8 things for small businesses to fear

Embezzlement. Losing your biggest customer. Unending debt. For a small-business owner, lots of things are scarier than zombies on Halloween. If you’re checking under your bed — or desk — for monsters, here are eight fearsome things that might threaten your small business, along with ways to chase them away.

» Losing your biggest customer. In my small publishing company, during an annual business planning session years ago, we realized 90 percent of our revenue came from just one distributor. Talk about scary. So we began to diversify our income stream. Smart move. It saved my business when that distributor went bankrupt a few years later. Most small companies depend on one or two customers who bring in a disproportionate amount of revenue. How to stay safe? Pay lots of attention to that customer, and develop a number of contacts and champions within that customer’s company so if one leaves, you don’t lose the account. And diversify your income stream so you aren’t dependent on just one client or channel.

» Employees from hell. The scariest thing for a small-business owner? Terrible employees. They’re the real “walking dead.” They come to work but aren’t productive; they’re unreliable — showing up late or not at all; they treat customers or other employees badly. Or worse, they steal. How to avoid this nightmare? First, hire carefully and slowly. Check references thoroughly. Meet applicants more than one time. Then train well and give proper supervision, especially at first, but provide ongoing management. Finally, don’t be afraid to fire underperforming staff.

» Drowning in debt. Most small businesses use at least some form of debt — lines of credit, real estate or vehicle loans and certainly credit cards. Debt itself shouldn’t frighten you. But too much debt, or debt with an interest rate that’s too high, definitely scares the daylights out of any smart business owner. Use and choose debt wisely: to fund critically needed purchases and only with the certainty or high probability of funds to service or pay off the debt arriving soon.

» Another company steals your idea. The good news: You’re on the right track. The bad news: Someone else stole your idea. Every company has certain intangible assets that may be extremely valuable. You’ll want to protect that intellectual property with copyrights, trademarks or patents. But an idea isn’t a company. So be sure to run your operations well and provide outstanding customer service — that’s a lot harder to steal.

» A setback or emergency. A few years ago, I broke my right wrist, the one I depend on to write with and run my small business. It could have been a complete disaster. Fortunately, I have a great team. Before you face a disaster — an injury, a natural disaster like an earthquake, a data breach or a supplier slowdown — develop a contingency plan. Cross-train your team so more than one person knows how to do each job. Back up your files automatically and regularly. Develop a list of alternate suppliers.

» Orders you can’t fill. It starts like a dream and quickly turns into a nightmare. You’ve got a huge order but can’t get the products or materials to fill it. To avoid this, examine your supply chain. Find reliable vendors who can maintain a shipping schedule, respond quickly and work with you on terms and payment. Don’t shop for suppliers solely on price.

» Recession. Nothing affects the health of your small business more than the health of the economy. I’ve been through two recessions, and they almost devastated my business. What can you do? Fund reserve accounts, watch your debt levels, diversify your income streams. And when you vote for president Nov. 8, choose the candidate you think has the experience, temperament and policies to keep the American economy healthy.

» Not being able to retire. If you’re like most entrepreneurs, you think of your business as your retirement plan — you imagine you’ll sell it. But few small businesses actually sell for enough money to finance a comfortable retirement. Instead, be certain to build and fund a real financial retirement plan — a 401(k), a SEP-IRA or other retirement instrument. There are tax advantages too.

Rhonda Abrams is the author of 19 books, including “Successful Business Plan: Secrets & Strategies,” now in its sixth edition.