A business’s success often rests on one key step: preparedness. A healthy business should have a plan in place for worst-case scenarios. From economic turmoil to natural disasters to fraud, a backup plan — and better yet, a diversified backup plan — is the key to successfully navigating an emergency.

So, what can you do to ensure your business can withstand hardship?

Build your backstop

You’ve heard the term, “It takes a village to raise a child.” Well, this applies to your business as well. It’s important to build a team you can trust, and in my years of working with business owners on preparation plans, that should always include an accountant, a lawyer and a banker. With those three strong positions in place, you can make informed decisions.

Relationships are key. You should be able to pick up the phone and reach someone when you need to, especially in a crisis. Do your research and surround yourself with a reliable, responsive team.

The goal is to have seasoned professionals who know the ins and outs of your business, have experience in helping businesses through unexpected challenges and can advise you with your unique needs in mind.

Develop cash reserves; diversify accounts

Similar to setting up a personal emergency fund, I recommend that businesses have a reserve account to sustain themselves in the event of a crisis. Often obtained through a line of credit or access to capital, this gives you time to get control over a potential situation and plan strategically, rather than making reactive decisions that often serve as temporary fixes. You don’t want to wait to apply for a loan until you desperately need it. Plan, don’t panic.

I tell all my clients to do a stress test. How long can your business last without bringing in income? Are all your vendors in the same area? Do you have a backup? As we witnessed with the recent storms in Northwest Indiana, it can be crucial to have backup material and supply vendors in the event of a local emergency. What happens if everyone in the area is down for days? You should have a system that allows for direct access to cash.

Communicate

With your customers, with your banker, with your vendors — communication is so important. The recent pandemic really shed light on both the importance of preparedness and communication. Businesses that figured out how to effectively communicate with their teams and customers who likely could not physically be together were often the ones who made it through the tough times.

Invest in insurance and cybersecurity

Thieves rely on emergency situations, which create the perfect storm for them to strike — infiltrating systems and preying on vulnerabilities. I strongly encourage all of my clients to set up solutions such as Positive Pay, ACH Payment Blocks and Zero Balance Accounts.

Surviving a cyberattack comes down to prevention and defense — how are you able to handle a situation if you unfortunately become a target?
Carefully review insurance information and make sure you’re covered for what pertains to your specific needs. Better yet, look for an insurance adviser who specializes in your industry so they can help you decide which little add-ons are worth it.

Cultivate trust

Ultimately, being prepared comes down to diversification. It’s not just one thing that will ensure you’re covered — it’s having all the right pieces in place and working with people you can trust.