Protecting your business from the unexpected

No one ever expects the unexpected to happen to them. But if it did, what would happen to you and your business? Could someone step in and run it for you if you were incapacitated or would everything fall apart?

Fortunately, it is possible to prepare your business so that you can deal with the unexpected when it occurs.

Document key roles and retain those employees

It’s important to identify and document key roles in the business. This means that if a key person leaves the business, or is temporarily incapacitated, the business can continue. Start by identifying which roles in your business are fundamental to its functioning or success. Ask each of those people to document every aspect of the work that they do. Remember to do this for yourself as well.

If certain employees are fundamental to your business, you should use your best endeavours to retain those employees. Look at creative ways to incentivise them to stay and review their employment contracts to see whether they contain restraint of trade clauses.

Document key processes

Once you have identified what your key people do, you need to document the processes that they follow to perform their tasks. This means identifying each step of the process, including what inputs are needed to perform the task, and what the output should be.

Financial security

Businesses which are financially secure are more likely to survive the unexpected. The first step is ensuring that you have robust invoicing and payment systems in place. Invoices should be sent as soon as goods are delivered, work is performed, or at agreed-upon stages. Unpaid invoices should be followed up immediately after the due date. Preparing comprehensive cashflow budgets will help you ensure that you can meet your payment obligations as they fall due.

Having a financial buffer will also help you weather the unexpected. Look at how many months your business could survive if something went wrong. It’s worth trying to slowly save up three months’ worth of bill payments to help you through any difficult periods.

Insurance

Review your business’s primary risks and check whether your insurance covers them. If your business depends on you, you might want to look at getting ‘key person’ insurance to cover your absence if anything happened to you.

Sale-ready

The advantage of preparing for the unexpected is that it also means that your business is sale-ready if a change in circumstances means that you want to sell your business at short notice.

At advisme, we’re not just experts on the law, we’re also experts on working closely with businesses to identify opportunities and solutions that work for your business.