Like you, I bet, I learned about the uncertainty that comes with owning a business the hard way.
The first time for me was when I opened my first business, a law firm. Starting in March of that year, I hung out a shingle, advertised the heck out of it, and made a profit my very first month. I thought I was some sort of capitalist genius.
That belief stuck with me… until November and December of that year, when business completely dried up. I didn’t know people generally don’t like hiring lawyers during the holidays. OK, lesson learned.
Fast forward a decade later: I had begun my second business, a better-fitting content creation and writing business. But much to my surprise, an unexpected recession hit, and my business completely dried up a second time.
These days, needless to say, potential bumps down the road are alwayson my radar.
And I am not alone.
Twice a year, our friends at Bank of America issue the Small Business Owner Report (SBOR). Always a fascinating glimpse into the mind and machinations of small business owners, the SBOR this year indicates that not a few small business owners are starting to think about, and plan for, an upcoming downturn in the economy:
“Overall, we found that most business owners are preparing whatever the future may hold, creating continuity plans for their business in the case of a disaster and taking steps to prepare for a potential economic downturn.”
According to the Report, “Concern over a variety of economic factors has ticked up over the last six months. Health care costs remain the top-ranking issue, with the political environment emerging as a close second.”
The good news is that according to the SBOR, confidence among small business owners remains high. For instance
- Almost 60 percent of small business owners surveyed expect their business revenues to increase over the next year (almost exactly the same percentage as last year)
- Just about a quarter plan on hiring this year (more than last year)
- Well more than half expect to be able to grow their business over the next five years (slightly down from last year)
So, yes, as is their nature, small business people are optimistic. But, that said, they are also prudent, and smart, and as such, are expecting the unexpected.
According to the Report, “Business owners recognize the need to prepare for disruptive events such as economic downturns, natural disasters and cyber breaches, [with] a majority [having] continuity and preparedness plans in place…”
69 percent have taken steps to prepare for a general economic downturn. Steps taken include:
- Established an emergency fund: 37 percent
- Created an alternative business plan, reducing expenses: 25 percent
- Opened a line of credit: 19 percent
- Obtained a second job: 13 percent
61 percent have a continuity plan in place in the case of a natural disaster(flood, hurricane, earthquake, etc.) This includes:
- Purchased an insurance policy: 49 percent
- Backed up files: 40 percent
- Implemented a communication protocol for employees: 19 percent
- Made structural updates to building: 14 percent
80 percent have plans in place in case of a cyberattack:
- Installed security patches: 47 percent
- Secured customer data: 44 percent
- Securely disposed of confidential documents: 42 percent
- Trained employees on confidentiality protocols: 27 percent
- Implemented a third-party security management program: 25 percent
As they say, what goes up, must come down. But they never said that it has to come down with a thud. What these savvy small business owners (and even your late-to-the-game author) know is that with a little planning, even the most unexpected of changes can yield a soft landing.
Start. Planning. Now.
About Steve Strauss
Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business Success.© Steven D. Strauss
Bank of America, N.A. engages with Steve Strauss to provide informational materials for your discussion or review purposes only. Steve Strauss is a registered trademark, used pursuant to license. The third parties within articles are used under license from Steve Strauss. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice. Bank of America, N.A. Member FDIC. ©2019 Bank of America Corporation