There was a good response from my post of last week, titled: The Perils of the Personal Guarantee. Thank you to my readers.
As someone who grew up in a family that owned a small business, I developed a short list of significant 'perils' that can undo the best plans and how to protect your small business from being disrupted.
A. Downturn in economy
The fix - Anticipate. Read articles that discuss economic growth potential in your area, or the lack of it. Develop a game plan to respond. Stay in touch with local lenders and develop strong banking relationships.
B. Unexpected perils that require quick response and change of structure
The fix - Stay aware of changes to the economy in general and locally. Read the local and national news and if your business depends upon things engineered outside the U.S., read the international news headlines also. During COVID many small restaurants developed their take-out trade to survive. Those restaurants who did not, found it difficult to retain and pay staff, and many eventually closed their doors.
C. Expensive litigation
The fix - Avoidance of legal problems is the key. Have contracts reviewed by a professional. Know the weak points in your industry, for example, if you own a dry cleaning store, what is the likelihood that you will be sued for damaging an expensive garment? Make sure your insurance is in place and that the insurance covers what you think it does. Remember, in contracts, if it seems to be too good to be true, then there is a reason. Get things in writing. A handshake and a promise will not protect your legal interests.
D. Changes in tax laws and legislation
The fix - Consult annually with a professional who tracks tax law issues and find out which laws could impact the methods of your business transactions. Ask them to contact you with anything of interest the develops that could affect your business.
E. Changes in environmental rulings
The fix - Awareness is the key again. Join organizations in your area that keep their pulse on issues that affect businesses like yours.
F. Changes in worker availability, or rulings that affect the cost of labor.
The fix - know what is happening in your area. If you own a small business, what would be the impact of a major chain relocating into your area and hiring qualified workers. Develop a plan. What can you offer that a big chain cannot, e.g. more flexible hours.
Stay a step ahead:::
* Meet with your local business groups. Even if they are in a different industry, as a small business, they are facing similar problems.
* Join organizations specific to your industry.
* Subscribe to periodicals that are specific to your business.
* Develop an online presence and a website. Monitor the site to learn what people are saying about your company. Read the websites of other companies and their reviews. Talk to your customers whenever you can to find out what you can improve or what service they would like to see added to your business.
* Attend online webinars - Online business webinars are often free. You could receive pertinent information about your business just by spending an hour online.
* Websites like the SBA (Small business Administration) have a wealth of information available for free at - sba.gov
The bottom line:
Small businesses face most of the same issues of major corporations and compete with large corporations for resources.
A small business does not have a large legal team or compliance officers to protect their interests.
It falls upon the small business owner to stay aware of perils and be prepared to respond.
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