Unexpected Business Risks Every Entrepreneur Should Plan For
Running a business comes with plenty of rewards, but it also means dealing with unexpected risks. For instance, only 34.7% of businesses that started in 2013 were still operational in 2023. These odds underscore how tough it can be to stay afloat.
Everyone plans for the obvious ones, such as market competition, cash flow gaps, and hiring hurdles. But some risks arrive unannounced. They slip through the cracks of even the most thorough business plans.
On top of that, new trade policies are adding to the uncertainty this year. How can entrepreneurs protect their businesses from these hidden risks? Let’s break down the top risks you need to prepare for, so you can weather the storm with confidence.
Plan for Employee Turnover and Talent Retention
The Great Resignation may have peaked, but its effects are still rippling through workplaces everywhere.
Every year, millions of workers walk away from their jobs. The reasons vary from seeking better pay and work-life balance to chasing career growth opportunities or simply feeling undervalued.
Some leave because of burnout, others because they've found a company that aligns better with their values. While the wave of mass resignations has slowed down somewhat, the trend hasn't disappeared.
As an employer, the responsibility falls squarely on your shoulders to create an environment worth staying for. High turnover drains your resources through constant recruitment, onboarding, and training costs.
More importantly, it disrupts your team's momentum and can leave critical gaps in institutional knowledge that take months or even years to rebuild.
Prepare for Product Liability
Product liability is the legal responsibility a business holds when something it sells or provides causes harm to a customer. Even if you think your product or service is safe, accidents can happen in ways you never imagined.
Take what happened in Rogers, Arkansas, for example. A teenager was going through an automatic car wash when a mechanical brush suddenly broke loose and fell into her vehicle.
The family was left searching for answers while the car wash owner faced serious questions about safety protocols and equipment maintenance. According to the Keith Law Group, incidents like these can rapidly escalate into mass tort actions that cost businesses dearly.
So, how do you protect yourself from product liability risks?
Invest in comprehensive liability insurance that covers product defects, equipment failures, and customer injuries related to your business operations.
Document your safety protocols and quality control measures, so you have a clear record of the precautions you've taken to protect customers.
Conduct regular equipment inspections and maintenance to catch potential failures before they cause harm, and keep detailed logs of all maintenance activities.
Train your team thoroughly on safety procedures and make sure everyone understands their role in preventing accidents and protecting customers.
Connect with a personal injury lawyer in Rogers, Arkansas, to understand your legal responsibilities more deeply and get advice on how to handle product liability issues should they ever arise.
Protect Your Business from Cybersecurity Threats
Cybersecurity is one of the most pressing risks businesses face today. With sensitive data stored and shared online, every business is vulnerable to cyberattacks that can cause financial loss, reputational damage, and legal trouble.
For instance, in 2023, Oracle, one of the world’s largest cloud service providers, was hacked by the Cl0p ransomware group. The breach affected several of Oracle’s customers, leading to the exposure of sensitive data and putting businesses at risk. The fallout included significant financial and operational consequences for the affected companies.
To protect your business from cybersecurity threats, follow these steps:
Implement strong encryption and multi-factor authentication (MFA) for sensitive data.
Keep your software and systems up-to-date to fix any existing vulnerabilities.
Educate employees on identifying phishing attempts and secure online practices.
Work with a cybersecurity expert to conduct regular security audits and assessments.
Build a Cash Reserve Before You Need It
Emergencies never wait for convenient timing. When the Federal Reserve adjusts interest rates, the APR and factor rates on business loans and credit lines move right along with them. This means borrowing money gets more expensive right when you need it the most.
Suppose your main supplier suddenly goes out of business, or a key piece of equipment breaks down, or a major client delays payment for months. Without cash reserves, you're forced to take out loans at whatever rates are available, watching interest payments eat into profits that could have been reinvested in growth.
The solution requires strict discipline from your end. Start by calculating three to six months of operating expenses. This includes rent, payroll, utilities, insurance, and any other fixed costs that won't disappear during tough times.
Then work backwards to figure out how much you need to set aside each month to reach that target within a year or two. Consider this fund the insurance you pay yourself, rather than premiums you send elsewhere.
When revenue dips or unexpected costs appear, you'll have breathing room to make smart decisions instead of desperate ones. The peace of mind alone is worth the effort of building this cushion.
Understand Your Insurance Coverage Inside Out
Most business owners have insurance, but few truly understand what their policies cover until they need to file a claim. Reading through insurance documents feels tedious, so many entrepreneurs sign on the dotted line and file the paperwork away.
Then something goes wrong, like a fire damages your inventory, a customer slips and falls on your property, or a disgruntled employee files a lawsuit. You reach for that policy expecting protection, only to discover gaps in coverage you never knew existed.
Insurance policies come loaded with exclusions, deductibles, and coverage limits that can dramatically affect what you receive after a loss. Take time now to sit down with your insurance agent and review every policy you carry.
Ask specific questions about scenarios relevant to your business. What happens if your building becomes unusable for three months? Does your coverage extend to equipment you rent or lease? Are your employees protected when they work remotely or travel for business?
Learning these details beforehand gives you the chance to adjust your coverage while you still can. You might discover you're paying for redundant policies or missing critical protections. Either way, you'll sleep better knowing what safety net you have in place.
Preparation Pays Off in the Long Run
Building a resilient business means preparing for risks you hope never to face. Each safeguard you put in place today creates more options for tomorrow. Think of these preparations as investments in your future flexibility, not burdens on your current budget.
When challenges arrive, and they will, you'll respond from a position of strength rather than scrambling to recover. Your business deserves that kind of foundation.