What is risk, and managing it
All businesses face risks, some known and some unknown. The key factor is to acknowledge that your business is at constant risk. Here are a few things to keep in mind;
You - In a large number of instances people who set-up businesses underestimate risks. They look at their business only in a positive light, with a “bad things won’t happen” attitude. There is nothing wrong with knowing that your business faces risks and that you can be wrong sometimes but it is important to actively keep track of risks that can put your business in jeopardy.
What if analysis - This is really important that’s why we mention it several times. Constantly ask yourslef...What if ?...What if we don’t reach our sales targets? What if our marketing campaign doesn’t work? What if material costs increase? By doing this you can come up with alternative plans and contingency plans should the worse happen.
The environment - You may have a great business but then suddenly the whole country is plunged into a recession.
Your reputation - Years to develop, seconds to destroy. Guard it at all times.
Staff - Is the business being carried forward by a handful of staff or just one member of staff and what will happen if they leave?
Clients - Is the business only profitable because of 1 -2 top paying clients, and what would happen if they moved to a competitor?
Competition - What are they doing? How are they reacting to you?
Social behaviour - What is the current trend towards your business, is there a chance that your product will become unfashionable or socially unacceptable? How does the green issue affect your business?
Legislation - Can changes in the law adversely affect your business? Is there a chance that your business will be outlawed or additional requirements be placed that will increase costs?
Technology - Will technological developments impact your business?
Risk and managing risk is all about asking those difficult question, you may not have the answer to all of them, and some risk may hang over your business. But as long as you know they exists you will stand a better chance of dealing with them.
