How to protect your business from the unexpected

- May 25, 2024 2 MIN READ
Business man pushing large boulder up a hill

The latest statistics on Australian small business survival are pretty grim.  Recent ASIC findings show 82 per cent of insolvent companies in the last 12 months had less than 20 employees. The ATO is chasing more than $34 billion owed in debt from small businesses and CreditorWatch predicts the business failure rate will increase from 4.4 per cent to almost 6 per cent by the end of the year, so how can you protect your business and prepare for the storms ahead? Angus Sedgwick, CEO of OptiPay shares some suggestions.

More than that, how can businesses not only survive but actually thrive in these turbulent times?

Here are five practical strategies and actionable tips for building financial resilience to protect your business

Diversify your revenue stream

Relying on a single source of income makes your business more vulnerable. To protect your business you should consider ways you could diversify your income stream such as expanding your product line, entering new markets or targeting different customer segments.

Monitor cash flow

The lifeblood of any small business is its cash flow. Be vigilant about monitoring and analysing it to identify patterns, risks and opportunities. Robust cash flow management gives you the resilience to weather economic uncertainty.

Reduce unnecessary costs

Conduct a thorough audit of business expenses and try to reduce wasteful spending. Consider renegotiating contracts or explore more cost-effective alternatives. Some business owners find implementing automation or upgrading technology saves money in the long run. Every dollar you can save will strengthen your financial resilience.

Build strong supplier relationships

A reliable supplier network is critical to survive uncertainty. Make sure you put the time into nurturing these relationships to provide you with a steady supply chain even during turbulence.

Have a contingency plan

Every business should have a safety net in the form of a contingency plan. Plan ahead for various scenarios and know what steps to take should things go wrong. Make sure everybody in your organisation knows how to respond in a crisis and who is responsible for what. Ensure you have a financial buffer in place in the form of an emergency fund or an invoice financing facility to act as a financial safety net.

Financial stress can take a heavy toll on your well-being and the success of your small business so understanding the psychological aspects of resilience is equally important. Unmanaged stress can lead to poor performance and productivity and building financial resilience requires commitment, adaptability and foresight.

Businesses who embrace strategies to plan ahead for economic uncertainty will be better equipped to withstand the turbulent economic waters we find ourselves in and emerge stronger. Hopefully calmer shores are on the horizon.

This post first appeared on Kochie’s Business Builders. You can read the original here.

Join the soloist movement. Whether you are new to Flying Solo or looking to grow your business, our membership options will help you attract more leads, grow your network and sharpen your business skills.  Sign up to our newsletter to get the latest news and advice straight to your inbox.

Now read this

7 tips to keep cash flow strong in FY24

Here’s why you need to upgrade your Flying Solo membership pronto!

  • Share your business journey in an exclusive member profile
  • Get free lifetime access to our Going It Alone digital course
  • Participate in members-only events and experiences
  • Boost your business’ visibility with a Directory listing

$149.95 + GST
Billed annually
  • Andrew Caska

    Caska IP Patent Attorneys

    'Flying Solo opened up so many doors for us - I honestly don't know where I'd be without it"