Every business undergoes times of stress and anxiety. Risk is always a factor not only due to the standard competitive risks but also because of the business cycle and overall economy. Whatever kind of firm you are in, your business will be threatened at some point and there are important steps to take to prevent loss.
Purchase Insurance
Your company can purchase insurance both in the literal sense and in the figurative sense. Purchasing insurance for your plant, property and equipment is basic for any company. If a building goes down in flames or a vehicle crashes, insurance can help get the company up and running quickly.
For less tangible cases, buying insurance may mean buying or partnering with a competitor to eliminate a threat. For example, Google noticed that many internet users were searching for online videos on YouTube, rather than through their own search engine. Rather than compete with the company, Google spent over a billion dollars for a company with little revenue and no profit in order to neutralize that threat.
Create a Plan B
Companies that want to protect assets always have a Plan B if something goes wrong. Retailers almost always invest heavily into product lines. But if something doesn’t sell, they know where to go to liquidate their items and recover some of their costs. At worst, a retailer may have the strategy of light inventory until they can determine the hot items of the season.
Create Multiple Business Lines
Business that have multiple business lines are more likely to survive the ups and downs of the business cycle. Most car companies stratify their offerings with luxury, mid-priced and economy options. In times of plenty when the economy is good, luxury cars sell better. During slower times, economy cars sell better. In either case, the business stays afloat (as long as legacy costs do not balloon too large).
Pay Attention to Contracts
Contracts act as one of the most essential elements of building and doing business in modern society. Because of the exceptional power they hold over the activities of the parties they bind, every contract should be approached carefully and with the aid of a professional. It’s especially important to have an attorney review any contract your business enters into before you sign it. They can make sure no contract you enter into has a provision which is against public policy, which a specialist from the Silver Law Group says is considered unenforceable. Your business will be far more vulnerable and prone to threats if you fail to pay attention to the importance of contracts.
Build a Rainy Day Fund
Every business should create a so-called rainy day fund of cash, bonds or liquid assets that can be tapped in crisis. While businesses constantly needs to invest in new products, employees and other resources, a rainy day fund can be the difference between life and death. Astute managers put these funds aside to protect their assets.
Conclusion
Overall, there are several techniques to apply when your business is threatened. The above list represents some important strategies. Without a strategy, business can be threatened and be forced in to bankruptcy.
