It does not matter whether your business is large or small – every business comes with its own share of problems.
While larger corporations might have special teams to assess the different types of risks and take appropriate action to counter them, your small business might not need an entire team to cover the risks.
Therefore, you can handle the situation in an informal manner.
Identifying the Risks
You will first need to identify the risks associated with your line of business. Every business model has different types of risks, so the risks faced by another business might not apply to yours.
If your line of business is dealing in products where there is high rate fluctuation, then you will need to be wary of falling rates after you have purchased those products. If you are dealing in seasonal products, then you will need to sell your products before the end of the season, or you will get stuck with inventory that you can’t sell.
If your business location is prone to flooding or if your restaurant is fully dependent on a single chef, then you need to analyze the different risk factors that could plague you in the future.
Countering the Risks
Once you have identified the potential risks that could pose a hazard to your small business, you will need to counter those risks so that they can’t cause damage to your business.
For example, if your business is seasonal, then you could draft an agreement with your suppliers stating that they will take back all the unsold products that they have supplied you with at the end of the season. This move might reduce your profit margins, but at least you won’t be sitting on dead inventory at the end of the season.
Similarly, you can appoint an assistant chef in your restaurant who can take over when your main chef is unavailable for any reason.
By putting a professional system in place, you can easily neutralize many of the threats that have the potential to cripple your business.
The Role of Insurance
Another mistake that many small business owners make in their quest to save money is to cut down on insurance.
This could prove to be a very costly mistake – not only for you, but also for your family and future generations. You should have adequate insurance for yourself, your family and your business. It is also important that you insure your property, inventory and vehicles as well.
By taking out an insurance policy, you are ensuring that you and your family are safe if any disaster strikes you or your business.
For example, if your business premises is prone to flooding, then your insurance policy should cover possible flood losses. Even though the premium might be high, the fact that the area has flooded in the past and could be flooded in future should provide you with motivation to spend the necessary money.
As a small business owner, you should realize that your small business is not immune to internal or external risks. Taking appropriate action before something happens is crucial.
