Episode 3 – Protect your downsides: Avoid single points of failure in your business

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Hey everyone, welcome to episode three! Our topic today is “single points of failure” – do you have any of these in your business, and are you prepared for a possible worst-case scenario? I’m going to ask you some hopefully provocative questions, and then tell you some of the specific things I do to head off disaster.

A single point of failure is defined as part of a system where, if that one part fails, the entire system stops working. An example is if you sell products exclusively online, and your website goes off the air for some reason, then your cash flow simply stops because you’re not making any sales whatsoever with no website.

Another one – if you’ve got a great employee or a key developer who takes care of a lot of stuff in your business, and that person unexpectedly quits – do you have measures in place so that your business doesn’t grind to a halt or take a major hit if that happens?

The reason I think this is important to talk about is that a lot of us entrepreneurs are extremely forward-thinking. We move fast, break stuff, put a “minimum viable solution” in place that works for now, and we keep rushing forward. We rarely take the time to go back and make sure our ducks are all in a row when it comes to disaster prevention.

Obviously you don’t want to be paranoid… but I’ve found the act of thinking through worst-case scenarios to be really helpful in discovering any possible “single points of failure” in my business and planning for them.

Also, I’ve seen a few online entrepreneurs get to a decent of success and then “OMG my site was hacked / computer stolen / sites de-indexed and now I’m ruined!!!” Don’t let that be you.

So here are some of the disasters I’ve considered. Not all of them will likely apply to your business, but for those that do, give them some thought:

What would you do if…

  • your payment processor or e-mail list provider freezes your account or terminates your access? Do you have enough cash available to keep the business afloat? Do you have an account with an alternate provider that you could get up and running within a day?
  • you’re banned on Facebook, Adwords or Adsense? If most of your traffic comes from Facebook ads, and you happen to violate one of their policies, what’s your plan? Do you have alternate ways of reaching people? I’ve seen people with FB groups of 100,000 people get shut down with no explanation. If a key part of your business rests on someone else’s platform, you’d better have a backup plan in case it gets taken away.
  • your site(s) is/are deindexed from Google? Check out some of the case studies of people whose sites have been deindexed. There are ways to get it restored, as well as things you can do to minimize your risk of getting removed. But can you reach your audience without the help of the big G?
  • your laptop melts down or is stolen (and you’re in a foreign country)? First of all, your data better be backed up… not doing this is just stupid for anyone whose livelihood depends on their computer. Can you run your business from your smartphone or from an internet cafe? Or do you have the money available to pick up another laptop immediately?
  • your site is hacked or a developer screws it up? Nobody’s immune to this. I’ve seen it happen to people who are far more advanced than me. Do you have a plan for this situation?
  • you’re sick or injured and unable to work for a week or more? Imagine that you’re totally offline for a week – what happens? Does customer support just stop? Does your product or service not get delivered, because you are an essential part of the process?
  • your partner/cofounder/key employee quits suddenly or goes rogue? A lot of the bad partnership stories I’ve heard have become even worse and more costly due to lack of an agreement laid out in writing, which covers what should be done if one of the partners exits. If you’ve got an employee who’s really essential to the functioning of the business, and that person leaves, is there anyone else who’s already trained to do that person’s job? Or would you take it over? Do you have written Standard Operating Procedures defining that person’s role and tasks?
  • your main supplier/dropshipper decides to terminate its relationship with you? If you sell physical products, this is definitely a possible single point of failure. Do you have alternatives, and how fast can you switch? Do you have enough stock to hold you over during the transition?
  • your highest-paying regular client stops being your client? People who sell high-priced products and services have the advantage of needing less than 10 regular clients to make a good living; on the other hand, their weakness is what if you lose 4 of those clients? Can you get by on less, and do you have a way to bring more clients in quickly?
  • a client sues you, or you’re found to be infringing on someone else’s trademark? Nobody likes to think about these ugly legal situations, but they’re even more of a headache if you don’t prepare for them. So think about it – what would you do?

My precautions against single points of failure

This year, I actually faced a major issue when I thought my payment processor had failed. At the beginning of a new month, sales suddenly plunged by 80% and stayed there for an entire week. It was such a big dip that it seemed like they had maybe changed something in the way they processed credit cards, and payments weren’t going through.

Luckily, I had a backup payment processor ready to go – and I completed the switch within 24 hours. It would have been even quicker, but there was an SSL issue on my site which took some time and tech support to resolve.

Turns out that there wasn’t a problem with the old payment processor, and it was apparently just a very bad sales week that threw me into a panic. But I ended up staying with the one I switched to.

Still, I was definitely glad I’d thought through this scenario before it actually happened, because I knew exactly what needed to be done. Now I just need to write out my worst-case scenario SOPs instead of keeping them all in my head!

Here are a few of the things I do:

  • Automatic cloud backup for laptop. I use Carbonite and it runs automatically, so I don’t have to remember to do the backup.
  • Spare laptop. Okay, it’s not mine, it’s my husband’s – but I could work from it if I didn’t have my computer.
  • REALLY important files (such as my digital products) are stored in multiple places – Carbonite, Dropbox, Amazon S3, my web server, and a USB drive.
  • Two-factor authentication turned on wherever possible – yes, it can be a bit of a pain, but it adds an extra level of security that your sensitive accounts shouldn’t be without.
  • Password manager and strong generated passwords – like 1password, Lastpass, etc. This makes things both more convenient for me, since I don’t have to remember as many passwords, and more secure.
  • Website hosted on WPengine (with automatic nightly backups) – this has been a life-saver a few times. I’ve had plugin installations and WordPress updates go bad and completely screw up my site, and with WPengine I can do a one-click restore and roll everything back to the most recent working version of the website.
  • Domains set to auto-renew – such a simple thing, and you’ll be kicking yourself if you don’t do it!
  • Monthly download of my e-mail list and my customer list – one of my biggest assets is my audience, and I want to have that list in my possession, just in case there’s ever some problem with my mailing list provider.
  • Always have a healthy “war chest” – as mentioned in the last episode, your war chest is your business cash reserves, to be held in case of a disaster or big opportunity. I operate with a healthy margin so that if the business needs funds in an emergency, I’ll be OK.

I haven’t prepared for every scenario, but having these basics covered definitely helps me sleep better at night.

That’s it for today – if you want to see the full list of questions and worst-case scenarios I talked about today, go to entrepreneursinmotion.com/failure Is there anything I’ve left out? Or have you got some extra tips or experience with worst-case scenarios? Go ahead and leave a comment on this episode, again, at entrepreneursinmotion.com/failure

See you next week.