Starting a business is like jumping off a cliff. Some enjoy the thrill; others face the fear and just do it. However, if that fear becomes too much it can stop the growth or destroy a business owner. As Henry Ford stated “Whether you think you can, or you think you can’t–you’re right.” If you think you will fail – you most likely will.
Business activity is rarely constant. There is either too much or too little. This could be cash, customers, time, space, etc. Here’s some ideas of what I have done or considered in the past to tackle the fears in business.
Losing a key employee – Remember a business is it’s own entity, made of people, processes and things. Every business is bound to lose a key person. Have systems documented and in place to train the new person. Cross train so that others can step in temporarily. Change your mindset from fear to opportunity. For key management positions consider key man insurance to give you time to find a replacement.
Disasters – The odds of coming back from a disaster are not good, only 60% come back and 29% are still open after 2 years. Have an emergency plan – identify a place to meet, have backup information such as contact information for employees, customers, access to customer receivables, etc. Review your insurance policy to see what coverage you have. Consider ways in which you can beat the odds – such as two locations that face different challenges, a backup generator, extra equipment, etc. Again, insurance can help provide cash resources to rebuild.
Loss of a Key customer – Be aware if one customer produces a significant portion of your sales and profit. If something happens to that customer, it will have an impact on your business. If a single source creates more than 10% of your sales this is called economic dependency. Strengthen customer relationships so that if an error occurs the business will have time to make amends and retain the business. Have cash reserves to have time to regroup, replace the sales or cut your costs.
Bank financing – Being dependent on bank financing allows the bank to have a say in your business. They can pull your loans and force the business to sell. Remember the bank is looking out for the bank not for your business. Focus on becoming financially sound with low debt ratios or internally financing your own working capital for seasonal needs and business growth.
Business owner’s sickness or death – Have an emergency plan to protect the value. Decide who will make decisions and who will manage the business. If it is to be sold, provide options on who to contact to sell. Depending on the size – time is of essence. The longer you wait to take action the faster the value of the business falls.
The most common fear – an uncertain future – Every business faces an uncertain future. There are no guarantees. I think of Enron and Arthur Anderson. One forced a future, the second thought it was not susceptible to fall. Have faith in your team and a support group.
Steps you can take to reduce your fear –
- Have a good relationship with a quality business insurance agent,
- Have an emergency business plan
- Create, develop and maintain a support team
Life without fear can be pretty boring. It creates a sense of adventure. How’s your adventure going?
By Mary Guldan-Lindstrom