How to Protect Your Business in a Financial Crisis
Create a plan for preparedness to ensure you can bounce back
by Amy Cash

Within the construction industry, crises can occur rapidly and without warning. Whether it be a safety issue, lack of trained professionals or a cyber incident, when a crisis hits, being unprepared can lead to catastrophic results.

In the construction industry, emergencies can include weather-related disasters, jobsite violations, violence, fire, lack of trained professionals and cyberattack. Construction business owners should regularly reexamine their crisis plans for these various possibilities. In any industry, but especially in construction, the most effective way to handle a crisis is to have a plan in which each member’s response role is detailed, and to not only update it, but make regular practice of putting the plan into action.

Because safety is one of the top issues in the industry, a safety plan should be prepared and regularly practiced as well, and individuals should know their role and be ready to perform it at any time without reluctance.

Crisis management plans should include an immediate response to a crisis, a business operations plan and, finally, a contingency plan to maintain operational status during the crisis. The strategies for each situation should be well-known and easily applicable when needed.


In any disaster, finances are always at risk, and execution of a financial disaster plan is key. A financial disaster usually requires the immediate need of monetary outflow that goes beyond the scope of cash reserves or impacts inflow, resulting in the depletion of cash reserves. This can be anything from a natural disaster, project mishap, uninsured death or sudden, sharp market decline. Financial disaster plans should be revisited at least annually, more frequently if there are changes in the financial status of an individual or growth or decline in the company. Types of disasters and their causes are constantly evolving, and financial plans should adjust accordingly.

When construction business owners consider how to put a disaster plan in place, they should center the discussion on risk. The first step is to identify whether you have a general plan, either for cash flow or retirement. If the answer is yes, then determine if you can self-insure for a financial disaster. Many individuals and businesses believe this just means holding 6 to 12 months of cash, which is not always the case. It is important to think about whether you are prepared to respond during a situation, such as a major injury or a natural disaster, during which you may not be able to operate your business or may be required to uproot your home. For these more severe cases, insurance is needed.


Insurance is key for construction business owners due in large part to the risk that the job typically involves. When obtaining an insurance policy, the safest option is the one with as few limitations as possible. When you prioritize cost of the policy over the coverage provided, coverage limitations may prevent receipt of benefits. Upon reviewing the conditions, a business should consider which disasters they might self-insure and which ones they cannot, and then, use that judgment to choose a policy to cover all their needs.

If the financial disaster is not an insurable event for the company (e.g., death, disability, fire, etc.) self-insurance is the primary option to manage the impact of the disaster. Owners should ensure access to their investments and have a predetermine what they can sell or liquidate in the event they have an immediate financial need. For this reason, it is recommended that businesses retain a fixed income in their profile and an asset that can be easily tapped to assist during a broad, macro financial disaster, such as a market decline or job loss. At a business level, organizations should now consider if they could withstand a data breach of client or financial data. On an individual level, considerations should be made to determine whether they can withstand identity theft. Cyber risk assessments can assist in hardening the business as a potential target, and possibly reduce insurance costs.

When business owners are looking to put a crisis plan in place, they should consider professional assistance from a team of asset managers, including legal counsel, subject matter experts or tax advisors who are available to coordinate a plan addressing all angles of a potential financial disaster or safety situation. Planning for the unexpected is an essential trait of responsible business owners. The level of service and amount of crisis planning should be the same for a business during the best financial times as it is for a business on shaky financial footing. With the continued construction labor crisis, it is more important now than ever to be prepared for any and all situations to ensure your construction business thrives.