You work hard to build your business. You probably get in early and stay late. I’m guessing you also sacrifice at least some of your personal life for the greater good of the company.
If you work so hard, why would you risk everything you’ve done by not securing your business? In many cases, all it takes is one phone call or email—postponing that call or email is like playing Russian roulette with your company.
In my 20-plus years of working with business owners in companies of all sizes, I have seen the following four situations bring some very good and profitable companies to their knees. Don't think it can't happen to you—the following scenarios take place every single day. How prepared are you to deal with any of them? Let’s stress test your business. In specific detail, how would you respond to the following?
"We’ve Been Hacked"
It’s Monday morning and you arrive at your office to find out hackers have taken over your e-commerce website. They are threatening to completely shut it down unless you pay them $50,000. It’s your busiest time of year and suddenly your business has come to a complete halt. What do you do?
Here’s another scenario. Your company processes credit card information along with other important customer data. Someone hacks into your system and takes everything. How do you begin to address the situation? Are you PCI-compliant? How quickly can you alert your customers? Who do you need to call immediately?
According to Symantec’s 2013 Internet Security Threat Report, companies with fewer than 250 employees received 31 percent of all targeted cyber-attacks in 2012, up from 18 percent in 2011. The main reason for the increase: less sophisticated defenses in small businesses' networks and websites.
If either of the above scenarios could happen to your company, you need to run practice drills and “what if” cases so you're prepared to respond quickly and correctly when a hacker tries to take over your business. (Not sure where to start? Download this 7-page PDF on “Data Loss Prevention Deep Dive” by Roger Grimes, a recognized security expert.)
"We Didn’t Back Up Our Computers"
It has never been easier or less expensive to back up your critical information to the cloud. Depending on the number of computers and amount of information you need to back up, the cost could be as little as $50/year to save your critical information to a place outside of your physical workspace. In most cases, once you sign up for the service, backing up your data is automatic. Nothing could be simpler and less stressful. Unfortunately, I can give you dozens of examples where a business owner did not back up his or her most important information and lost everything. Floods, fires, stolen computers and hacking are just a few ways business owners lose all their presentations, proposals and contact information.
If you’re not backing up your data right now, stop reading this post and check out Dropbox, Google Drive, Carbonite or any of the other major companies offering to back up your data. Total setup should take less than five minutes and it will bring you a little peace of mind.
"We Just Lost Our Largest Client"
I’ve seen it happen a thousand times. One client represents 30 percent or more of a company’s total revenue. In some cases, I’ve seen it as high as 100 percent. One day, the client tells you that they are “going in another direction” or they’re “not supporting this project anymore.” How quickly can you replace the lost sales? Can you reduce expenses in the interim? I call these examples “2x4’s” because it feels like you just got hit in the back of the head with a 2x4 piece of wood. You never saw it coming.
Sometimes it’s not the largest client walking out the door; it’s the largest client shutting their doors. When a big corporation declares bankruptcy or goes out of business, they usually write off a considerable amount of bills owed to creditors—companies such as yours—who weren’t ready to say goodbye to tens of thousands of dollars owed in outstanding invoices. What do you tell your creditors? How will you pay your bills?
Set up a time to review your business. First, make sure you have excellent relationships with your largest customers. Second, diversify your portfolio of clients so no one company represents more than 20 to 25 percent of your total revenue. (That means it's time to focus on new business.) Third, review your accounts receivable and look for any red flags. Don’t extend too much credit, and work vigilantly to collect money owed to you. The goal is to limit your exposure.
"I Can No Longer Work"
It's a moment every business owner dreads, and hopes never happens. However, according to the National Safety Council’s 2012 report, a disabling injury occurred every second in the U.S. last year. If you are the main revenue generator for your company, what would happen to your business if you became disabled? Do you have sufficient disability insurance? It’s expensive, but are you willing to risk losing everything you have on the chance that you won’t ever need it? Do you have someone who can take over your business in the event you're out for a lengthy period of time?
Check with your current insurance company to see if it offers disability insurance and what it would cost you annually. Then ask two or three other companies in your industry for referrals to their disability insurance carriers. Compare the policies and don’t buy on price alone. Read the fine print.
You may not find all the answers today, but you need to work on getting them in the event disaster knocks on your door. It’s difficult to fully recover from any of these scenarios if you own a small business; it’s impossible if you don’t have a plan.
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