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Take the information above and determine who will be responsible for executing the financial contingency plan.As a startup business, this responsibility will likely fall on the business owner.
There are a limited number of risks that could lead to failure.
In fact, the risks are usually relatively easy to foresee, even if you’ve yet to launch.
Putting a simple financial contingency plan in place can give businesses in this situation the lifeline they need. For example, they may generate a revenue but have falling profit margins, or have issues with chronic late payments due to the lack of an effective collections procedure.
In the early stages of a business, there are often simply no resources to absorb any unexpected negative events.
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Content Header .feed_item_answer_user.js-wf-loaded . Suffering any sort of disaster that stops the normal function of the business can be a huge problem for a company.But this is compounded for small businesses that may be working on exceptionally tight budgets and schedules. Any and all of these things can be catastrophic for a business, and only you will know which risks are most likely to happen to you.You should also map out who will have access to the documents needed to act upon the plan before and during the process, and include a list of the team members who will know about the plans before they are put in place.There can also be changes to market conditions that expose the business to new and previously unidentified threats.For example, what would happen if a key customer went elsewhere, or if an important team member left the business?With the right planning, as long as there’s demand for the products or services you offer, it is possible for a business to survive any kind of risk.For example, do you own a business vehicle that is nice to have but is not critical to the business’s core activity?Or perhaps you own a brick and mortar location you could sell if the survival of your business depended on it?Proactively identifying alternative sources of credit that can be secured and assessing their financial feasibility will help the business continue operating if credit lines are reduced.This should be a process that is revisited on a quarterly basis as the range of finance options available to your business will change.