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Biggest Threats That Can Put Your Small Business “Out of Business”


When you make the decision to start your small business, you’re full of excitement and really optimistic about what the future holds for your business. And while those feelings of optimism are great for your business, you can’t forget to be realistic about your new business venture as well.

All too often, business owners get too wrapped up in the excitement of starting a new business that they forget about the real threats they’re going up against. In your entrepreneurial journey, creating your business plan on the basis of “best-case scenarios” is just like building a house of straw… one huff and puff will blow your business down.

But knowledge is power and preparation is key. The more you know about the threats your business will be up against with business ownership, the better prepared you’ll be when your business actually does face these threats head-on.

Ultimately, you don’t want to have to face these risks but the reality is not if your business will face these threats but more so when your business will face these threats.

So the real question at hand now is are you ready to quit your job for entrepreneurship? And not just the good part of it, either… Are you ready to take the good, the bad, and the ugly that comes with entrepreneurship? If so, take a look at some of the biggest threats your small business will be up against, and if not handled properly, could put you out of business.

Biggest Threats That Can Put Your Small Business “Out of Business”

Reputational Damage

In running a business, your business’ reputation is one that is often overlooked, despite it being one of the most important assets. It’s so important because it’s so fragile. It can take years for a business to build a strong reputation only for it to be completely ruined by one negative review or comment.

A business needs a strong reputation in order to grow. If you’re a new business and no one has ever heard of you or if you’re an already established business but you’re only known for bad things, people won’t shop with you.

Libel and slander are two of the biggest threats to your business’ reputation. If you have any complaints from customers, work to fix their issues, don’t avoid or ignore them. Ultimately, customers just want to be heard when they do have a problem. By responding to and fixing their issues, you’re building your reputation back up, increasing customer satisfaction.

Business Interruption

Business interruption is something that can happen at any moment, and it’s basically anything that causes your business to become inoperable. Things like fires, floods, and other natural disasters cause businesses to temporarily shut down. According to Eastern Kentucky University, the Federal Emergency Management Agency asserts that almost 40% of small businesses fail to reopen after natural disasters impact their business.

Another area where businesses can get interrupted is in supply chain. As a business, are you getting your inventory from just one supplier? Sometimes businesses rely too much on just one supplier. As a continuity plan, you need to have a contingency plan in place with other suppliers in case something happens with your primary supplier, to prevent interruptions.


Aside from theft from physical stores, threats to the security of your business is typically due to failures within your IT systems. As technology advances, so are the skills of hackers, making it easier to compromise sensitive information of your business and customers. This means that you’re going to have to get proactive in your preventive measures.

You, of course, will want to take measures like requiring customers to create very strong passwords, continuously update your computer systems, and always keep a close eye on suspicious purchase activity. But in addition to that, you’ll want to invest in website monitoring programs. These preventive measures will reduce insurance-related costs like deductibles and premiums.

Risk Management is Key

From reputational damage to finances, these are some of the biggest threats your business will be up against, and the solution to all these threats is risk management. Having a good risk management plan in place will not only protect the reputation of your company but it will also be the foundation for your contingency planning.

Yes, you can hire a risk management agency to aid you along the way but the best way to run damage control is to have a proper plan in place to cover you before any of these threats impact you… This is when business insurance comes into play.

Depending on the type of business you’re running, you may want to get general liability insurance as the foundation and then add additional policies like an errors and omissions policy to protect you in the event someone seeks legal action for negligence.

Again, prevention is key and your insurance policy or policies is going to play a vital role in prevention and contingency planning. Once you have these systems in place, then you can feel free to operate in pure entrepreneurial bliss

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