When thinking of threats to businesses, most entrepreneurs will probably think of their competition as their biggest threat. While this is true, it’s not the only threat that businesses can face. In some cases, your business’s biggest competitor can be the least of your worries when it comes to these other potential threats that you could be faced with.
#1: Weather and Natural Disasters
The weather is one of the biggest threats to a brick-and-mortar business, or it can be one of the least likely threats— it all depends on where your business is located. For example, a business located in Florida is more likely to be damaged by a hurricane and flooding than it is to be damaged by an earthquake. Conversely, a business in California is less likely to be damaged by a hurricane, but more likely to receive damage from an earthquake.
Other businesses that have weather as a threat include seasonal businesses, such as construction, landscaping, and lawn care. These businesses rely on good weather to be able to provide services.
When it comes to prevention, weather can be tricky. You can't prevent weather conditions and natural disasters, but you can prepare for most of them. It’s also important to make sure that your commercial property insurance covers damages associated with a specific natural disaster, as most policies don’t cover earthquakes or flood damage.
#2: Shortages
Most businesses around the world have been affected in some way by the supply chain shortage, and this is another thing that can cause a threat to the functioning of a business. Material shortages prevent businesses from being able to produce the products they normally sell, or can cause them to increase their prices because the materials are so difficult to obtain. This can affect every business from the automotive industry to the restaurant and hospitality industries.
#3: Legal Liabilities
There’s a possibility that any business could be sued by their customers/clients, their employees, or even by another business. Legal liabilities are a huge threat to businesses because they can end up costing a lot of money in legal fees to rectify the situation. Some of the most common legal liabilities include:
- Faulty products that cause harm to customers
- Professional mistakes in services
- Wrongful termination and other employee-related claims
While preventing someone from filing a lawsuit can’t always be prevented, business owners can protect their pockets by having certain types of insurance that can help pay for these claims. These include general liability insurance (GLI), product liability insurance, professional liability insurance (also known as errors and omissions), and workers’ compensation insurance.
#4: Financial Problems
Financial issues can plague businesses just like they do with individuals, and for a variety of reasons, making it hard for businesses to succeed. As mentioned above, businesses being sued without proper insurance can lose a lot of money— or they can even go bankrupt. Shortages of all kinds can also affect a business financially, and so can the weather and natural disasters. Overall, almost anything that poses a threat to a business can also affect its finances.
#5: Employment Shortages
A variety of factors make it hard for some businesses to attract and retain employees. One reason may be that employees in your industry are at an all-time high— which sounds like a good thing, but it also means that you’re less likely to find skilled workers because the majority of qualified individuals in your industry are already employed by another company. Another issue could be that there are simply not enough qualified individuals in your industry. Because of this, employers may have to spend more time and resources, training individuals.
#6: Cyber Attacks
Though not always at the forefront of every business owner’s mind, cyber-attacks are truly one of the biggest threats to businesses— even for those who don’t operate online. However, brick-and-mortar-only businesses aren’t at as high of a risk as e-commerce and hybrid businesses, but the risk is still there. Cybercriminals can hack into computer systems and networks, gaining access to sensitive business information. Fortunately, security information event management software (SIEM software) helps fight cyber attacks, making your business less likely to become a victim.
So there are several threats to businesses that exist, and not all of them can be prevented. However, for the threats that can’t be prevented, some solutions help lessen their negative effects. For the threats that can be prevented, it’s up to business owners to do what it takes to protect themselves.