Preparing Your Firm for a Business Disaster

guide to online retail

Reading business blogs, and listening to the wisdom of successful business leaders, it’s easy to think that your main threat comes from other companies in your space. Healthy competition is, of course, a great thing, and inspires enterprises to deliver the highest value to consumers and constantly innovate their way to a competitive advantage. Instead, you should anticipate a possible business disaster so you can prepare ahead of time. By making preparations that allow you to avoid a business disaster and developing contingency plans in case of an unforeseen disaster, you offer your business the best shot at long-term success.

business disaster

Companies need to guard against a series of potential threats so they can put processes in place to avoid them. This planning helps you avoid the pitfalls of poor planning such as loss of revenue, poor customer reviews, and even bad publicity that might follow your business for years. Ultimately, these business disasters might result in the failure of your business.

Obviously, you can’t plan for every eventuality but there are a host of threats that can happen to damage your business. Here are just a few of the likely disasters you should guard against.

Preparing for a business disaster

Data breaches

A business disaster that’s increasingly common in the digital age is data breaches and other types of data loss. Adverse weather conditions that cause flooding, fire, hurricane, or even damage to the structure from an earthquake can destroy your physical data storage. Regardless of the cause, making sure you maintain up-to-date backups or alternatives such as offsite storage means your business can return to its operational standard (or at least retain its sensitive documents, proprietary information, and essential data) more quickly, which limits damage to your reputation, disappointment for you customers, and loss of the records necessary to run the business.

With IT disaster recovery solutions, you can make sure your systems are properly backed up and that you can get your business up and running again as quickly as possible. Off-site servers and cloud backups can also make a huge difference here, allowing you to effectively resume operations at other premises if this is deemed to be necessary. In the long run, you’re sure to see just how valuable this approach is for avoiding a business disaster.

Too few workers to run your business

Nothing represents a bigger danger to your reputation that not having a sufficient workforce to meet your normal demand. With the pandemic causing serious labor shortages, having workers missing from your workforce means you can’t keep customers happy and may even result in a safety issue that results in someone getting hurt.

In the short run, you can likely survive missing a few workers who experience an illness, traffic delay, or even an unexpected worker who resigns. You can pay overtime to your remaining workers or hire a few temps to fill in. In the long run, however, you can’t expect this solution to work as overworked employees might quit, creating a cycle of worker shortages, and temps are often an expensive alternative because you must pay a temp fee and because temps are likely less productive than your normal workforce. This is especially challenging when you’re missing a key employee.

There are some provisions you can use to resolve these worker shortages if your business is suitable for such alternatives. For instance, you can outsource some work to third parties who are available at a moment’s notice. Unlike temps, you can hire a graphic designer or developer as a gig worker to fill in when you need a few extra hands. Key man insurance is a great alternative to compensate the firm for the loss of someone who’s harder to replace.

Customer data breaches

There’s nothing quite as damaging to a business’s reputation as a consumer data breach, but we’ve seen massive companies face a data breach or the encryption of their data through ransomware by hackers.

It’s essential to have an action plan in place if this happens. And, most such data breaches occur via social engineering (called phishing) whereby a hacker gains access through the carelessness of an employee. Setting up a system that requires employees to change their passwords frequently can save you from many of these efforts. Similarly, ensuring your system is secured with state-of-the-art cybersecurity is your first line of defense against hackers.

In the case of a data breach, identifying and being transparent about exactly what information was stolen goes a long way toward mitigating your damages.  You’re sure to lose out on some trust with your users at this point, but it’s important to make them whole as much as possible. For instance, you might pay for monitoring their credit and protecting them against identity theft to make them feel more secure. This helps you regain some trust.

Inventory that doesn’t meet normal demand

Managing your inventory to ensure you can meet normal demand is essential to keeping your customers happy. That’s why it is so important to anticipate demand as accurately as possible. It’s almost worse to have too much demand as it is to have too little demand. When customers come in expecting to buy your product and it’s not available, you now wasted your advertising and the disappointment caused may damage your reputation.

I once had a client whose customers expected chips with their sandwiches. When he discovered his chip supplier anticipated going on strike, he faced the prospect of disappointing his customers. It’s too late at that point to plan for an alternative source of supply. You need to set up an alternate supply now before you need it.

It’s also very important to be wise about sourcing for alternatives, to at least search for better or more valuable deals each year to provide your customers with better quality and to never place all of your eggs in one basket, as it were. This helps you pivot around market forces more easily, even if your sourced goods are only available from a few manufacturers.

Planning to replenish is equally important. You don’t want too much or too little inventory. With too much inventory, you tie up your money, it costs more money to store and protect the inventory, and there are risks you encounter with your inventory such as theft and damage. Having too little inventory means you can’t meet demand and disappoint customers.

Modern supply chain practices seek to reduce this risk. Using algorithms developed to calculate efficient order quantity can help you order smarter. You should also monitor your inventory levels using bar codes so you have an up-to-date list of what you have on hand. Using key metrics allows you to use your own performance to constantly update your estimates.


With this advice, we hope you can continue to prepare for a business disaster. Even though these dangers aren’t common, by establishing processes to reduce the threat and having a contingency to deal with the disaster should it occur, you’re in the best shape to survive a business disaster.

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