Is Your Startup Prepared For A Disaster? Or Do You Just Think It Is?

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Well all know that startups can be volatile creatures. One minute, they’re riding high, the next they’re in tatters. Unexpected problems seem to rear their ugly heads when they least expect it, smashing their confidence, and ruining their bottom line.

So it’s worth taking some time to figure out what can be done about it. How can startups avoid disasters?

Keep Up With The News

One of the biggest issues for startups is the economy. Often it’s startups, not big business, that are the first to go under when a recession hits. Of course, the mainstream news media is totally biased against the prospect of recessions – just look at how they were behaving back in the summer of 2008, just months before the biggest downturn in modern economic history. So it’s a good idea for small businesses to consult alternative sources of news that have had a proven track record in getting important predictions, like the 2008 recession, right.

Knowing what it going to happen to the economy in the future helps startups make decisions today. If consumer demand is about to fall off a cliff, it might not be a good idea to spend a load of money expanding the business and going into debt. A better idea might be to start building up a store of wealth, helping to make sure that the business can weather the storm.

Establish Redundancy Processes

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It’s no secret that startups live on a knife edge. They’re often reliant on so few people and tools, that if any one of them gets knocked out, it’s game over. As a result, startups need to do things like have employees who can perform backup roles, put in place procedures if a certain system goes down, and even things like emergency light testing if the electricity gets cut off.

Having these procedures in place helps to reduce the business’s exposure to risk while also making it more robust in the long term. It would be a terrible shame if a perfectly viable startup were to fail, simply because the Founders hadn’t bothered to put a redundancy policy in place.

Always Be Conservative

We’ve all seen businesses whose growth projections start off modest, and then go vertical. But the truth is that most startups won’t grow anything like this. They base their annual growth projections on truly exponential business models, like Airbnb, without considering whether their own business really is the same.

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Let’s say you expect to do $500k of sales in your first year. Plan all your costs and expenses around doing $400k. At the end of the year, when you’ve made $450k, you’ll be glad that you did.

Finally, it’s worth noting that no matter how much preparation you do, there will always be times when you get blind sided in business. No matter how much effort you put into prediction and estimation, the future of your business is uncertain. Strangely, business owners don’t tend to get blind sided so much on the downside as they do on the upside. So prepare yourself for both failure and glittering success.