Five Reasons for Unexpected Financial Issues

Whether we are talking about individual consumer or local businesses, everyone likes to believe that they are in complete control of their financial destiny. However, all it takes is a sudden wake-up call at the hands of the unexpected for us to realize that we actually have far less control than we thought.

Over just the past few years, there have been a wide range of unexpected factors that have had disastrous impacts on even the strongest small businesses. And since the only way to prevent history from repeating itself is to learn from it, let’s take a closer look and break down five of those factors in order to make sure that we are prepared for the possibility that they happen again in the future.

Economic Pressure

There were very few businesses and consumers that were realistically prepared to struggle through the Great Recession, and a quick dip like that could be on the verge of happening again at a moment’s notice.

Because we now live in a global economy, there are all kinds of factors outside our control that have the ability to destroy even the best-laid plans. And for that reason, we must always be cautious to guard against a total financial meltdown.

Real Estate

The Great Recession also opened a lot of eyes to the power of fluctuations in real estate values. When your house or your office building is suddenly worth half what you paid for it overnight, then everything you have worked for will suddenly be flipped on its head.

And while there is nothing we can do to control macro real estate trends, we can certainly make a point to protect ourselves from the pitfalls of sudden spikes by making sure that we are not overextending ourselves.

Interest Rate Fluctuations

Another factor that many businesses are not accounting for is the possibility that the current “zero interest rate” climate is going to come to an end at some point. For that reason, companies must be cautious to avoid depending on low-interest rate loans to squeak through the tough times.

If we were in a period of average interest rates, many businesses that are already cutting it to close would be forced to close their doors in a hurry, and those higher rates could be coming back sooner than any of us think if inflation starts to spike.

Criminal Activity

When most people think of criminal activity, they check the local crime statistics to see if the area where they are located is relatively safe compared to other surrounding areas.

That can certainly be an issue, because having hoodlums outside your business will not encourage upstanding citizens to come around, and increased crime rates can mean increased danger for yourself, your employees, and your customers.

But you should also be cautious to watch out for criminal activity in your industry as well. Imagine if a scandal like Enron or Bernie Madoff happened in your industry. How would that impact your day-to-day operations?

Mother Nature

There is also very little that you can do to protect yourself against the dangers that mother nature can impose on your business. Depending on where you are located, this could mean finding ways to protect yourself against hurricanes, tornados, tsunamis, earthquakes, or even California wildfires.

Any of these types of natural disasters can put your business out of commission for days, weeks, months, or even permanently. And for that reason, you have to treat the possibility that they do exactly that with as much respect as possible.

You are never going to be able to control how any of these factors can create unexpected financial issues for your business, but you can certainly take steps to ensure that their impact is as small as possible. And with that precaution in place, you will already be on the right path to avoiding trouble.

By | 2018-10-12T13:08:18+00:00 October 12th, 2018|Blog|0 Comments

About the Author:

Graduated from University of Utah - business degree 1990. Served in US Army as an interrogator / linguist, then as a tactical intelligence officer - Military Intelligence 1986-1990. Managed Western US sales operations for NY based collection agency 1990-1992. Founded Direct Recovery Associates, Inc. 1992-present