer or vendor gets injured at your business, or if you accidentally damage a customer’s property while doing work for them. For example, if you’re working on a customer’s siding on their home and you accidentally damage trim on a window, your policy could pay to replace the trim.
Meanwhile, professional liability insurance is especially helpful for businesses who sell services. It can help cover you if a client accuses you or one of your employees of negligence while providing your services.
Even if you didn’t do anything wrong, you may have to pay an attorney to defend you—and that’s where you may want coverage to help pay for those legal expenses.
Lawsuits and property damage can be just as devastating to a small business as a disaster or a pandemic. That's why we recommend getting business insurance - it can help give you better peace of mind, as well as protect your business from the unexpected!
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Whether you’re threatened with a lawsuit or need financial assistance during a national crisis, keeping accurate records can help. If you can reference the right paperwork, you can more easily access resources and support.
To help get organized:
Use labeled file folders and binders. Print still exists, and it’s especially helpful if your computer crashes. Try to keep print copies of your most important documents neatly organized.
Back up media files. Most of your documents are probably on your computer. Make sure to organize them in a logical way using file folders. Then back them up! This second step is critical, especially if your computer crashes or gets damaged.
Hire a trusted bookkeeper. If you don’t trust yourself to stay organized, consider hiring help. A good bookkeeper is an invaluable resource and a great investment.
It’s smart to prepare for unexpected financial loss by cutting expenses. In other words, run lean! First, make a list of all of your expenses. Then examine what you really need—and what you may not.
Here are some areas where you may be able to reduce costs, depending on your business:
Depending on what you do, there could be more ways to save too. Just ask yourself if it’s a “need” or “nice-to-have.”
If you have business debt, now’s the time to get rid of it. Debt feels heavy, and it can also hurt you if there’s an unexpected event or disaster.
To help pay off debt fast:
Working with a financial advisor can help too. Sometimes, it takes professional guidance to help formulate a plan.
If you’re trying to future-proof your business, hone in on what you do best. I’m talking about your core product or service. For example, if you’re a cosmetologist, your core offering may be bridal makeup. If you’re a financial advisor, maybe it’s helping families reach retirement.
Chances are, you already know your main product or service. Once you have it in mind, think about how you can improve upon it and better serve customers.
Remember, it’s okay to offer multiple services, but you want to ensure your main offering is outstanding first.
During a recession, many companies make the mistake of cutting back on their marketing budgets. Unfortunately, this often hurts them in the long run. Marketing and advertising are key ways to keep your business in front of the public during uncertain times.
Instead of cutting your marketing budget altogether, just spend it wisely. Learn what your customers need, develop a message that resonates, and use mediums that reach them (social media, Google, TV, radio, etc.). Then measure your communication. If you learn that it doesn’t pull in customers in a measurable way, you can readjust.
Before an unexpected event or disaster, you want to be known for excellent customer service. Word of mouth marketing is incredibly powerful, especially in today’s world. Most people scan online reviews for local businesses before they make a purchase.
To help improve your customer service:
Outstanding customer service can help you retain your current customers and draw in new business. It’s an invaluable tool, so you’ll want to consider making it a high priority.
The more money your business earns, the better prepared you may be; it's as simple as that. Additional revenue can help you pay off debt and build an emergency savings fund. If it’s possible, think of ways to increase your revenue from multiple streams.
Here are some ideas:
Your strategy ultimately depends on your industry. Take time to brainstorm new ways to increase revenue. Get creative and remember, when you’re brainstorming, no idea is necessarily a bad one.
Doing the right thing is one of the best ways to protect your business. Acting with integrity helps prevent lawsuits and boosts customer service. When you hire employees, treat them with respect and kindness. Pay them fairly and help them grow in their own careers. When you serve your customers, remember that their needs are your top priority.
The bottom line—having an excellent reputation is one of the best ways to protect your business if and when an unexpected incident arises.
Legal disclosure: Simply Business, Inc. is not a law firm and does not provide legal advice. This article is intended to be used for informational purposes only and is not a substitute for obtaining professional legal advice.
I love writing about the small business experience because I happen to be a small business owner - I've had a freelance copywriting business for over 10 years. In addition to that, I also head up the content strategy here at Simply Business. Reach out if you have a great idea for an article or just want to say hi!