The importance of mitigating risks sooner rather than later
Who thinks about the risks to their business? The answer is very few unless they are abruptly faced with a risk head on! In our experience, it’s one of those areas that owners don’t consider, they are more concerned about the next sale. Although if there was no business because there wasn’t a plan to mitigate your business risks, then we would not need to worry about sales!
There are many aspects to risk management to contemplate and shown below are a few examples:
Could your business survive without you?
An owner was busy managing a successful business. They had associates working for them, sales calls coming in and life was very good indeed. Then, the worst thing that could possibly happen happened – they became unwell. Unfortunately, they had not considered what would ensue if they could no longer work – either short-term or long-term.
Despite their illness, the owner battled on relentlessly. But at some point, the body cannot take it anymore and day-to-day tasks can take their toll. Eventually the owner discovered that they required an operation and that it would take six months to recover.
SIX MONTHS TO RECOVER. What an absolute sucker punch!
As there was no contingency plan in place and no one to handover the reigns to, dread and fear set in very quickly. We are sure you will agree that this is probably one of the worst situations for a small business to be in. Who was going to manage all the elements of their business? How were they going to cope? The business needed to continue running – it was their livelihood!
The owner managed to struggle through it. However, this turn of events prompted them to review all the risks to their business. As a result they then implemented processes to protect their business for the future.
Planning how to keep your business alive when life throws a curve ball is a necessary element when assessing risks.
Eggs in one basket
A technical business was contracted to a client and the client’s business was 95% of the owner’s revenue. Being so tied to a single client could have disaster written all over it. The client could go out of business or decide that they no longer want to work with you. Where would that leave your business?
The contract with the client was due to expire in 12 months’ time. In this instance, the owner was unsure whether they wanted to continue working with the client.
A clearly constructed contingency plan was required to identify the opportunities and potential clients. The purpose of the plan was to enable them to break away from the client safely. Additionally, built into the plan was a process to help keep their turnover intact.
In our experience, it is common to have one core client. Though, if anything happens to that client, you need to have a warm pipeline of alternative opportunities.
A risky business
A Learning and Development business had unknowingly left themselves in a vulnerable situation.
There was a previous owner for the business, however they were no longer associated with the company. Whilst conducting a risk assessment, it was discovered the previous owner was still named on the business current bank account. And more worryingly, as the sole name.
The new owner had never considered that the previous business owner could have withdrawn all funds from the current account. And more so, legally, there would be nothing that the new owner could do about it. As a result, the bank account was changed immediately!
These examples seem so simple when you think about it now. Business owners are so absorbed in the day-to-day running of a business that they don’t consider these types of issues.
We’re passionate about risk management
Exposing and minimising the risks in your business is our speciality and we do this by:
- Being your expert risk management partner
- Methodically pinpointing the possible risks to your business
- Assessing the possibility of risks that could happen
- Creating a contingency plan to manage the risks
- Implementing effective process and systems to monitor, track and review the risks
We find that many light bulb moments are triggered during our risk assessment sessions. Furthermore, when you think about it, you wouldn’t go into business without insurance, and it’s the same when considering risks. Ultimately, these go hand-in-hand and form the foundations to protect and safeguard you and your business.
Our businesses will encounter many risks that can affect their survival and growth. We are just in the process of coming out of a global pandemic. If you are one of the lucky ones and your business has survived, its time to strengthen for next time. It is so important to understand the basic principles of risk management. If used effectively it can help mitigate the effects that risks like this have on businesses.
Our Virtual Operations Managers are qualified Project Managers who have experience of identifying and mitigating risks. We know the pressure you are under and we want to help prevent and manage your risks.
“Having reviewed the risks to my own business, this ignited my passion for helping others to identify their risks.”
Have you identified the risks in your business?
If, after reading our blog you are starting to identify the risks in your business, call us, let’s discuss how we can help you mitigate your risks and protect your business.