What happens to your entrepreneurial endeavours when unexpected disasters or major events hit you? These are seldom expected, arrive when you can least afford them, and create an overwhelming level of stress.
Most solo entrepreneurs or small businesses sink all of their resources into their ventures. Time, energy, capital and cashflow is more often than not reinvested into the business. When you are building or growing your business, it is not unusual to live from sale to sale, surviving on limited revenue, credit cards, and the goodwill of their creditors.
So when unexpected disasters or major events hit small businesses that are barely treading water, they often don’t survive. This devastating outcome can be avoided by following these three entrepreneurship tips:
- Build up an Emergency Cash Reserve
Even if (actually, especially if) your cashflow is tight, it is important to put a percentage of all revenue received into an emergency savings account. Start with 10% deposited to a savings account that is difficult to access. Then operate your business (including paying taxes) off the remaining 90%. Build up your emergency reserve to cover a minimum of three month’s expenses.
- Plan Your Emergency Strategy
Natural Disasters and Major Events will happen through your journey. The question is never IF – it is only WHEN. So, build an Emergency Strategy Plan into your business planning. Try to cover as many scenarios as you can think of, including natural disasters, human generated events or threats, and technology failure or other circumstances beyond your control. Once you have a list, develop out your strategy to remain operational or get back in business as soon as you can in the event of one of them happening.
- Make Sure You Are Adequately Insured
Having an insurance policy can feel like you are gambling on the roulette table at the Casino. You keep handing money over to your insurer, and most of the time you never need to make a claim. But when an emergency happens, you’ll be more than grateful you have an insurance policy! Work with a good insurance broker to arrange essential cover for your business.
My Unexpected Disasters Experience
I’ve been pursuing my entrepreneurship dream since 2003. All was looking promising in 2010, and then a 7.1 Magnitude earthquake struck close to my city in New Zealand. I didn’t have any disaster strategy in place, but somehow managed to get through this. However, when a 6.3 magnitude earthquake destroyed my city, Christchurch, in February 2011. I have been rebuilding this dream over the past six years. Then, five days ago (November 14, 2016), a 7.8 magnitude earthquake struck the South Island of New Zealand again – this time 100 kms north of Christchurch.
Three destructive earthquakes in just over six years has proven to be challenging, and resulted in a slight detour in the form of publishing books on the Christchurch Earthquakes.These three entrepreneurship tips are just a brief introduction to the many lessons I’ve learned along the way. Many more are shared on this website and through my books.