Pub. 3 2020-2021 Issue 3

17 CONCERNS Cybersecurity Anyone who uses computers (that is, pretty much everyone in the business world) should be aware of the need for cybersecurity. Fraud in the form of phishing and ransomware can damage your company, and the pandemic seems to have encouraged cybercriminals to pick up the pace on their attacks. You should protect your company by doing the following: • Consider hiring a cybersecurity company. Their employees can help you assess and reduce risks, develop protocols, and review your plans to keep the business going during disruptions. • Write and enforce strict protocols to protect financial information. • Buy cyber insurance, and take the time to understand what you bought. Know what is or isn’t covered. Cyber insurance is a great option if you don’t have a full-time IT employee. • Train employees. One person clicking the wrong link is enough to cause real trouble. • Talk with employees about the risks of remote work, too. Unmonitored home office settings and smartphone usage are potential problems. Cybercriminals can change accounts, addresses, or other key business information more easily than might be possible at work. • Maintain a backup system. Test it regularly. Experts recommend a one-two-three system: o One offline data copy o Two different backup methods o Three copies of data The Supply Chain There are several steps a company can take to protect itself from supply chain problems: • Contracts matter. Since many companies have increased material prices and have had unavoidable delivery delays, it’s important to put escalation clauses for materials in the contract. Pass increased costs on to customers when possible. • Strong partnerships and good relationships are more important than getting the lowest possible price. If you don’t have a good business relationship, it doesn’t matter whether you got the lowest possible price because the money you spent might not get you what you need: responsiveness when a problem occurs. A company’s reliability is more important than the price they charge. • Be friendly and professional, and expect the same in return. Someone who is pleasant is much more likely to get a heads-up about news such as an upcoming price increase. Supply chain issues are real, too, and your reasonable attitude and friendliness will go a long way toward making those issues easier to handle. • Look at alternative suppliers. Ideally, you should have more than one way to get the materials you need. • Financial forecasting can be extremely useful because of the insights it provides. Use financial planning and analysis (FP&A) to know what will happen to profits under different scenarios such as increasing or decreasing costs. Tax Plans Tax planning matters because tax rules get changed regularly. Despite their direction (up or down), you need to know how those changes will affect the taxes you pay. Therefore, your business plan should include a section about the tax planning process. It’s a good idea to hire someone who can focus on the specifics because the details can impact your bottom line enormously. However, there are a couple of guidelines you can implement: • Know the current rules, and use them to your benefit. • Talk to an expert about your succession plan and estate plan now, before the rules change. • Some experts think tax increases are coming, too. It might be better to make tax-related changes in 2021 than to wait for 2022. 3