Top 6 threats to small businesses and how to avoid them

Small business ownership can be a very rewarding career for highly motivated individuals seeking to be the author of their own destiny. But it is not without its risks, and there are certainly challenges that you will be required to overcome on your journey to success.

As such, protecting your business from threats is often a top priority for business owners. With that in mind, let’s look at some common risks that small businesses may face and how you can take a proactive approach to reducing the chance of each.

1. Business interruption

Could your business continue unabated in the event of a fire, a flood, or other natural disaster? A business continuity plan could help you manage unplanned events and get back to business as usual as fast as possible.

Unplanned interruptions could disrupt your cash flow and damage the reputation of your business. It’s important to have back-up plans in case the worst happens. Business Interruption insurance can help you get your small business back up and running in the wake of such an event.

2. Maintaining a steady cash flow

A stable cash flow is crucial for the success of any business. It can be hard to manage while meeting the existing financial obligations of your small business, such as rent for office space and employee wages.

Create a detailed budget and stick to it, making sure to regularly review your expenses. You may want to use accounting software to streamline cash flow management.

3. Cyber threats

While small business owners may assume that they aren’t attractive targets for cyber criminals, the fact is that all businesses can be impacted. However, 43% of cyberattacks in Australia target small businesses.

Learning to spot cyber threats is an effective way to stop cyberattacks, along with taking other measures to secure your business systems. Cyber Liability insurance can also provide a safety net should you be attacked despite you best efforts. A policy helps you cover the costs of a cyber incident, like restoring files or notifying affected customers.

4. Lack of time

Small business owners are among the busiest people around, often working around the clock. Productivity is key, but you can’t be everywhere at once. To reduce this threat, prioritise the most important tasks and delegate the rest. You may also consider hiring an office manager to take some of the burden off your shoulders.

Recommended reading: Time management tips for business owners

5. Profitability

It can be difficult to transition a business from its start-up phase to the point where it is achieving sustainable profits, especially for sole traders.

You may benefit from exploring the many ways that digital tools can help you automate certain business processes and operate more efficiently. Conduct market research to understand the landscape and set competitive prices.

6. Employee retention

Staff members can leave your company for a variety of reasons. Consider ways to increase staff retention such as encouraging a work-life balance with flexible hours, introducing bonuses and investing in employee upskilling.

7. Employee and customer injuries

Accidents happen, even in the safest workplaces. As a business owner, it is your responsibility to ensure the safety of your employees and your customers.

Businesses in Australia may need workers’ compensation insurance to help protect their staff if they are injured on the job. For customer injuries, you may want to consider Public Liability insurance. These policies cover third-party injuries and property damage, helping you manage the costs of potentially expensive claims and lawsuits.

Business insurance made easy with BizCover

Have you sorted your business insurance? At BizCover, we make purchasing business insurance quick, easy and paperwork-free. This includes Cyber Liability insurance, Business Interruption, and Public Liability insurance for small businesses.

Our innovative online platform lets small business owners compare competitive business insurance quotes from leading insurers. Get your business insurance sorted in less than 10 minutes and get on with your day. If you prefer to speak with us, you’ll reach our friendly team on 1300 920 867.