The banking industry has faced a series of crises this year, which have sent shockwaves through the global economy. As a green industry business owner, these events can be a cause for concern. However, there are ways to reduce risk and protect your business in uncertain times. Moreover, there are many lessons that can be learned from the banking crisis that can be applied to other parts of your business. In regard to risk management, there is much that small business owners can take away from the challenges faced by the banking industry.
You can have as many accounts as you want at one bank, but any balance over $250,000 will not be FDIC-insured. Business accounts are insured separately from personal accounts, so the FDIC can insure $250,000 in a business account and $250,000 in a personal account at the same bank. If you have more than the FDIC-insured amount at any given bank, then it would be advantageous to diversify your holdings in a second bank. Building this second banking relationship can also make it easier to quickly wire funds to safety if you are worried that your bank may be unstable. This is crucial, especially when you need to make payroll!
What else can a green industry business learn from this banking crisis? One of the major takeaways is the importance of diversification to manage risk. Below are some additional ways to diversify:
Material suppliers: It’s great to build a relationship with a supplier in your market, but having alternatives gives you leverage in negotiations and reduces your risk if changes occur at your primary supplier.
Marketing channels: Do you get 90% of new customers from one marketing channel? Protect your lead flow, diversify into other methods and platforms.
Subcontractors: Stay connected and build relationships with multiple subcontractors, especially if it’s a crucial aspect of your business model.
Recruiting strategies: This is a pain point for many businesses, stay open to alternate methods and opportunities.
Employees: Having checklists, processes, and systems in place is key if an employee leaves the company. It will allow the replacement to step in and continue operations smoothly.
It is crucial to have contingency plans in place to mitigate risk and protect your business in uncertain times. By taking these lessons to heart, you can navigate through challenging times and emerge stronger and more resilient. So, take action now, and start diversifying your business today!