As an entrepreneur, you’re probably more of a natural risk-taker than many others. Going out on your own and building a venture takes guts and the ability to move forward even when results aren’t guaranteed.
However, with so many risks facing businesses, owners and managers must be strategic. Keep looking for ways to mitigate risks, so you don’t put everything you’ve achieved in jeopardy. Thankfully, there are multiple steps you can take to increase security and decrease risk today.
Assess Likely Risks
Your strategic business planning needs to include the step of identifying which risks could pose a threat to operations, now and into the future. Assess likely risks ASAP, so you discover which preventable internal and external threats you can manage. This may be through the reduction or elimination of risk, transfer of risk or acceptance of it with plans put in place to mitigate negative outcomes. Evaluate what could go wrong and decide which risks to deal with and how.
There is a wide variety of potential risks you may come up with, many of which could be specific to your industry and business. For example, consider physical threats, like building collapse, or health and safety risks, like the use of toxic chemicals or injuries from falling objects. There are environmental risks, such as natural disasters, and political and economic instability in foreign markets.
Think about strategic threats, such as competitors on the market, and compliance issues, like new laws or regulations that affect your business operations. There are also financial risks, such as non-payments from customers or increased charges from suppliers or on business loans, and operational challenges, such as theft, breakdown of equipment, etc.
The next step is to plan around risk, so you mitigate the chance of issues developing and the negative results that could stem from them. Your business plan, for example, should help you navigate risk. In this document, you’ll examine the current and potential market, complete a SWOT analysis, research competitors and customers, find out about current and impending regulations, plan out sales and marketing strategies and work on financial plans. All of this will help you see what steps you must take to address possible threats.
Plus, it’s also wise to put together a specific emergency-management plan. This plan should address possible internal and external emergencies and detail what employees and managers need to do in the event of something happening. Document steps in order, noting who is responsible for what, and give an expected timeline where possible.
It’s valuable to put together preparedness checklists, too. Checklists should break down all the procedures or items people need to follow or obtain before, during and after an adverse event. For example, maintaining informational records, conducting training and drills, stocking up on first-aid equipment, putting together a list of emergency contact information, creating a dedicated evacuation site, backing up data to the cloud, etc.
Take Measures to Reduce Risks
You can never avoid all risks when running a business. However, there are measures you can take to reduce the likelihood of issues arising and of facing negative consequences in the future. For example, commit to creating a safe working environment for your staff members. Work in clean, tidy, updated workplaces that are maintained well and located in generally safe neighborhoods.
Instruct employees on things they must do to keep themselves and everyone around them safe from harm, such as storing items correctly and using adequate safety equipment. Train staff members on what to do in emergencies, too.
Handle and transport dangerous goods securely by having strict procedures in place for your team to follow, and utilize tools like adequate packaging and a quality shock recorder to protect hazardous items in transit and alert workers to potential risks if goods become unstable along the way.
Financially, keep on top of cash flow and maintain proper records, so you don’t face sudden bleak outcomes due to a lack of cash reserves or unexpected bills piling up. Speak with financial advisors, accountants and lenders as needed to stay up to date on related matters, and always think ahead. It also pays to diversify income where possible.
Plus, you can seek out advice from experts in a variety of fields to help you reduce the likelihood of risks to your business. For instance, get assistance on regulatory, security (physical and digital) and environmental matters.
Risk is a given in life and business. To give your company the best chance of success, take steps to protect the organization and its owners, the people working within it, customers and the general public. The steps listed above will help you to do this strategically.
Annie Qureshi is a serial entrepreneur and writer for Sustainable Business Forum. She embraces ecommerce opportunities that go beyond profit, giving back to non-profits with a portion of the revenue she generates. She is significantly more productive when she has a cause that reaches beyond her pocketbook. @annierqureshi