Minimize the Impact of Supply Chain Issues
3 strategies to minimize impact to your small business
Going into business for yourself can be exhilarating, but also time-consuming and filled with challenges. Depending on the business that you're in, you might need to learn how to manage the ins and outs of ordering inventory, managing staff, and building up predictable cash flow.
There is an additional challenge that has been hard to ignore recently—supply chain disruptions. Even the most well-run business can be derailed at times by this unpredictable complication.
Fortunately for many entrepreneurs, it's possible to plan for those disruptions with the goal of minimizing the potential negative impact. These strategies are easy to use and, in some cases, can be automated. Before working on a strategy to minimize the impact of these disruptions, it's important to consider the different ways a supply chain can be interrupted.
Examples of Supply Chain Disruptions
Before making a plan to fight supply chain disruptions, it's important to get a feel for how those disruptions could potentially happen.
- Weather-related disruptions are perhaps the most familiar to most American consumers and business owners. Snowstorms, tornados or even torrential rains can delay or disrupt supplies en route to their final destinations.
- The abrupt closing of international borders during unusual geopolitical or health-related situations will cause delays. One situation that has been experienced by citizens across the world is the global pandemic and its impact on the current supply chain.
- Human error, such as forgetting to place an order for supplies or turnover in staffing or changing who handles certain tasks, may slow down the ordering of products or other resources needed for a business' daily operations.
- Basic supply and demand can lead to a disruption in the supply chain. Examples of this could include higher than expected demand for a new product. Consumers have recently experienced demand impacting common household goods such as toilet paper in recent years.
What can a business person do to thoughtfully prepare for supply chain disruptions to reduce the overall impact on business operations? There are several strategies that have been proven to work.
How to Minimize Supply Chain Disruptions
Entrepreneurship includes constantly adjusting how a business is run through business planning, taking inventory, or running models that project future inventory needs. This data can help you anticipate when and where a disruption could most negatively impact your business and help you get ahead of any potential disruptions that may occur in the future. These strategies could include, but aren't limited, to the following:
- Develop a strategic plan that helps guide you during an unexpected crisis. Having a plan in place before any disruptions occur will help you navigate the challenges you may be dealing with during a disruption and minimize some of the stress during those moments in time.
- If you don't have a crisis plan in place, an immediate change you can make is to review your offerings and simplify your products and services. When making these adjustments, it's important to clearly communicate why these changes are being made and how they will impact your customers.
- Create one-time products that are available at a future date. Creating future product availability will give you time to produce the product and deliver it to customers. These products could include seasonal offerings, products made in collaboration with other businesses or a unique, short-term offering.
Companies can also reimagine the customer experience, encouraging the purchase of gift cards. Sometimes an unexpected disruption may become the inspiration for even better products and services or business pivots that you may not have considered previously.
3 Financial Tools to Manage Supply Chain Disruptions
In addition to crafting a strategy to manage supply chain challenges, there are also some useful financial tools that you should consider signing up for as you organize your business finances.
- Opening up a business line of credit such as our Unsecured Optionline. This financial tool gives qualified entrepreneurs access to a variable line of credit that can be accessed when needed.
- You likely have a personal emergency fund and having one for your business makes sense too. Open a savings account so it’s available when business income tightens up unexpectedly. Just like your personal fund, deposit a set amount each month into this account.
- Apply for grants. You may qualify for grants that can help you stay afloat during difficult financial times due to a supply chain disruption.
Lastly, there are two financial tools that you may consider having on hand: a business credit card and comprehensive insurance coverage that protects your business.
Supply chain disruptions are an unfortunate part of being an entrepreneur but proactive planning for how the unexpected can impact your small business will help you keep your business running during challenging times.