Do you remember how it felt to run a business in 2020?
The anxiety of empty storefronts, delayed shipments, and cancelled orders. The uncertainty of what the next day might bring. Declining consumer spending, supply chain disruptions, layoffs, and overall financial uncertainty all created ripple effects that threatened business operations and survival.
For many business owners, the COVID-19 pandemic wasn’t just a global health crisis—it was a waking nightmare that tested every ounce of resilience and resourcefulness they had. It exposed just how fragile many businesses were, especially small and medium enterprises (SMEs), during an economic downturn.
The worst may be behind us, but the lessons remain more relevant than ever.
Moving Forward: What Kind of Crises Should Businesses Prepare For?
While the pandemic may have been a once-in-a-generation event, it certainly won’t be the last crisis to test the resilience of small businesses. Economic and operational disruptions can arise from a variety of sources, including:
- Inflation surges – Sharp increases in the cost of goods, fuel, and raw materials can significantly eat into profit margins.
- Recession or market crashes – A downturn in consumer confidence often leads to reduced spending and slower cash flow.
- Natural disasters – Bushfires, floods, cyclones, and other extreme weather events can halt operations and damage assets, especially in vulnerable areas.
- Geopolitical conflict or war – Global instability, like war or trade sanctions, can disrupt supply chains and international trade.
- Cyberattacks and data breaches – With increased digitisation, small businesses are more exposed to cyber threats that can cripple operations.
- Public health emergencies – Pandemics or localized outbreaks can again force businesses to shut down or change how they operate.
- Changes in government policy or regulation – Shifting tax laws, trade policies, or industry-specific regulations can affect operational and financial strategies.
No business can control these events, but you can control how well you prepare for them. One way is to avoid these 9 common mistakes that could put your business at even greater risk during tough economic times.
1. Overlooking the value of business insurance
If your business is underinsured or not insured at all, you’re playing a dangerous game. Even though not all policies are tailored for specific crises, many can offer surprising coverage during a downturn. For example, plant and equipment insurance protects physical assets like machinery and tools, ensuring you’re not left scrambling if they’re damaged or lost.
Talk to your insurance provider about your existing coverage. Review your policy in detail to understand what events trigger coverage, such as business interruption, civil authority clauses, or contingent business interruption.
2. Ignoring government aid and grants
During economic crises, governments often roll out support packages for small businesses, including grants, tax deferrals, wage subsidies, and low-interest loans. Don’t assume you won’t qualify. Do your research, consult an advisor, and take full advantage of every opportunity available to you.
3. Avoiding small business financing
Even in a downturn, there are funding opportunities for businesses with solid foundations. If your business was healthy pre-crisis, lenders may still be open to financing. Explore alternative lenders, credit unions, or even government-backed loans designed to help small businesses weather the storm.
4. Ignoring your creditors
When money is tight, it can be tempting to go silent on your creditors. Don’t. Open communication can lead to flexible repayment plans or deferred payment schedules. Most landlords, suppliers, and service providers would rather negotiate than lose a long-term partner.
5. Spending on non-essentials
Now is not the time to splurge on nice-to-haves. That fancy espresso machine or showroom upgrade can wait. Focus instead on what’s essential to your operations and cash flow. Tighten your budget and reassess where every dollar goes.
6. Holding on to an outdated inventory
A bloated inventory can be a silent killer during slowdowns. Audit your stock and shift focus to high-demand, high-margin products or services. For food businesses, that could mean trimming the menu and using overlapping ingredients to reduce waste and cost.
7. Failing to pivot and adapt
Economic crises call for flexibility. Can you take your business online? Offer new services? Sublease unused space? Find innovative ways to generate revenue and stay connected to your customers. Many businesses that pivoted successfully during COVID-19 have kept those new revenue streams today.
8. Slashing marketing budgets
One of the most common mistakes during a downturn is going dark on your customers. Marketing doesn’t have to be expensive — social media, email newsletters, and website updates are cost-effective ways to stay top-of-mind. Keep your audience informed and remind them you’re still open and ready to serve.
9. Doing nothing
Downtime doesn’t mean dead time. Even if your doors are closed or sales are down, use this period to sharpen your business. Train your staff, organize your finances, improve internal processes, or review your insurance policies. Staying proactive now sets you up for long-term resilience.
Economic crises might be beyond our control, but they don’t have to spell the end for your small business. Avoiding these common mistakes and staying alert, agile, and insured will help you navigate uncertainty with confidence.
Author Bio: Carmina Natividad is one of the daytime writers for 360 Underwriting, a specialist agency network supporting insurance brokers with tailored underwriting solutions across sectors like motor, marine, professional indemnity, and plant & equipment. She enjoys crafting practical, jargon-free content that helps brokers better understand complex risks and deliver smarter coverage to their clients.
