4 Financial Emergencies Your Business Needs to Plan For

Wednesday, December 11, 2019, 6:00 AM | Leave Comment

Your business depends on sound financial management that occurs from day-to-day and throughout the year.

However, events can occur that disrupt your normal operations and expenses.

During these times, you should be able to rely your emergency funds to help you weather any problems in serving your customers and receiving your normal revenues.

Here are 4 financial emergencies that you should be planning for, to prevent a downturn in your business.

  1. Loss of a Major Client

    Sometimes, without warning, a major contract with a big client can go belly-up. At these times, entrepreneurs must often scramble to make up the work that keeps their staff busy and keeps revenue flowing. Credit risk monitoring you can rely on can make the difference in how well you will be able to secure the future of your business operations after a significant revenue loss and can help you maintain stability while you make the adjustments to get new business to compensate for the loss of a big client.

  2. Natural Disasters

    Unfortunately, natural disasters are becoming more frequent as a result of climate change. Events such as hurricanes, tornados, major flooding, wind damage and other events can bring your business to a stop. These events can cause long periods without power, building damage, equipment damage and problems getting your workforce on duty as normally scheduled. Loans can help you to restore your business to normal operations. However, repayment of these loans can put your future business plans at risk.

  3. Lawsuit by a Client or Employee

    Hopefully, you will always be able to fulfill your contract obligations for your client and will never run into employee disputes that can lead to a lawsuit. However, when legal problems occur, you may find you need additional funding to settle these disputes.

  4. Illness or Death of Key Personnel

    If a business owner or partner falls ill, it can mean major disruption for the companies. Operations can slow significantly, causing a drop in revenue and significant financial loss. This type of emergency happens frequently in the business world and can often mean severe losses and bankruptcy for the company. Additional funding may be necessary to replace personnel or to cushion the slowdown, until adjustments can be made to resume normal operations.

Business success depends on good planning and bit of luck. However, you can’t plan for the luck continuing throughout the years. If you put aside emergency funds for your business, you will be ready to handle any common emergency that is likely to occur, and will be able to keep your business on track for the future.

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