Internal or External: Threats Can Destroy a Business

April 22, 2021

Due to the global pandemic, businesses know all too well that their existence can be destroyed almost overnight. Few people could have predicted 18 months ago what was about to happen to businesses and economies all over the world.

Numerous Threats

Regardless of size or location, businesses will always have numerous threats that can jeopardize their profitability or survival at any point in time. Some threats may be internal while others might be external as the pandemic proved. Regardless of the type of threat, plans must be made to either eliminate the threat if possible or minimize the negative effects as much as possible if the threat does materialize. Although the pandemic was unpredictable to the ordinary person, business owner, executive, or manager, other threats continue to loom in future. Regardless of the type of threat, businesses must be prepared.

Although the pandemic was an external threat, businesses must also deal with the possibility of internal threats. Potential threats exist all the time and must not be taken lightly. Some examples of potential threats might be:

Internal threats:

  • Employee turnover
  • Lack of cross-training
  • Equipment breakdowns
  • Lack of adequate financial resources
  • Poor internal controls
  • Non-responsive customer service and follow-up
  • Narrow product or service line
  • Small customer base

External threats:

  • Global pandemic (for sure!)
  • Weather related problems (for sure!)
  • New competition
  • Existing competition with superior products or services
  • Less expensive foreign imports
  • New taxes or business regulations
  • Shift in customer or supplier base
  • Tight credit market
  • Erosion of profits due to weak sales, higher expenses, or major customer bargaining power

All threats can hinder a company’s profitability and competitive edge. Although a business has a certain amount of control over internal threats, it usually has little or no control over external ones. However, a business must foresee these threatening elements and know in advance what course of action to take as soon as a threat is clearly identified. 

Neutralizing Threats

Although older threats will continue to exist and action must be taken to neutralize or lessen those threats if they materialize, new threats will continue to arise. (Who could have foreseen a new threat called a global pandemic?) Therefore, businesses should be in a constant state of threat “prediction and pro-action,” so the negative effects of potential threats can be lessened, as much as possible. If no action is taken on potential threats, a company runs the risk of losing profits, their competitive edge in the marketplace, or even the entire business.

What If Game

Play the “what if” game when thinking about potential threats. What if this happens, what will the business do? Although a threat might be beyond any one person’s control, the threat, nonetheless, must still be dealt with if it arises. Plan in advance what actions you will take if possible known threats arise. 

Understanding Threats

Understanding potential business threats is another form of planning not unlike other types of planning that every business should do continuously. Planning involves reviewing one segment of a business, setting goals and objectives for that segment, deciding on a realistic timeline, evaluating alternatives, making a decision, executing action, and then measuring the action to see if the intended goal was achieved. Potential threats in a business can basically be handled in the same manner. Understand the threat, decide on alternative courses of action if the threat materializes, and predict what the measured effect will be on the threat based on the action that would be taken. If the predicted outcome is not positive enough for the potential threat, then different alternative choices should be reviewed.

Plan for a Threat

Planning for a potential threat is much like purchasing insurance. It helps to safeguard a business in case unexpected events become reality. It is far better to be overprepared then underprepared. If a potential threat never materializes, then the planning is like purchasing insurance that is never needed although it is still a business necessity.

Since hope is not a good business strategy, a business cannot simply hope that threats never materialize. The most unexpected threat can become real and businesses have no choice but to do deal with that reality. Threats don’t have timelines and may not give any warning to a business. It’s the business that must be prepared to handle potential threats...because internal or external: threats can destroy a business.

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