Equally, there may be less essential members of staff you could let go if the business was struggling financially.
Remember, it will almost certainly be easier to think through your bottom-line essentials now, rather than in the heat of a crisis.
If you’re pre-launch or have only recently gone to market, a contingency plan is likely to be the last thing on your mind; after all, your efforts are focused on making your business a success, and not necessarily thinking about what could go wrong.
But unexpected situations can interrupt the launch of a business and disrupt normal operations.
For that reason, it makes sense to explore the capital markets first and then adjust your strategic plan accordingly based on the money that’s likely to be available.
Make sure you’re comparing your cash flow projections with actuals on a regular basis so that you can head off a crisis before it has a chance to grow into something that threatens the existence of your business.Suffering any sort of disaster that stops the normal function of the business can be a huge problem for a company.But this is compounded for small businesses that may be working on exceptionally tight budgets and schedules. Any and all of these things can be catastrophic for a business, and only you will know which risks are most likely to happen to you.Without a financial contingency plan in place, these unforeseen events can be harmful to the health of the business, potentially leading to insolvency before a startup is even off the ground.Working for a firm of turnaround practitioners, I provide expertise in terms of business recovery, cash flow and financing.Putting a simple financial contingency plan in place can give businesses in this situation the lifeline they need. For example, they may generate a revenue but have falling profit margins, or have issues with chronic late payments due to the lack of an effective collections procedure.In the early stages of a business, there are often simply no resources to absorb any unexpected negative events.For example, do you own a business vehicle that is nice to have but is not critical to the business’s core activity?Or perhaps you own a brick and mortar location you could sell if the survival of your business depended on it?For example, what would happen if a key customer went elsewhere, or if an important team member left the business?With the right planning, as long as there’s demand for the products or services you offer, it is possible for a business to survive any kind of risk.