An economic downturn can be especially tough for small businesses, which often face increased pressure from supply chain disruptions and reduced cash flow. However, making the right adjustments can help your business weather the storm. Here are the main risks you should be aware of:
Supply Chain Vulnerabilities
The financial health of your business depends on the stability of your vendors and suppliers. In an economic downturn, it’s crucial to:
- Avoid relying solely on the insurance coverage of your suppliers.
- Consider expanding your own coverage limits to protect your assets in case a supplier defaults.
Contract Review and Adjustments
Before signing any new contracts in a turbulent economy, thoroughly review them for risk. Ensure dispute resolution clauses are in place to avoid costly legal battles down the line.
Expanding into New Markets
Exploring new customer bases or offering additional products may seem like a good idea during tough times, but these changes can also expose you to new liabilities. For example, expanding into unfamiliar markets may result in unanticipated product liability claims or class action lawsuits.
If you’re exploring ways to adapt to an economic downturn, McHugh Insurance Group can help you navigate the associated risks. Give us a call at 302-299-9199 for more details.