Being a small business owner comes with all sorts of surprises. Here is how to prepare yourself for unexpected events and random costs that arise.
What can go wrong will go wrong.
Some guy named Murphy said that, once. And, you want to know the truth?
Your business will single-handedly prove Murphy’s Law time and time again. Unexpected events will happen, and they might feel like the end of the world.
The best thing you can do is expect the unexpected.
Which… isn’t bad advice, but that’s not why you’re here. Keep reading to learn about six steps you can take to prepare your business for (almost) anything.
Bring it on, Murphy!
1. Invest in Business Insurance
As with medical or auto insurance, business insurance is in place to protect you. And, like other types of insurance, it’s not easy to understand. But that doesn’t make it any less important.
When something bad happens, insurance’s job is to keep your business from going under. It may also reduce your liability in the case of an accident.
75% of businesses are underinsured, and 40% of small businesses aren’t insured at all. You don’t want to be a number in a statistic like that.
There are several types of insurance policies built to protect your business. Different providers have different requirements and out-of-pocket expenses.
There’s too much to cover in detail here. So, click to find out more about them.
2. Planning for the Future is Your Friend
It’s easy to get lost in how your business is doing right this second. Now, I’m not saying that’s not important. But preparing for unexpected events means planning for the future.
A solid business plan will make sure you stay aligned with your goals as you grow into a thriving business. Plus, you can use it to predict future performance and foresee roadblocks you may come across.
You can prepare for the spring lull. Back to school season won’t leave you with no inventory. Or, you can manufacture in bulk to prepare for ski weather.
Plus, if you need funding for any reason, investors want to see your revenue generation plan. So, not having one isn’t an option.
Lastly, you should also invest time in developing a disaster recovery plan. Why? Because 90% of businesses without one fail after a disaster.
3. Diversify Your Business Income
Imagine you own a retail store.
A big storm comes and wipes out your brick-and-mortar shop. Proper insurance will help you rebuild and restock your inventory. But, what happens in the meantime?
If you don’t have other methods of generating income, you’re not going to make money. A smart retail shop might invest in:
- Building an eCommerce store
- Creating digital products or services
- Starting a blog and using affiliate marketing
- All of the above
This is an extreme example, but not an impossible one.
Diversifying your income means losing one revenue stream won’t destroy your business.
4. Research Necessary Software and Product Prices
Knowing what you need will reduce the number of surprises. Research prices before you buy so you know what to expect when it’s go time.
Typical unexpected business expenses include:
- Website hosting
- Packaging and shipping
- Automation software
- Inventory and storage
- Permits and licenses
- Processing fees
- Taxes, insurance, and interest rates
Set a realistic budget based on research and stick to it.
You can be as prepared as you like. But, unexpected costs and events will happen. Set aside a reasonable emergency fund to help cover those costs as they come.
5. Let Go of “Nice to Have” Equipment and Tech
Lower operating costs by letting go of the equipment and software you don’t really need. Put the money you save in your emergency fund.
Once a month, look at the services you pay for and decide if they’re worth the continuous investment. It might surprise you how many of them you forgot about or don’t use at all.
But make sure you aren’t cutting things you need. You don’t have to revert to the beginning of the Industrial Revolution to save a few dollars. In fact, that will make things worse.
This mindset works the other way, too. You could save money by investing in products and tools designed to help your business.
You might pay $200 a month for a service. But, if it quadruples your revenue and cuts your hours in half, it very well may be worth the investment.
Plus, many companies offer free trials.
So, try out that cutting-edge software and reevaluate when the trial’s over.
6. Cut the Number of Unexpected Events
Unexpected events are inevitable. But you can mitigate your risk by doing things like:
- Buying business insurance
- Developing a rock-solid business plan
- Researching common startup expenses
- Diversifying your income
At the end of the day, you have to face the music. You’re never going to eliminate them all. But you can reduce the frequency at which they occur.
Proper preparation can be the difference between unexpected crises and roadblocks you know how to maneuver.
If you have a plan for something, it’s no longer an unexpected event, right? You know it’s coming, but you may not know when. And that’s what owning a business is about.
Learn to Embrace the Chaos
You aren’t promised success.
You may end up working 80+ hours a week in the beginning.
Failing isn’t inevitable.
Catastrophe will happen.
But there’s a driving force behind why you started your business. Whatever your reason, it outweighs the fear of failure. And that’s something to be proud of!
The best business owners learn how to feel at home amidst the chaos. They know that every challenge is an opportunity for growth and development.
The Triumph of Overcoming Murphy’s Law
Murphy’s Law is inevitable, but that doesn’t mean it should win.
Planning for unexpected events is a vital part of being a strategic business owner. Being comfortable during times of chaos is one of many things that separates the good from the great.
Looking for more tips and tricks for running your business? Be sure to check out the “business” section of this blog for more.
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