Our work delving into the businesses of independent news publishers through LION’s Sustainability Audits has given us a unique window into the operations of more than 500 newsrooms across the country. Each is trying to build a digital business around local news; some are rural, some are urban; some are relatively large with staffs up to a few dozen, but the vast majority are small.

The challenges? AI implementation keeps eroding traffic and advertising business; increased competition for philanthropic dollars, including well-funded university development teams competing for scarce resources. But most critically, we see a crucial need for business training and resources for the sector. Without support to shore up the operational resilience of these organizations, common risk management pitfalls that we see will become insurmountable obstacles.

Neglected books come home to roost: All founders are strapped for time. Most hail from the news side of the industry, so they don’t put enough effort into creating a financial budget and tracking finances. To a startling degree, these newsrooms don’t know how much money is coming in, and how that tracks against what they’re spending — on salaries, on freelancers, on the systems that allow for publishing. Some for-profits or small nonprofits treated their fiscal sponsors more like fractional CFOs than bookkeepers. For instance, if a fiscal sponsor provides a profit and loss statement that shows much more spending than income, and the business’s cash balance is really low, the publisher ought to know how to act on that information — and too many do not. Others are using outdated software, declining to spend a few hundred dollars per year, but running the risk of default, which is much more pricey. What are they using instead? Excel or Google Sheets. And while starting with a spreadsheet makes sense in the very early stages, they need small business software to track spending and expenses much sooner than most of these emerging businesses think.

One lawsuit away from extinction: Our data shows about 40 percent of the publishers we work with are not currently carrying media liability insurance. The threats facing local news outlets are only increasing. This is a recipe for disaster, and it doesn’t take much imagination to see the risk for founders who’ve borrowed against their homes, retirement accounts, or other personal assets but haven’t properly indemnified their news businesses. A prolonged legal action could not only wipe out these businesses but devastate them personally, as well.

Compliance ignorance bites back: Through our programs, we’ve seen far too many publishers — many new leaders, many new to managing employees, whether full-time or freelance — who are unclear about the distinctions between full-time and contract roles. There are rules that govern, at the federal and state levels, how full-time employees and contract workers are managed and compensated. Not addressing this can lead to legal complaints or even investigations, which take time, energy, and attention away from serving communities. An ounce of preparation — learning how these roles work, and treating those functions accordingly — is worth several pounds of cure: Paying fines, risking contractor lawsuits and disputes, paying out accumulated back pay, and more.

These emerging publishers need to learn how to properly manage risk for their businesses. The data shows us that, by and large, many don’t do that right now. We even hear from members that they hate this part of the work, which is part of why we’ve ended up here.

In the most stable of environments, it’s important to follow best practices while running a business, but the existential risks to the news business right now make that even more important. So if they don’t get a handle on these risks — financial, legal, operational — we could see a mass shrinking of the field.

With all that said, there is hope. LION Publishers and other organizations are offering resources, coaching, and support to help independent news leaders address these issues. We’re confident that the local outlets that prioritize these foundational business needs will not only be more stable but will be better positioned to do the kind of journalism that is at the heart of their mission.

Sarah Gustavus Lim contributed to this piece.