In business, all entrepreneurs can expect to face challenges. With markets constantly shifting and consumer preferences changing with the times, the smallest crisis can irrevocably impact a business’s ability to survive and thrive.
Making plans in advance to safeguard operations can enable businesses to weather any storm before it becomes a full-blown financial emergency. Below, 20 Forbes Business Council members share simple steps any entrepreneur can take to ensure their business is safe and secure whenever the organization faces a crisis.
1. Develop A Well-Planned Financial Strategy
One key step is having a well-planned financial strategy. It’s crucial to prepare long before a crisis hits by building a reserve fund, diversifying revenue streams and reducing unnecessary expenses. This approach keeps a business stable in any situation and allows for quick adaptation. Financial security is the result of smart planning, not last-minute decisions during a crisis. – Jekaterina Beljankova, WALLACE s.r.o
2. Build A Strong Financial Foundation
Building a strong financial foundation before a crisis is essential. One effective way to secure it is to maintain a positive cash flow and minimize debt. Regularly audit expenses to ensure that every dollar spent contributes to further growth, and then cut all unnecessary costs. Find several revenue sources to avoid relying on a single income. – Michael Podolsky, PissedConsumer.com
3. Focus On Your Relationship With Your Bank
One critically underestimated relationship is the one you have with your bank. Do you have a relationship with your account manager? Is it the right banking relationship for the needs of the business now rather than when the business started? A strong, trusting relationship is required so that when you need cash, the bank knows you and your business and will work with you. – Tina Corner Stolz, LXCouncil
4. Optimize Your Cash
Cash optimization is a critical element to giving your young company as much runway as possible. The most effective entrepreneurs are optimizing lines of credit and business financing before they face crises to ensure their access to capital. Negotiating access to capital early on is essential to creating a simple and adaptive enterprise. – Sal Fuentes, Decision Counsel
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5. Identify Non-Essential Expenses In Advance
A financial crisis often hits cash flow from unexpected angles, including bank account freezes, reduced client payments, rising employee demands and a cooling investment climate. The key is to manage the risk before the crisis strikes. Identify which expenses you can cut quickly (e.g., PPC budgets) and assess the impact. Plan ahead to ensure your business can survive, even with zero profit. – Dmitry Malin, Novakid
6. Maintain Bookkeeping
Bookkeeping is boring, but you need to be the one who keeps your books. Then, when you get busier, you can hand off part of that task to someone else. Never let anyone have your credit cards or let them send out money! Stay in control of those tasks, and if you have to hand them off, you need to be the one to review them. Once you stop looking at the money coming in and out, that’s when there could be an issue. – Allen Kopelman, Nationwide Payment Systems Inc.
7. Build An Emergency Playbook
Build a company financial emergency playbook before you need it. This means setting aside a crisis fund and mapping out key actions, such as cutting non-essential expenses, renegotiating contracts or pivoting revenue streams. Don’t wait for a downturn to react. It’s not just about having cash on hand — it’s about knowing exactly where to turn and what decisions to make when the unexpected hits. – Sam Nelson, Downstreet Digital
8. Start An Emergency Fund
To ensure financial security in a crisis, entrepreneurs should maintain an emergency fund. Have three to six months of expenses and get proper insurance to transfer risk. Key coverages include general liability, business interruption, professional liability, workers’ compensation and cyber liability. A strong financial cushion and the right insurance protect against major setbacks. – Ken Goodwin, Pacific Preferred Insurance Brokers
9. Build A Crisis-Proof Revenue Strategy
Build a crisis-proof vault by creating a strategic revenue stream, such as a premium subscription, VIP membership or exclusive content. This silent financial powerhouse grows in the background, ensuring your business stays resilient and self-sustaining during unexpected challenges. Avoid desperate loans and drastic cuts by just investing in smart, built-in security for long-term success. – Arpit Jain, SEO Sets
10. Create Multiple Revenue Streams
I have created multiple streams of revenue for my organization to make sure something is always coming in. I also maintain a strict budget to ensure we can still survive if people cannot donate. As a nonprofit, we cannot assume that people will donate or that we will get the grant we want. It is essential to create both short- and long-term goals when it comes to finances. – Natalie Boehm, The Defeating Epilepsy Foundation
11. Save Part Of All Account Deposits
Automatically save money as it enters your account to create a crisis buffer. This ensures you’re never caught short for taxes and payroll, which are obligations that sink businesses during downturns. Remember that money in your custody temporarily isn’t yours to spend. Depositing these reserves in high-interest accounts means your obligations generate income while you’re waiting to be paid. – Henry McIntosh, Twenty One Twelve Marketing
12. Set Aside A Percentage Of Profits Monthly
We set aside 10% of profits every month for anything that might happen in the future. This strategy helped us tremendously during COVID times, when 15% of our clients had to close their storefronts and no longer needed SEO services. Thanks to the money we set aside, we did not have to fire anyone and were also able to invest in new marketing strategies with a focus on Covid-proof businesses. – Oleg Levitas, Pravda SEO Inc, Real Results SEO Inc.
13. Stress-Test Your Finances
Reverse stress-testing your business finances is essential for planning for failure before it happens. Instead of just forecasting growth, ask what would happen if you lost your biggest client. What if revenue dropped by 50% overnight? By running the worst-case scenarios and preparing contingency plans in advance, you’ll strengthen your business’s ability to survive any crisis. – Romain Pison, NoviCarbon
14. Set Your ‘Cut To Survive’ Number
Know your “cut to survive” number. Before a crisis hits, define the exact revenue drop that triggers action. This will help you learn what expenses to cut, which contracts to renegotiate and what resources to protect. Businesses fail when leaders panic and slash reactively. A pre-set crisis plan ensures you stay strategic, not desperate. The best way to prepare is to decide today how you’ll respond when tomorrow turns uncertain. – Chris Dyer, Chris Dyer
15. Prioritize Sustainable Hiring
People are expensive. Only hire your next employee when your current team is nearing full capacity, not before. Hiring too far ahead of demand has led to the downfall of many entrepreneurs who assumed growth would never slow. Sustainable success comes from strategic, demand-driven hiring rather than confidence alone. Remember the lesson of the tortoise and the hare. – Larry Bomback, Strategic Nonprofit Finance
16. Follow Two Key Principles
As an entrepreneur, first train yourself to expect the unexpected. Second, entrepreneurs have a tendency to underestimate how much funding is truly required to successfully scale a company. As a simple rule of thumb, more funding is better than less. Entrepreneurs should be less focused on dilution and more focused on securing as much capital as possible. – Alexandre Douzet, Pumpkin Insurance Services Inc.
17. Avoid Scaling Without Cash On Hand
Avoid over-leveraging and scaling without cash on hand. Growth is great, but the business can collapse if a crisis hits and you’re stretched too thin. Keep a cash reserve, focus on profitability and limit reliance on debt. A business that can survive slow periods without scrambling for funding is built to last. Stability and smart scaling matter more than rapid, unsustainable growth. – Andrew Lopez, 1000 Media
18. Adopt The Profit-First Method
One simple step is to use the profit-first method. This system ensures financial security by allocating revenue into separate accounts — profit, taxes, owner’s pay and operating expenses — before spending. By prioritizing profit first, you build reserves and prevent overspending. This disciplined approach ensures you always have a financial cushion, keeping your business stable and crisis-proof. – Raquel Gomes, Stafi
19. Ensure You Have Insurance Coverage
Make sure your insurance broker knows how to strategically cover your business. All risks are knowable in advance, even the ones currently unknown to you. A good broker will get you coverage for the crises you ask about, but a great one will cover the ones you don’t even know about yet. – Arar Han, Sabot Family Companies
20. Know Your ‘Survival Quartet’
Build your “survival quartet” by identifying two key suppliers and two critical customers who’ll collaborate during challenging times. When trouble comes, this strategic network becomes your lifeline, as suppliers might extend terms while customers accelerate payments. This relationship capital transforms potential business-breakers into manageable challenges, creating resilience that money cannot buy. – B.D. Dalton, Rockfine Group
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