As an entrepreneur, it is inevitable. One of these days, your best laid plans will be derailed by an unwelcome surprise. Whether it’s your hard drive crashing, the IRS knocking on your door or a flood destroying your office, we, as entrepreneurs, will all be faced with our own disaster some day. When that disaster hits, it is easy to recover if you have a solid Hit-The-Fan-Plan (HTFP) standing by.
Good HTFPs require a large dose of creativity and imagination. Without it, every setback and obstacle will seem insurmountable. The biggest key to a solid HTFP is to think long-term. Particularly, you may want to ask yourself these questions:
- What are the potential disasters my business could face down the road?
- How, specifically, would those disasters affect my business operations?
- What can I do to prevent or reduce those disruptions?
Rest assured, no HTFP is written in stone. You will constantly adjust the plan as your business grows and new opportunities and threats present themselves. The key is to just get something started now.
Here are a few areas I recommend evaluating to help you get started:
Business entity – Form one; keep it healthy. Here is a chart to get you started.
Accounting system - Use some sort of accounting software and scan all of your receipts. Small business accounting software these days is inexpensive, reliable and easier than ever to use. As for receipts, indexed electronic copies of all your business receipts WILL save you one day (I promise). Neat Receipts or Shoeboxed provide excellent receipt archival systems.
Intellectual property protection – If you are in the business of creating anything (tangible or intangible), it pays to protect those valuable assets. Jill will help guide you through the sometimes dizzying array of intellectual property protections.
Personal estate plan – Form one, even if it consists only of a simple will and medical power of attorney.
Emergency fund – Create one. If you live paycheck to paycheck, you’re in trouble. The simple act of setting aside a few bucks automatically each month will give you the cushion you will need in the future. ING has a great savings account that is easy to set up and automate.
Income diversification – A key ingredient in any good HTFP is being able to weather fluctuations in income. It almost always helps to integrate related products and services into your offerings to moderate fluctuations in demand. See Pam’s posts in her “Side Hustle and Flow Series”.
Royal guard – Marshall your helpers, defenders, allies, friends and cultivate those relationships. None of us can do it on our own. See Rachael’s post.
Data security and redundancy – Sooner or later, a hard drive will fail, your web host’s server will go down, or someone will hack into your computer. An ounce of prevention now will pay huge dividends when one of these happens to you. Willie has some excellent online security tips here.
Most importantly, cultivate a flexible mindset while developing your plan and talk with other entrepreneurs about the challenges they’ve faced.
With a solid Hit-The-Fan-Plan in place, you will weather those anticipated disasters and emerge relatively unscathed. As for unanticipated disasters, do what every good entrepreneur does: chalk it up to a “lesson learned” then add it to your Hit-The-Fan-Plan.