Planning in turbulent times
The past years have been a reminder that businesses must be prepared for whatever events arise and whatever business conditions follow. That requires disciplined thinking about what could happen, what to do if it does, and how to prepare—and puts a high value on a small business’s ability to anticipate issues and react to them.
Some issues are easier to anticipate, prepare for, and actively track. Inflation is one such issue. Seventy-six percent of businesses are somewhat/very concerned about inflation and its effects.
Ninety percent of businesses have already taken some pricing actions to deal with inflation, like changing purchasing decisions, reevaluating pricing versus the competition, or passing along pricing increases. At the top of the list is accepting lower profitability, which could constrain growth investments or reduce the funds available. Small businesses that add now to cash reserves or adjust spending to anticipate a profitability reduction will reduce the risk that continued inflation can bring.
There are other common issues that small businesses rarely see coming. A key component of having a resilient business is being prepared for the loss of a supplier, employee, or customer and being ready for an economic downturn. Almost 60% of businesses say they’re somewhat/extremely prepared for these events. Simple preparations like having multiple suppliers, cross-training employees and documenting their jobs, and diversifying the customer base can go a long way toward softening the impact.
The hardest to prepare for are the events aren’t visible and the horizon and are unimaginable, like natural disasters—only 51% of small businesses say they’re somewhat/extremely prepared for them. The right insurance coverage is important, as is access to financial resources to provide the flexibility needed to get a business back on its feet. Cash reserves, business credit cards, or business lines of credit can provide the financial resources a small business might need.