Every business owner understands that the rewards of running your own company are immeasurable, but the tradeoff is that you also bear the brunt of the consequences if things go wrong. This is why it’s important to have a risk management plan in place.
Here are some of the more common risk factors that small-business owners face, and how best to prepare for them.
You’re overly reliant on a small number of clients or customers
If your company is niche, your pool of customers will be quite small. So, losing one of them impacts greatly on revenue. You can decrease the risk by:
Your business is under threat from competitors
Competition is not always negative – it can lead you to create the best version of your product/service. However, there are threats from competitors that are tricky to overcome, such as offering significantly lower rates for what seems like a similar service. You can mitigate the risk of ongoing competition by:
Your technology is not up to scratch
Technology is central to any business, and it can accelerate company growth and performance. With so many companies heavily reliant on IT infrastructure, it’s important to take steps to reduce the risk of any technical difficulties:
You’re having trouble maintaining your cashflow
For your business to maintain a risk management plan, you will require a baseline level of liquidity. You can meet your short-term debt obligations through the following techniques:
Rebecca James, Chief Marketing and Enterprise Officer, Prospa