5 Unexpected Disasters That Can Bring a Small Business to It’s Knees

By Jessica Kane

Regardless of how much planning you have done at the start, many small business owners fail to consider what will happen if things don’t go according to plan. Unexpected emergencies are one of the leading reasons small businesses fail. The ones that survive in spite of financial setbacks are usually the ones who put strategies in place ahead of time in case of disaster.

Here are five unexpected emergencies that many small businesses face, along with strategies to get out ahead of them before they occur.

1. Mother Nature’s Wrath

One of the most common emergencies faced by small business owners is a natural disaster. It can come in the form of a hurricane, tornado, flood or fire. But less obvious natural disasters occur every day. Hot weather keeps customers indoors for weeks at a time. A week of rain leads to leaks, a flooded basement and lower than expected revenue. An early cold snap bursts a pipe.

The first protection against natural disaster is to carry the right insurance. But equally important is to make sure that you thoroughly understand your local environmental risks. Seasonal business owners should have cash reserves in case of an unexpectedly short season. Businesses that rely on walk-ins should research alternate revenue streams for times of inclement weather. Whatever preparation you do before Mother Nature strikes will pay off more than what you do after the fact.

2. Techno-Fail

Almost every small business relies on digital technology to some extent. It’s indispensable, but it can turn against a business in a flash. Some businesses experience data breaches that cause customers to lose faith. Some simply have the wrong technology, or inadequate technology to handle demand. Countless online businesses have failed because they didn’t invest in a proper website that could handle heavy traffic.

Invest up front in proper web design and online security. The costs of having your website knocked down from a traffic overload the day your business launches can be deadly. If customers can’t find you on the web they will assume you’re nonexistent. Prepare for success. And rest assured that taking steps to secure your customers’ data is far less expensive than losing their loyalty after your system gets hacked.

3. Too Much Success

Having an overabundance of demand for your product or service sounds like a good problem to have. But for many small businesses, too much success can lead to financial ruin. One of the most complicated aspects of running a small business is anticipating demand. Imagine a clothing company that makes customers wait several months to receive the product they ordered online. Imagine a video streaming company without the bandwidth to accommodate a rush of pay-per-view subscribers. Imagine an ice cream truck that failed to stock up for a heat wave. The customers of those businesses have other options, as those businesses will quickly find out.

The way to prepare for too much success is to do your homework ahead of time. Research your customer base. Contemplate all possible scenarios that could affect demand for your product or service. Do the math, and then do the math again, and again. Never stop analyzing your customers needs and wants and the trends that may cause those needs and wants to adjust.

4. Massive Equipment Failure

Equipment fails every day. If a single cooler in a big box grocery outlet fails, those products can easily be transferred to another cooler until that one is repaired. If a whole bank of coolers at a corner bodega fails because of a power surge, it could cause tens of thousands of dollars in product losses, as well as disappoint a lot of customers, and could lead to a financial emergency.

Businesses relies on equipment to keep running. Landscapers and builders have tools, restaurants have stoves and refrigerators, and gyms have weights, treadmills and mats. No matter how unlikely the scenario seems, every small business owner needs to contemplate ahead of time what the backup plan is going to be in case some or all of their equipment suddenly, catastrophically fails.

5. The Long Arm of the Law

A customer trips on a wet floor. A delivery driver’s brakes go out. It could be almost anything. It’s normal in our culture for people to sue anybody for anything at any time. As with a natural disaster, many small business owners assume that as long as they carry insurance they have nothing to worry about when it comes to lawsuits. But no one can possibly imagine what the outcome of a legal battle will be.

In addition to being properly insured, small business owners need to make sure they’re properly licensed and bonded. They need to be savvy, careful and shrewd. And most importantly they should have a legal protection fund set aside in case a situation arises when their business needs more defense than their insurance provides.

Subscribe to the Small Business Bonfire Newsletter
And get your free one-page marketing plan template.
Jessica Kane
Jessica Kane is a professional blogger who focuses on personal finance and other money matters. She currently writes for Checkworks.com, a leading supplier of personal and business checks.
  1. Nice article with information that I’m sure small businesses tend to overlook. FYI…You might want to check your title… “it’s” doesn’t need the apostrophe.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.