Risk & Survival

March 2020: when everything stopped

Pushpa didi, Rishikesh. The shutters came down on March 22. No warning — well, there had been warnings on the news, but nobody believed it would actually happen. Her chai shop was closed. For three months, she had zero income. Zero. The rent didn't stop. The gas bill didn't stop. The EMI on her small loan didn't stop. She had ₹47,000 in her bank account when the lockdown began. By June, she had ₹6,200.

Bhandari uncle, Haldwani. ₹15 lakh worth of inventory — cement, pipes, fittings, electrical supplies — sitting in his shop. Construction sites shut overnight. Nobody was buying. But his distributor's payment was due in 30 days. Two EMIs running. His wife asked quietly one night: "Dukaan band karni padegi kya?"

Neema, Munsiyari. Every single booking for the homestay — March, April, May, June — cancelled overnight. Not postponed. Cancelled. And guests wanted refunds on advance payments. Neema had already spent some of those advances on renovations. She owed money she didn't have to people who didn't want to wait.

Rawat ji, Ranikhet. The apples were coming in. Nature doesn't wait for lockdowns. But the transport to the mandi was stopped. No trucks. No buyers. He watched boxes of apples rot in his storage shed, each box worth ₹800 that would become zero.

Vikram, Dehradun. The restaurant was shut. Staff sent home. Rent running at ₹40,000/month for a locked door. The franchise brand sent a cheerful email: "We're all in this together." The royalty was paused for one month. One month.

Ankita. Courier services were suspended. Her online orders — the lifeblood of her packaged food business — couldn't be shipped. She had 200 jars ready, shelf life ticking, and no way to sell them.

This chapter is about risk. Not the theoretical kind from textbooks — the kind that shows up at your door, unannounced, and tests whether your business survives.

COVID was the biggest collective business crisis most of us have lived through. But risk doesn't need a pandemic. A key supplier going bankrupt. A natural disaster. A sudden regulation change. A health emergency. A partner walking out. These happen every day, to businesses of every size.

The question isn't whether risk will come. The question is whether you'll be ready when it does.

Types of business risk

Every risk falls into one of these categories:

1. Market risk

Demand for your product or service drops. Customer preferences change. A competitor takes your market share. The economy slows down.

Neema's homestay during off-season: from 90% occupancy in October to 15% in January. Predictable, but still painful.

2. Operational risk

Something goes wrong inside your business. Equipment breaks. Key employee quits. Supply chain disrupted. Quality problem causes customer complaints.

Pushpa didi's gas supplier changed terms — she had to pay upfront instead of monthly credit. Cash flow disrupted for weeks.

3. Financial risk

Cash runs out. Debt becomes unmanageable. A large customer doesn't pay. Your costs rise faster than your revenue.

Bhandari uncle extended ₹8 lakh credit to a builder who defaulted. That's 15% of his annual revenue — gone.

4. Legal and regulatory risk

New regulation makes your business more expensive or illegal. Tax law changes. A compliance gap leads to a penalty. A customer or partner sues.

When GST was introduced, many small businesses in Haldwani struggled with the new compliance requirements. Some shut down rather than figure it out.

5. Natural disaster and climate risk

Floods, earthquakes, landslides, unseasonal weather. Uttarakhand businesses are especially vulnerable.

The 2013 Kedarnath floods destroyed hundreds of businesses along the Char Dham route. Many never reopened. The 2023 Joshimath subsidence affected tourism businesses for months.

Rawat ji loses 10-15% of his apple crop to hailstorms in an average year. In a bad year, 30%.

6. Health and personal risk

The entrepreneur gets sick, injured, or burns out. In most small businesses, if the owner can't work — the business can't function.

When Bhandari uncle was hospitalized for two weeks in 2019, his son had to rush back from Lucknow to keep the shop open. Nobody else knew the pricing, the supplier relationships, or where the account books were kept.

7. Technology risk

Your website crashes. Your data is lost. A new technology makes your model obsolete. Cybersecurity breach exposes customer data.

Priya's agri-tech app had a server crash during peak season. Farmers couldn't access the platform for 36 hours. Three major users switched to a competitor and never came back.

8. Reputation risk

A bad review goes viral. A food safety incident makes the news. A disgruntled employee posts on social media. A product recall.

One negative review about a cockroach in a food delivery order cost Vikram's restaurant an estimated ₹80,000 in lost orders over the following month. The review is still visible on Zomato.

Risk assessment: probability x impact

Not all risks are equal. A risk that's likely to happen but has small impact is different from a risk that's unlikely but catastrophic.

Risk Score = Probability (how likely) x Impact (how bad)

Example: Bhandari uncle's risk assessment

You don't need a fancy spreadsheet. Take 30 minutes, list the top 10 risks for your business, score them roughly, and figure out what you're going to do about the top 5. Update this once a year.

Insurance: paying for protection

Insurance is one of the most underutilized tools in Indian small business. Most entrepreneurs think "mere saath nahi hoga" (it won't happen to me). Until it does.

Types of business insurance

1. Fire insurance / property insurance Covers damage to your business premises and assets from fire, natural disaster, theft, or vandalism.

Bhandari uncle's shop has ₹15 lakh of inventory and ₹5 lakh of fixtures. A fire could wipe him out completely. Annual premium for ₹20 lakh fire insurance: approximately ₹4,000-8,000. That's ₹15-25 per day for peace of mind.

2. Stock/inventory insurance Specifically covers your inventory against damage, spoilage, or theft. Critical for businesses with high inventory value.

3. Public liability insurance If a customer gets injured on your premises or by your product, this covers legal costs and compensation. A customer slips in Vikram's restaurant and breaks an arm — medical bills, legal fees, compensation could cost lakhs.

4. Keyman insurance Life insurance on the key person (usually the owner) in the business. If something happens to Bhandari uncle, the policy pays out enough to cover debts, wind down the business, and provide for the family.

5. Health insurance For the entrepreneur and their family. A single hospitalization can cost ₹2-10 lakh. Without insurance, that comes directly from business capital.

6. Product liability insurance If your product causes harm to a customer. Essential for packaged food (Ankita), any manufactured goods, or services where customer safety is involved.

7. Crop insurance (PMFBY) For agricultural businesses. Rawat ji can insure his apple crop against hail, frost, and pest damage through the Pradhan Mantri Fasal Bima Yojana. The premium is subsidized by the government.

The math is simple: Insurance costs a small, predictable amount every year. The alternative is a large, unpredictable loss that could end your business. It's not about whether you can afford insurance. It's about whether you can afford not to have it.

The emergency fund: your survival buffer

Every business needs cash reserves that it can access immediately in a crisis. This is not investment money. This is not "grow the business" money. This is "keep the lights on when everything goes wrong" money.

How much?

Minimum: 3 months of fixed expenses. Rent, salaries, loan EMIs, insurance premiums, utilities — everything you must pay even if revenue drops to zero.

Ideal: 6 months of fixed expenses.

Let's calculate for each character:

Where to keep it?

• Savings account (liquid, immediate access, low interest)
• Liquid mutual fund (slightly better returns, 1-2 day withdrawal)
• Fixed deposit with premature withdrawal option (better interest, accessible in 1 day)

Do not keep emergency funds in the business cash register, in stock, or in any illiquid investment. The whole point is instant access when you need it.

How to build it?

If you don't have an emergency fund today, start with 5% of monthly revenue. Set up an automatic transfer. Treat it like a non-negotiable expense. Build it up over 12-18 months.

Pushpa didi learned this the hard way. After COVID, she started keeping ₹5,000 aside every month. "Pehle socha tha — itna chota amount se kya hoga. Lekin 18 mahine mein ₹90,000 ho gaye. Agar agli baar kuch hota hai, toh teen mahine toh chal sakti hoon."

Diversification: don't put all eggs in one basket

The most dangerous word in business: only.

• Only one product
• Only one customer
• Only one supplier
• Only one revenue stream
• Only one platform

When that "only" fails — everything fails.

Revenue diversification

Neema's homestay used to depend 100% on booking.com. When COVID hit and bookings zeroed out, she had no alternative. After reopening, she diversified:

• Direct bookings through her website and Instagram (40% of bookings)
• Booking.com (30%)
• MakeMyTrip (15%)
• Corporate retreat packages sold directly to companies (15%)

Now if any one channel disappears, she survives.

Rawat ji used to sell 100% through the mandi (wholesale market). One bad season, the mandi prices crashed. Now:

• Mandi: 50%
• Direct retail (weekend market in Nainital): 20%
• Processed products (apple juice, apple cider vinegar): 15%
• Direct B2B (hotels, restaurants): 15%

Customer diversification

Bhandari uncle's biggest customer is a local builder who accounts for 25% of his revenue. If that builder goes bankrupt or switches supplier — Bhandari uncle loses a quarter of his income overnight. The rule of thumb: no single customer should be more than 15-20% of your revenue.

Supplier diversification

Ankita sourced all her spices from one farmer in Bageshwar. When that farmer had a bad harvest, Ankita had no supply for two months. Now she has three suppliers and maintains a buffer stock of critical ingredients.

Skill diversification

Pushpa didi added breakfast items (paratha, poha, bread-omelette) to her chai shop. Morning revenue went up 35%. She also started a monthly "pahadi chai" subscription for 12 regular customers — ₹500/month for daily chai delivery. That's ₹6,000 guaranteed income regardless of walk-in traffic.

Scenario planning: what if?

Most entrepreneurs plan for the best case. Resilient entrepreneurs plan for the worst.

Scenario planning means asking "What if?" about the biggest risks and figuring out your response before the crisis hits.

Exercise: write down your top 5 "What if?" scenarios

1. What if your biggest customer stops buying?

   • How much revenue do you lose?
   • How quickly can you replace them?
   • Can you cut costs fast enough to survive the gap?

2. What if your rent doubles?

   • Can you afford it?
   • Do you have alternative locations scouted?
   • Can you renegotiate, or is the landlord non-negotiable?

3. What if your key employee quits tomorrow?

   • Can someone else do their job?
   • Are processes documented?
   • How long to hire and train a replacement?

4. What if a natural disaster hits?

   • Is your business insured?
   • Do you have inventory stored in a second location?
   • How quickly can you resume operations?

5. What if you get seriously sick for 3 months?

   • Can your business run without you?
   • Does anyone else have access to bank accounts, supplier contacts, customer information?
   • Is your family financially protected?

You don't need detailed plans for every scenario. But for each one, you need to know: (1) how bad is it, (2) what's my first action, and (3) who do I call. Write it down. Keep it updated. Share it with one trusted person.

Legal protection: your armor

Many business risks can be prevented or reduced through proper legal documentation:

1. Written agreements with everyone

• Suppliers: payment terms, delivery timelines, quality standards, dispute resolution
• Customers: scope of work, payment terms, liability limits
• Landlord: rent escalation clause, lock-in period, maintenance responsibilities
• Partners: profit sharing, decision-making, exit process
• Employees: job description, notice period, non-compete, confidentiality

No handshake deals. Bhandari uncle has given ₹8 lakh credit over the years based on trust alone. Some he recovered. Some he didn't. Every credit above ₹25,000 should be documented.

2. Compliance up to date

• GST filing: monthly/quarterly, on time, every time
• Income tax: filed, paid, documented
• FSSAI (food businesses): license active, inspections cleared
• Labour law: PF, ESI if applicable, minimum wage compliance
• Shop and establishment license: renewed
• Fire safety: certificate valid, equipment working

3. Intellectual property

If you have a brand name, logo, or unique product — register them:

• Trademark: Protects your brand name and logo. Ankita registered "Pahadi Rasoi" as a trademark. Cost: ₹4,500 for government fee. Process: 6-12 months.
• Copyright: Protects original creative works (your website content, photographs, written material)
• Patent: If you've invented something genuinely new (rare for most small businesses)

4. Business structure

Operating as a sole proprietor means your personal assets are at risk if the business owes money. A Private Limited Company or LLP provides a legal wall between personal and business liability. We covered this in the Legal chapter — if you haven't set up a proper structure yet, revisit it.

Personal risk: the entrepreneur behind the business

We talk a lot about business risk. We don't talk enough about the risk to the human running the business.

Health

Long hours, poor diet, no exercise, chronic stress — the entrepreneur lifestyle. Bhandari uncle developed high blood pressure at 52. Pushpa didi has chronic back pain from standing 10 hours a day. Vikram hasn't taken a day off in 8 months.

Get an annual health checkup. Not expensive (₹2,000-5,000 at most hospitals). It catches problems before they become crises. Your business needs you healthy.

Burnout

The signs: constant exhaustion even after rest, cynicism about your own business, declining performance, irritability, difficulty making decisions.

Burnout is not laziness. It's your body and mind telling you that the pace is unsustainable.

What helps:

• One weekly day off (non-negotiable — yes, even in food business)
• Physical activity (even a 30-minute walk daily)
• Talking to someone outside the business about how you feel
• Delegating — your business should not depend on you doing everything yourself

Family pressure

"When will you get a real job?" "Your cousin's son is earning ₹80,000 in Bangalore." "You've been doing this for two years and we still don't see stability."

Family concern comes from love. But it can break an entrepreneur's confidence at the worst time.

How to handle it:

• Share your numbers (not feelings, numbers) with family quarterly. Transparency reduces anxiety.
• Set a timeline: "Give me 18 months. If it doesn't work by then, we'll discuss alternatives."
• Separate business finances from family finances completely. Family should not be bearing the business risk.

When business fails — and that's okay

Let's talk about the thing nobody wants to talk about.

Most businesses face a near-death moment

Across every study, every survey, every experienced entrepreneur's testimony — roughly 90% of businesses face at least one existential crisis in their first 5 years. The question is not whether it will happen, but when, and how you respond.

Pushpa didi's near-death: COVID lockdown. She survived by borrowing ₹20,000 from her brother and cutting expenses to bare minimum.

Bhandari uncle's near-death: 2016, when the builder defaulted and a large cement shipment was damaged in transport simultaneously. He was ₹11 lakh in the hole. He renegotiated payment terms with his distributor, took a small loan, and recovered over 18 months.

Ankita's near-death: Her first batch of 500 jars had a labeling error — the expiry date was printed wrong. She couldn't sell any of them. ₹42,500 of stock wasted. She nearly quit. Her grandmother told her: "Achar ek din mein nahi banata. Business bhi nahi banega."

Pivoting vs shutting down: how to decide

When the business is struggling, you have three options:

Option 1: Pivot — Change what you're doing. Different product, different customer, different channel, different model.

Neema pivoted during COVID: she offered "work from mountains" packages targeting remote workers from cities. Different customer, same infrastructure. It worked so well that it became 20% of her post-COVID business.

Option 2: Restructure — Keep the core but cut costs drastically. Reduce staff, renegotiate rent, drop unprofitable products, shrink to survive.

Vikram restructured by closing dine-in for two months and running delivery-only. Staff reduced from 4 to 2. Revenue dropped 60% but costs dropped 70%. He survived.

Option 3: Shut down — Close the business. Not failure — a decision.

Shut down when:

• You've been losing money for 6+ months with no realistic path to profitability
• The market has fundamentally changed and your business model is obsolete
• Continuing will put you into debt you can't recover from
• Your health (physical or mental) is severely affected

Closing a business responsibly

If you decide to close:

1. Pay your employees first. Salary, any pending dues, and whatever bonus you can manage. These people trusted you with their livelihood.

2. Pay your suppliers. If you can't pay in full, negotiate. Communicate honestly. Most suppliers will work with you if you're transparent.

3. Settle your debts. Loans, credit, outstanding bills. Talk to your bank. Restructuring options exist.

4. Handle legal obligations. Cancel registrations, file final GST returns, close bank accounts properly.

5. Inform your customers. If they've paid advances, return them. If you have pending orders, fulfill or refund.

6. Don't disappear. The people who shut down a business honestly can start another one with their reputation intact. The people who disappear, leaving debts and broken promises — they can't.

Failure is data, not destiny. Every failed business teaches you something no book can. The cost structure was wrong. The market wasn't ready. The team wasn't right. The location was bad. You now know. Next time, you won't make the same mistake.

Starting again

Across the table from Vikram at a Dehradun cafe sits a man named Sandeep. He's 44, runs a successful IT services company with 35 employees and ₹2 crore annual revenue.

What most people don't know: Sandeep's first business — a computer training center in Haridwar — failed in 2008. He lost ₹7 lakh. His second business — an e-commerce attempt in 2012 — failed in 18 months. He lost another ₹4 lakh.

"People see where I am now and think I'm successful," Sandeep says. "I am. But I'm standing on the graves of two failures. Those failures taught me everything this business is built on — cash flow discipline, customer validation before investment, hiring slowly, and keeping six months' expenses in the bank always."

The most successful entrepreneurs are rarely first-time lucky. They're experienced survivors. They've failed, learned, and rebuilt — with more knowledge, more caution, and more resilience each time.

If your business fails:

• Take time to process. Grief is normal. Business failure feels personal because it is personal.
• Write down what you learned. Be specific. Not "I should have done better" but "I should have validated demand before signing a 3-year lease."
• Clean up responsibly. Pay what you owe. Close properly. Protect your reputation.
• Rest. Then start thinking about what's next.
• You are not your failed business. You are the person who dared to try.

Building resilience: habits and practices

Resilience isn't a personality trait — it's a set of practices.

Daily habits

• Check your numbers. Revenue, costs, cash balance. 5 minutes daily. Surprises happen when you're not looking.
• Move your body. Walk, yoga, gym — whatever works. Physical health = mental health = business health.

Weekly habits

• Review cash flow. What came in, what went out, what's committed for next week.
• One conversation with a customer. Not a sales pitch — a genuine check-in. What's working? What's not? This keeps you connected to reality.

Monthly habits

• Full P&L review. Not just revenue — every cost line. Where is money leaking?
• Update your risk list. Has anything changed? Any new risks? Any old risks resolved?
• One thing to improve. Not five things. One. Focus.

Annual habits

• Health checkup. Non-negotiable.
• Review insurance. Is coverage adequate? Anything new to cover?
• Scenario planning refresh. Update your "What if?" responses.
• Take a break. At least one week. Your business will survive 7 days without you. If it can't — that's a problem to fix, not a reason to never rest.

The long game: what 10-year businesses have in common

Bhandari uncle's hardware shop has been running for 22 years. In that time, he's survived demonetization, GST introduction, COVID lockdown, a builder default, two floods, and the rise of online commerce.

What's kept him going? What do businesses that survive 10+ years have in common?

1. Cash discipline

They don't overspend in good times. They save when revenue is up so they have reserves when revenue is down. Bhandari uncle has never taken a car loan or built a bigger house during a good year. He reinvests or saves.

2. Adaptability

They change when the market changes. Bhandari uncle added sanitaryware when bathroom renovation demand grew. He started accepting UPI payments early. He opened a small delivery service for bulk orders. He doesn't fight change — he absorbs it.

3. Customer relationships

Their customers are loyal because the relationship goes beyond transactions. When a customer calls Bhandari uncle with an emergency plumbing need at 9 PM, he picks up the phone. He's not just a shopkeeper — he's a trusted advisor.

4. Conservative debt

They use debt carefully. Small loans for specific purposes, repaid on time. Never borrowing to cover losses. Never borrowing beyond their ability to repay.

5. Family and team support

No one survives 22 years alone. Bhandari uncle's wife manages the accounting. His son helps on weekends. His two long-term employees (8+ years each) are practically family. The business is a team effort.

6. They find meaning in the work

This is the one that doesn't show up in business books but matters most. Bhandari uncle genuinely likes his work. He likes solving problems for customers. He likes the daily rhythm of the shop. He's not grinding through misery — he's built a life he's mostly content with.

"Business mein 10 saal tikna aasan nahi hai," Bhandari uncle says, closing the shop one evening. "Lekin impossible bhi nahi hai. Paisa bachaao, customer ka dhyan rakho, family ko saath rakho, aur jab mushkil aaye — himmat mat haaro. Bas itna hai."

The bridge to Part 3

If you've read this far — Part 1 (business fundamentals) and Part 2 (running a specific type of business) — you know more than 90% of people who start businesses in India. You understand money, marketing, legal, operations, pricing, team, and now industry-specific knowledge and risk management.

This is enough to build and run a good, sustainable local business. For most people, that's the goal — and it's a worthy one. Pushpa didi's chai shop, Bhandari uncle's hardware store, Neema's homestay — these are real businesses that support real families and serve real communities.

But some of you want more. Some of you have an idea that could reach thousands of people. Hundreds of thousands. You're thinking about technology, about scale, about raising investment, about building something that grows beyond one location, one city, one state.

That's the startup path. And it's a very different game.

Part 3 is for you. It covers the startup world — from idea validation to fundraising, from building a tech product to scaling operations, from equity and cap tables to the mental cost of the startup journey.

But don't skip Part 1 and Part 2. Everything in Part 3 builds on what you've already learned. The startups that fail most often are the ones that ignore the fundamentals — cash flow, unit economics, customer understanding, legal compliance — in their excitement to grow fast.

The best startups are just well-run businesses that found a way to scale.

Ready? Let's go.

Chapter checklist

For business survival and risk management:

• Have I identified the top 5-10 risks for my business?
• Have I scored each risk by probability and impact?
• Do I have appropriate insurance (fire, stock, liability, health)?
• Do I have an emergency fund of at least 3 months' fixed expenses?
• Am I diversified — multiple revenue streams, customers, and suppliers?
• Have I done scenario planning for my biggest "What if?" situations?
• Are all business relationships documented in written agreements?
• Am I legally compliant (GST, income tax, licenses, labour law)?
• Do I take care of my health, with an annual checkup?
• Can my business operate if I'm absent for 2 weeks?
• Do I have a trusted person who knows where everything is (accounts, agreements, keys)?
• Have I accepted that failure is possible — and prepared accordingly?

Twenty-two years of Bhandari uncle's shop. Not because nothing went wrong. Because when things went wrong, he didn't quit. He adapted, he survived, and he kept the shutters rolling up every morning.

That's the real definition of entrepreneurship. Not glamour. Not funding rounds. Not Instagram stories. Just showing up, day after day, and doing the work.