5 Common Business Risks and How to Prepare for Them
Running a business comes with risks. Some of them are specific risks that will be associated with your industry, while others will be broader and cover any type of company. These are the ones that we will be discussing today. For the ones that are more industry specific you will need to search online for a different article. If you are wanting to know what the broad business risks will be, and if you are wanting to know how to prepare for them, keep reading.
1. Financial Risks
You are in business to make money. A lot of the times you will need to spend money to make money. You have probably heard this a million times but it is true. What you have going against you though is that the facts show that 29% of businesses fail because they run out of capital. Either there was not enough to keep you going, you are not making enough profits to gain funds, or your bookkeeping practices are not accurate enough to keep you ahead of the financial management.
The best way to prepare for this is to always have some funds on hand. Getting a bank loan to keep you above the basic operating expenses that you have would be a promising idea. If you are not familiar with bookkeeping and accounting practices take a class and learn it, or opt for a professional that can do it for you. That goes for the everyday managing of your business as well. If you are managing, take some classes to learn better management practices, or hire a good manager that has proven themselves in your industry.
2. Strategy Risks
Your business plan should have outlined the strategies that you are planning to use, but since innovative technology is making changes in how people do business your updated strategies must reflect those changes. If you continue to market through old avenues, you will be missing out on the majority of consumers that may be interested in your products or services. Most of the people are shifting to online business, and they prefer to conduct all their transactions from the safety of their own homes. You must have a platform set up to manage these online visitors.
The best way to prepare for this risk is to have a good solid business plan that you update on a regular basis. Too many business owners just “go with the flow” and never really have a plan to follow. This is a terrific way to lose your profits, lose your employees, and lose your business.
3. Liability Risk
It is unfortunate but in today’s world people jump at chances to file lawsuits against companies, hoping to make a quick buck. There are even people that make their living by scamming companies so they can sue and get a steady stream of income. If you own a brick-and-mortar location you are even at a higher risk. Even if you work from home, though, there can be issues with security breaches, injuries from people on your property, consumers that get injured by your products, and so on.
The only way to prepare yourself for the inevitable is to have an insurance policy that will cover you against all the risks that could happen to you and your business. Check here for more information, but make sure that you do some research and find out what you need before you commit to any policies. The important thing is that you need to include the types of insurance that is specific to your business. For instance, if you have online platforms (which you should) you will need to have a policy that covers data breaches. If in doubt talk to an agent that can give you educated advice.
4. Reputation Risk
If you have been in business for any length of time, working or owning, you will know that the reputation of you and your company are high on the list of importance. People not only go through you because of your product or service, but they also go by what they have heard or found out for themselves. If you have a reputation of being honest, speedy, and professional, you will be golden. If you get a reputation of having horrible customer service you will slowly lose business, and it will be extremely hard for you to gain new customers. Obviously, these are just examples because there are so many ways to improve your reputation, or to ruin it.
The only way to prepare for this is to have a good customer service plan in effect. One that includes all your employees and vendors. Have the best products possible, and if you provide a service be at the top of your industry when it comes to standards and ethics. Customers are the main aspect of any business, so you need to keep them happy. That means keeping a good reputation in the industry that you have chosen to own a business in.
5. Security Risk
This has been mentioned a couple of times already, but it is definitely a huge issue for any type of business. Modern technology comes out all the time that can improve your profits, but it also opens new ways for criminals to gain access to your accounts. Not just your accounts, either, but all your customers that have gone through you for anything. Your customers are trusting you with a ton of their personal information, including bank accounts and credit card numbers.
The bottom line is that online security, building security, and employee checks need to be in place and be top of the line. Invest in a good program to help you secure information, or use the IOT and connect with an online server that uses Blockchain technology. Your building needs to have an alarm in place that is being monitored by a security company. And the final aspect is employee theft. It is more common than you might think, so make sure that you not only keep an eye on your customers, but watch for any embezzlement or thefts from within.
Running a business is a lot of work, and stress. There are always things that you need to do. So many, sometimes, that you do not have the time in a day to complete all your tasks. With that will come problems that you will have to overcome, and risks that you will have to take head on. Being prepared for anything is the only way to go, and since you have read this article you are more prepared to handle whatever the world of business tries to throw at you.