In running a business, of course, we will always be faced with two choices, namely success or failure.
It is not an easy thing to run a business because a business is not just profit but also the risk of failure and loss. Therefore, to start a business requires a level of courage, determination and a capable business strategy. This courage, determination and good business strategy are needed by a business owner to face challenges such as facing business risks.
When you run a business, of course, you will face various challenges and difficulties that keep coming. All these challenges and difficulties are often referred to by filling in the business risks.
What is a business risk?
Before we share an example of how we helped a client with a business risk, its important to understand the definition.
Business risk is an integral part of running a business. But here is the art of a business because with these risks a business can grow rapidly.
Uncertainty in running this business is often the main reason why many people are reluctant to become business owners.
The word risk is an absorption word from the English language that is a risk that can be interpreted as constraints, failures, obstacles, dangers, or losses.
As a result, it can be concluded that risk can possibly occur and result in losses.
The definition of business risk is a bad possibility such as constraints, failures, obstacles, losses. These may arise in the future due to efforts to carry out the business at the time.
Even though a business owner must be brave to take risks, it does not mean that business owners still have to keep measuring and carefully considering. With careful consideration, the owner will be better prepared when the risk arises into reality.
Generally, the uncertainty of risk faced is caused by the following 3 factors:
- Economic uncertainty (Economic Uncertainly Caused)
- Nature uncertainty (Nature Uncertainly Caused)
- Behavioral uncertainty (Human Uncertainly Caused)
In addition to the three factors above, there are actually several other factors that can affect uncertainty. Some of the factors that can influence the emergence of risk include social, economic, environmental, technological progress, etc.
Errors in marketing and decision-making errors can also pose risks.
Business risk examples
Before you run a business, you should do business research and analysis so that the risk can be measured.
Based on the control, business risk can be categorized into 2 (two), namely:
a. Business risks that can be controlled
This business risk category is a risk that has been predicted from the start. For example, businesses that are just starting but sales are still far from the target. This certainly makes the effort not bring profit and return on capital.
b. Business risks that cannot be controlled
This business risk category is different from the risk that can be controlled and can still be found in a solution.
The type of risk that a business owner cannot control such as fraud, fire, theft, etc. These unpredictable events are risks that are unpredictable and previously thought.
Business risk is not something that can be separated from business. This is what causes many people who do not want to start a business because they are afraid to take risks.
But you can manage these risks by identifying, evaluating, and controlling risks.
Team members on holiday?
After highlighting the importance of identifying and assessing risks before they impact your business, we wanted to share where we helped a client.
We recently helped a client where they had grown very quickly. The business owner had tried by herself to do everything except for some support from a VA.
Unfortunately for the business owner the VA had to take some time out. It was at this point she released that she did not have the foundations in place to protect the business.
The business owner then had to take some time off sick and needed to cancel all her appointments. It was at this point she realised that she did not have a central repository with all contacts and their details. Panic struck in, what should have been a quick and easy job to ring around clients turned into a stressful mess. The business owner then had to try to find all the telephone numbers for the appointments she had and contact them to let them know.
We are now working a little retrospectively with the client to ensure that foundations are in place for two reasons. Both to ensure risks are identified and to make sure there is a plan/actions to mitigate them. Its common for business owners to only consider these simple things when they are in the eye of the storm and they are being impacted.
Its important for business continuity purposes, especially when a team is very small, and things are reliant on one person. Nobody ever considers what if that person isn’t around, that’s why the work we do to document processes is critical.
We love the work we do protecting businesses in this way, SME’s are so important to the economy. In our opinion protecting your business is just as important as making money and in some respects its more important. Well if you don’t have a business then you wont be able to make any money will you? It’s a no brainer for us.
Begin your risk assessment
If you are inspired to look at your business risks, read our recent blog which shares some of the other common risks we identify.
Why not book a call to discuss how we could help you in protecting your business?