How to crisis proof your business | Small Business Accounting NZ

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How to crisis proof your business

If the last few years of Covid-19 disruptions and wild weather events have taught us anything, it’s that crises rarely come with a warning. For that reason, having a continuity plan is more important than ever, as we never know what is around the corner. We’re sharing some important tips for keeping your business in action during a crisis, so you can be best prepared for the unpredictable.

Identify your weak spots

Take a look at your business and identify your vulnerable areas, and where you could make improvements to strengthen your business against external factors, such as economic downturn.

Consider the worst-case scenario for your business, and make a plan for how you would navigate that. For example, you might have a solid customer base of loyal, long-term clients, but lack a pipeline of new clients. If any of your existing clients suddenly have to shut their doors, you may find yourself stuck with a dwindling cash flow and no prospective clients, which presents a major problem in an economic downturn.

Review your budget

Your chances of weathering a crisis ride heavily on your financial resilience. Even when business is booming, you need to be familiar with your business’s income and outgoings and know what you can cut from the budget if a crisis were to strike, so that you can keep your business afloat. Consider building an emergency fund into your budget so you can have confidence that you will have enough cash to keep the doors open if the unexpected were to happen.

Have a crisis management plan in place

We know that crises come in all shapes and sizes, and the safety of yourself and your staff during a crisis is of the utmost importance.

Create an action plan that details the expectations of everyone in your team when a crisis strikes, to ensure everyone is safe, whether it be a natural disaster, humanitarian crisis or accident. Ensure you have a stock of the bare essentials you and your team will need access to in the event of a crisis, for example, food and first aid supplies. Learn more about what you should include in your crisis management plan here.

Enable your business for remote working

As we have learnt from the Covid-19 pandemic, there may come a time when you have to close your doors as a business owner, whether by law or for safety reasons.

If you’re able to, having a plan in place to set yourself and your employees up for remote working is highly beneficial, as you’ll be able to continue running the business from afar. If you can operate remotely, ensure any tools you’ll need to do so are kept up-to-date so you can quickly pivot to operating online if needed. This might mean tidying up a neglected website or employing digital tools to help your staff perform their role remotely.

Have a backup source of cash

While we would recommend having an emergency fund for this purpose, it might pay to explore your options for securing extra cash in a crisis. This could mean speaking to your financial advisor or bank about what emergency loans might be available to you if your business is in jeopardy during a crisis.

Although there is no way to know what’s coming around the corner, your ability as a business to adapt is what will aid your continuity. The best way to ensure your business will be adaptable and resilient during a crisis is by having a plan in place for the worst-case scenario.

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