Every business faces uncertainty, but it’s how you respond to it that determines your success — or failure. Here, we take a look at the four types of business uncertainty, and how hummpro can help improve your ability to respond to the unexpected.
According to a recent survey by the Australian SME Banking Council, 37% of small businesses say uncertainty is their biggest challenge. Given the past two years of snap lockdowns, changing trading restrictions, and blanket travel bans, it’s somewhat surprising to learn that it isn’t more.
COVID-19 has caused a huge amount of uncertainty for all businesses, but especially smaller firms, which often don’t have the resources to pivot or hibernate their offering that bigger organisations do. But it’s not the only reason you may be struggling to make decisions about the future.
US-based business insurance broker Embroker has identified four different types of uncertainty facing small businesses and startups. Here they are:
Level 1: Low level uncertainty
Think of this as your baseline level of uncertainty. Nobody knows what the future holds, so we all need to make the best decisions we can based on the most relevant data we have available. For example, which property to choose for your new office.
Level 2: Different paths forward
Here is where things get a bit trickier. You are faced with a few potential outcomes, and you don’t know which one will occur. For example, how much stock to order. You can work through this level of uncertainty by coming up with a plan for each scenario and picking one based on your risk tolerance.
Level 3: A range of different paths forward
When you’re faced with a scenario that has many potential outcomes — too many to count and map out — it can be stressful to make a decision, such as trying to predict consumer demand for a new product, for instance, or the economy. The best way to deal with this type of uncertainty is to identify what you think the likely outcomes would be and come up with a plan for each one. Similarly to level two, pick the plan that you’re most comfortable with.
Level 4: True uncertainty
When a situation is so unexpected that you can’t even predict what the possible outcomes could be, you’re in level 4 uncertainty. This includes major technological, economic, and social disruptions, such as COVID-19.
How hummpro can help
While you can’t eradicate uncertainty from your small business, you can improve your ability to respond to the unexpected. For instance, you can use hummpro to pay for unexpected expenses, such as repairing broken equipment, or replacing inventory that has been stolen, without impacting your cashflow.
Here are some other tips to help you deal with uncertainty:
- Think through worst-case scenarios and establish a risk management plan: You’ll be less stressed about the future if you think through all the worst-case scenarios you might face and develop a plan to mitigate the risks now.
- Remember progress, not perfection: Don’t let your desire to find the perfect solution to a situation stop you from acting. Take action quickly and check in frequently to revise if necessary.
- Be transparent about what’s going on: You might think you should wait to talk to your employees until you have a clear plan of action, but they will appreciate being kept informed all along the way.
Lastly, don’t forget that uncertainty creates opportunities. If every small business owner knew what the right decision was, there would be no advantage.
Uncertainty is one of the biggest challenges facing small businesses, but with hummpro, you can improve your ability to respond to the unexpected.