Business Loan

Do you like skating on thin ice? Do you leap before you look? I thought not. As an investor you make careful assessments before putting in your hard earned money. Yet you may be missing an aspect that can mean the difference between success and failure. The ability of a business to cope with disaster.

No doubt you perform the usual checks; financial audit, assess the people and evaluate the market. All well and good but meaningless if the business cannot survive what life throws at it. Let's leave tornadoes and terrorism for the moment and think about the mundane disasters that force thousands of businesses into oblivion. The weekend leaks, the staff that suddenly quit, the suppliers that only supply excuses. The neighbouring business from hell. The equipment that breaks when the big contract is due.

Some people still believe that insurance will make it all okay. The more battle weary among us know that when the insurance cheque finally arrives it cannot mend a ruined reputation, it won't make disgruntled suppliers agree to supply again and it won't stop competitors pouncing on misfortune.

At this point I could bombard you with the oft quoted statistics. Along the lines of "..one in five businesses suffer a major disruption every year blah blah". I won't bother. Harsh as it sounds who cares what disasters befall other businesses? You need to ensure that your investment is safe. Besides which if you want to worry just read any newspaper and imagine the business tragedies unfolding behind the big accident, the crime scene, the protracted roadworks or the boom in the Asian economies.

So the wise investor seeks a resilient business. A business that says "yes we got flooded at the weekend...but we have arrangements to work elsewhere, back up equipment in place and our staff know how to re route orders. It is not a problem". Such an operation brings to mind a spider's web. Bits can break but it still works. As opposed to many businesses which are more akin to a house of cards.

How do you start assessing how well a business has prepared to cope with disruptions? Such discussion often goes under the banner of "business continuity planning". However this is a term that has suffered from over association with the IT side of things. (Borne out of the Y2K issue.) A more holistic approach to assessing business resilience will cover what the business is doing to protect and plan for disruptions to all its key resources. Some examples being;

• People – is their knowledge captured or does it leave with them?


• Information – are copies usable and secure?


• Telecomms – if the phone line was cut how will customers reach you?


• Reputation – if the media wanted answers what would you say?


• Premises – what happens if the access road is blocked?


• Equipment – have you tested using the alternate kit?

Of course business continuity planning is not all gloom and wringing of hands. The resilient business has the satisfaction of telling customers about how they will deliver come hell or high water. "Oh and by the way, what have the competition said in that respect?". Imagine throwing that card on the table to tip the negotiations.

Speaking of negotiating tactics, a wise investor who uncovers concerns about the resiliency of a business can can add a whole dimension to the deal talks. It goes without saying that the amount you invest must reflect the level of risk you are taking.

As an investor you can bring many things to the table. Next time go armed with the right questions and an appreciation of the importance of business resilience. So that whatever decisions you make, avoid investing in disaster.