Business Coaching Blog
Did anyone see that coming?
Thursday, May 17th, 2018
Working with growing SMEs makes one keenly aware of how fragile some businesses are – of small business risk. Of course, businesses of any size can be caught out by unpredictable events but small businesses are often hit by things that were entirely predictable.
In the corporate world they have formal risk management processes and reviews. Smaller businesses don’t run to those but a simple checklist approach can be applied on a regular basis. This won’t in itself remove risks but it will bring them to the attention of management who can decide what action to take to remove or mitigate the risk.
Risk in a small business can be considered in six areas: Revenue, profit, cash, people, reputation and regulation.
- Revenue risks include over-reliance on a single customer and limited track record in bringing in new business.
- Profit risks include inadequate project control and tracking and failure to review and discuss overall margin trends regularly.
- Cash risks include inadequate terms of business and rapid growth of typical project size.
- People risks include missing restrictive covenants in the employment contracts of key people.
- Reputation risks now come primarily from online postings, although word of mouth still plays a critical role in broadcasting service failure.
- Regulation risks include health and safety failures and compliance failures.
Risks in each of these areas have the potential to seriously damage a business, perhaps terminally. The good news is that it is pretty simple to put in place a risk checklist to identify the risks in your business. The business owner can then devise short, medium and long-term plans to deal with the risks identified.
If you would like to know more about taking a managed approach to risk and all other aspects of running a small business then you should attend our next event.