Did you know that the current small business failure rate is 36% above the average?

It’s the worst it’s been in 11 years and the estimate is that ten thousand businesses will close down this financial year.  It’s a concerning trend, and we cannot ignore this. I don’t want to scare anyone with this episode, I  want to equip you with the knowledge to safeguard your business. As I’ve said many times, prevention is better than cure so I’m going to share the five biggest reasons behind these business closures and the steps you can take to reduce this risk.

Cashflow Management:
Cashflow is the cornerstone of any small business. We need the infrastructure in place to bring in consistent reliable cashflow, and detailed oversight on our numbers.  What this looks like is solid legal documents tailored to your business. They support you in converting prospects to paying clients and in feeling confident and secure when faced with challenges.  Once your foundation is set, a good accountant can help you maintain it and keep you up to date. If you aren’t connected with an accountant yet, this is your sign! Don’t wait until it’s too late!

Keeping Up with Legal Changes:
I’ve heard from many small businesses that changing laws, especially in areas like employment law, are difficult to keep up with. This is where you should look to experts like lawyers and accountants, to guide you through the complex legal landscape. Surrounding yourself with a team of advisors will give you access to the knowledge and resources you need to stay informed and compliant.

Cyber Risks:
Cybersecurity threats pose a significant and ever-increasing risk to businesses. The average cost to a small business when hit by a cyber-attack is $50,000, which is definitely enough to sink a business. How can you protect yourself from cyber threats? Get prepared, stay informed, and establish cybersecurity protocols in your business. This is things like data encryption, regular system updates, and employee training programs.

Winning Work and Payment Terms:
Sales and payment terms play a vital role in business success. Ensuring your legal documents, processes, and systems align with your business operations will help you navigate payment issues and support your cashflow management.

Failing to Adapt:
If our business isn’t able to adapt to changes and trends then we can get left behind and our risk of failure increases greatly. Change shouldn’t be seen as scary though. If we stay flexible and open-minded it becomes an opportunity for growth and innovation. Just remember, to make sure you have the legal support in place to facilitate the changes you make.

The biggest message I want you to take away from this episode is not to wait until it’s too late. Get proactive and get connected with experts who can guide you. Yes, the statistics are scary but with a strong risk mitigation strategy you can set your business up for long-term sustainable success and avoid becoming a statistic.

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