Planning for a Personal Catastrophe as a Small Business Owner

by | Apr 23, 2022 | Financial Advice, Small Business Cash Flow

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Catastrophes take many forms, especially with the pandemic. Being prepared for any possible disaster is essential, whether it be natural or man-made. It’s also essential that preparations be made for more personal disasters as well. The death of a family member or an unexpected illness of an owner can send a business into a tailspin if it isn’t fully prepared. You need to take stock and determine whether or not your business will be able to handle that type of shock.

What Is a Personal Catastrophe?

Personal catastrophes take many forms. They can range from acute illnesses like a bout of COVID-19 or a chronic illness that will have a more significant impact over time. While natural disasters affect everyone in the community, a personal catastrophe only affects you and your loved ones. It will also take a drastic toll on your business if you aren’t fully prepared. If you are the victim of riots and other social unrest, you, your family, and your customers will all pay the price.

Short-Term Problems

Short-term illnesses and the death of a family member are short-term problems that will eventually allow you to return to your business on a full-time basis. Valued customers and other businesses you interact with will normally be understanding and willing to work with you until you and your family get back on your feet and are ready to return to work on a full-time basis.

Long-Term Problems

Long-term problems that prevent you from returning to the business within a month or two will call for more substantial measures. The following steps will help you keep your business moving forward in your absence. Know your insurance coverage – Disability coverage is important to have if you need to take time away from work for a medical issue. Make sure your management team can assume control – Train one or more of your managers to take your place so that you will always have sufficient coverage in your absence. Establish an emergency fund – Put money in an emergency fund so that you know the bills will still be paid if you are unable to return for any length of time. Talk to the experts – Talk to a financial planner to ensure that you have covered all of your basis in terms of financial security. Being properly prepared will ensure that your business is able to survive a personal catastrophe.

Taking Control of Your Future

Your business is your livelihood. If something happens to you, your business will suffer unless you take precautionary measures. Working capital funding is just one way you can provide additional support to your business. With proper financial planning and securing the day-to-day operations of your business, you can provide your family with everything they will need to keep money coming in and your customers happy. Preparing for a personal catastrophe is part of doing business. It’s up to you to ensure that your business will be able to function efficiently whether you are standing at the helm or watching from the sidelines. Talk to a financial advisor today and see what they recommend for your business. It may be just what you need to save your business from disaster.