Once you’ve put your plan together, make sure your managers and staff are familiar with it and they understand what their roles will be.
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.
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.
Good business management means planning for when things go wrong, as well as when things go right.
Disasters and serious incidents such as flooding, fire, or the death of a key employee are relatively rare, but they do happen.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?Not all your business’s resources are crucial to its operation.Although they may be few and far between in the early days, what resources you can operate without if it means the difference between keeping your doors open and folding?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.Follow this process to create a financial plan you can rely on.Importantly, each of these steps is simple and completely doable. The whole process should take no more than an hour of your time.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.