10 tips to help SMEs prepare for the unexpected

What would you do if your business suffered a ransomware attack tomorrow morning? Do you have a contingency plan in case of a tornado, wildfire, or earthquake? The unexpected can happen at any time, and small businesses can be particularly affected.

SMEs are the backbone of many economies. They are essential to job creation, innovation, and community development. However, running an SME carries significant risks, such as financial uncertainty, market volatility, and natural disasters.

60% of SMEs fail within the first 6 months after being victims of a cyberattack.

Therefore, small business owners must prepare for the unexpected to ensure their longevity and success. In this article, we will discuss some tips to help small businesses prepare for any eventuality.

1. Create an emergency plan

One of the most important steps in preparing for the unexpected is creating a contingency plan. A contingency plan is a set of procedures that help a business respond to unexpected events such as natural disasters, supply chain disruptions, or unexpected financial setbacks.

The plan should describe the steps the company will take in the event of an emergency, including who will be responsible for what tasks, as well as how to communicate with employees, customers, and suppliers.

2. Maintain adequate insurance coverage

Small and medium-sized businesses should always maintain adequate insurance coverage. This protects them from unexpected events. Insurance policies should include elements such as:  

• Liability Coverage
• Coverage for material damage
• Business Interruption Coverage
• Data Breach Costs

Business interruption coverage is particularly important. It can help cover lost revenue and expenses during a disruption, such as a natural disaster or supply chain interruption.

Cybersecurity liability insurance is one of the newest types of policies. In today's threat landscape, it has become an important consideration.

Cybersecurity insurance covers things like data breach repair costs and legal fees.

3. Diversify your sources of income

SMEs that rely on a single product or service are at greater risk. Unforeseen events can cause significant damage. Something like a raw material shortage could paralyze an organization without an alternative.

Diversifying your revenue streams can help reduce this risk. For example, a restaurant could offer catering services. A clothing store could sell products online in addition to its physical location.

4. Build strong relationships with your suppliers

SMEs should build strong relationships with their suppliers. This ensures they have a reliable supply chain. This is especially important for companies that rely on a single supplier for their products.

In the event of a disruption, it's important to have strong relationships. This mitigates the risk of supplier failure or supply chain issues. Having supplier options can help reduce the impact on your business.

5. Keep cash reserves

Small businesses should maintain cash reserves to help them cope with unexpected events . Cash reserves can help cover unforeseen expenses, such as repairs, legal fees, or lost revenue. As a general rule, businesses should maintain at least six months' worth of expenses in cash reserves.

6. Build strong subcontracting relationships

If business owners try to do everything in-house, they run a higher risk. For example, if a key member of the IT team resigns, the company could face major security issues.

Establish strong outsourcing relationships with an IT provider and other critical support services. If something happens to a company's staff or systems, they have a safety net.

7. Check your finances regularly

Small business owners should regularly review their finances. This helps ensure they are on track to achieve their goals and quickly identify any potential problems.

This includes:

• Income and Expense Tracking
• Creation and review of financial statements
• Meet regularly with a financial advisor

8. Invest in technology

Investing in technology can help SMEs prepare for unforeseen events. For example, cloud-based software can help businesses store their data offsite. This ensures its security in the event of a natural disaster or cyberattack. Technology can also help businesses automate their processes.

Automation reduces the risk of errors and improves efficiency.

9. Train employees for emergencies

SMEs should train their employees for emergencies. This ensures everyone knows what to do in the event of an unforeseen event.

This includes training for natural disasters, cyberattacks, and other emergencies. Companies should also have a plan for communicating with employees in the event of an emergency, in addition to ensuring that everyone has access to the plan.

10. Stay up to date on regulatory requirements

SMEs must stay up-to-date on regulatory requirements. This ensures they comply with all laws and regulations, including labor laws and industry-specific regulations. Failure to comply can result in fines, legal fees, and damage to your company's reputation.

In conclusion, SMEs face many risks, but by following these tips, they can prepare for the unexpected.

Improve your business continuity and disaster preparedness

Get started on the path to resilience and protect your business interests. We can help you prepare for the unexpected. Contact us now to schedule a conversation.

About Nexxo

Nexxo Computer Solutions specializes in providing IT and technology services to Quebec businesses. Its mission is to offer Quebec companies IT services tailored to their needs. Acting as an external IT department, it handles all of a company's IT tasks, allowing it to focus on its business activities. It achieves this by collaborating closely with its clients and putting their interests at the center of its concerns.