6 Threats Small Businesses Face

By: Caroline Black

6 Threats Small Businesses Face

When you’ve got a business, lots of things can go wrong at any time, but in the case of small businesses, some of these threats can shut them down for good. Small business owners must be more careful than anyone about the risks they are taking and the threats they face. 

That’s why it’s more important for them to be aware of the biggest threats to their business; here are just 6 of the things small business owners should keep in mind and protect their business against. 

1. Health and injury loss & liability

When you’re a business owner, you have the obligation for indemnification towards your employees for cases of illness, injury, or other related physical or mental damage. That covers everything, from an ordinary cold to chronic illness, pregnancy, and mental health issues. 

A larger company will have an easier time covering both the absence of the employee and the financial aspect, but with a small business where the margins are slim and the employees are few, this can spell disaster.

In addition, liability is always a concern, for the same reasons related to illness and injury, but also property damage and other types of damage. It’s important to implement and follow the correct safety procedures and have insurance coverage for the eventuality that such issues occur. Accidents and injuries are always unfortunate, but if they are mismanaged, they can end your business. 

2. Data breaches & improper cybersecurity

Perhaps the biggest issue right now, or at least a hot-button topic, is the matter of data breaches and cybersecurity, in general. When you’re working with clients, their privacy is the most important, so when things go awry and third parties gain access to their information, there is potential hell to pay. Cybersecurity threats you should keep at the forefront of your mind include hackers, scammers, phishing, and malware. 

One data breach scandal and you could not only lose sensitive and valuable information, but you could also be inundated by lawsuits from the clients whose data was compromised. 

Even the biggest companies suffer extraordinary loss of faith, of customers, and of financing as a result of situations like this, so security should be your no. 1 priority when working with customer data. Otherwise, you may be looking at a very short-lived business.

3. Losing important employees

Every successful start-up owner will tell you that especially at the very beginning, solid, valuable employees are essential. Finding a small team of capable, skilled, passionate and loyal individuals is incredibly important. Even more important is to be able to keep them. 

When you hire someone, you spend the time and money to bring them on board, train them, share your trade secrets with them, and come to rely on them for crucial parts of the process. As long as everything goes well and everyone is happy, it’s great.

However, should one or more of your valuable employees choose to move on, that can mean that your company takes a big hit. You’re not only losing the talent you’ve come to rely on, but that employee may go on to work for the competition. In addition, now you’ve got to cover for their absence while you spend more time and money bringing someone else in their place and training them. It’s not an ideal situation, and in the worst cases, it can sink a company. 

4. Improper marketing & SEO

You may not think of this as a legitimate threat, or at least not one as scary as the other ones are. It doesn’t involve a direct or sudden loss or any legal problems. So, what’s the problem, then? Well, in today’s market, unless your marketing is on point, it may be just a matter of time until your business goes down. 

You see, as a small and relatively new company, your SEO department needs to be strong enough to put you on the map. Especially in niches where you’ve got a lot of competition and a lot of bigger and already established businesses, you can drown before you’ve even got a chance to make yourself known to the public. 

One of the first things you should do is make sure that you’re putting your name out there and that your customers and potential customers can find you easily, whether that’s on your own website, through social media pages, or at a simple Google search. Otherwise, you may as well not even exist.

5. Business interruption

Have you ever considered the possibility of business interruption? That doesn’t always happen through any fault of your own or because the business isn’t going well. Should a natural disaster happen, or the building needs to undergo repairs for one reason or another, do you have a contingency plan?

Most businesses don’t, especially if they’re on the small side, and that can severely affect their success or the odds that they’ll be able to stay open, in the long run. If you need to interrupt the business, that casts a bad image and customers may lose trust, or they may simply move on to a competitor. Your business may never recover from the loss.

Preparing for worst-case scenarios is not the most pleasant activity, but it’s an essential step in ensuring your long-term success, regardless of unforeseen circumstances that are out of your control. 

6. Asset loss

One mistake people make in general, whether they’re business owners or not, is that they take their assets for granted. For small business owners, that includes materials, inventory, etc. Should you lose any of these, it would be a liability for your company, as they may not be replaceable, or at least not as easily as you’d like. 

Depending on how large the loss is and where your company is, financially, a large-scale asset loss can mean business shutdown, so you’ve got to protect these assets at all cost. In addition to ensuring their relative physical protection, you’ll also want to set up proper insurance. It can be expensive and a financial strain, especially for businesses that are just starting out, but insurance can make the difference between a company that is still running and one that is on its last legs, overnight. 


You are probably already aware that as a small business, it almost feels like you’re always on thin ice. You have to work so much harder than bigger companies in order to stay afloat, make a name for yourself, and become profitable, or even break even. 

However, there are other threats you need to be aware of out there, from liability issues, to asset loss, employee loss, cybersecurity breaches, and even bad marketing. Anyone of these issues can lead to the demise of your business, and you’ve got to work extra hard to make sure that you’re covered from every point of view, so you can rest easy.

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