In a perfect world there would be no such thing as risk for business owners. You would be able to come to work each day with a smile on your face knowing that it will be a good day. Unfortunately though we don’t live in a perfect world and the success of your business is constantly threatened by a range of factors, many of which are going to be beyond your control and often unexpected.
While it would be naive to expect to be able to plan for every possible thing that could impact on your business you can minimise the potential impact that unexpected risks can cause to your business by identifying risks and putting in place plans to deal with them. If you have a plan in place to deal with issues when they arise then you will be better placed to get your business back on track.
From experience many business owners do attempt to mitigate their loss in the event that something was to go wrong by, for example entering into agreements with third parties such as insurers. While this is a positive step often if it is taken without first seeking appropriate legal advice and it could leave you exposed if you haven’t read the fine print and do not know exactly what you have put in place. If you get it wrong now it could become far more costly and difficult to fix in the future.
Some of the risks to consider include:
- Natural Disasters such as fire, floods and cyclones: What happens if your business premises are damaged or destroyed as a result of a natural disaster? If you are leasing premises is there adequate provision in your lease to reduce or suspend rent or even terminate the lease? Are you in a position, financially or otherwise to relocate to new premises if required? What happens if the roads are blocked and suppliers cannot deliver new stock?
- Power failures:Have you considered what happens if the power simply goes out? It is easy to take something like this for granted but it could have significant implications on your business given that computers, phones, faxes and internet all rely on electricity to operate.
- Loss of or destruction of computer files and business records: Are adequate backups in place and can data be recovered easily? If back up procedures are in place have they been followed? Do your computers have adequate virus protection and are they safe from hackers?
- Crime:What happens if records and/or stock are stolen from your business? What if an employee is stealing money from the business? What are your rights in this situation?
- Turnover of staff: What happens if staff leave the business? Can other staff take over and fill the void?
- Unexpected family issues such as Death, Divorce, Illness or Pregnancy: Can you afford to take time out of the business? Is someone else available to operate the business if you are unavailable? If not, can the business afford to be closed for what could be an extended period of time? What happens if you are unable to continue to operate the business at all or you die? Have succession plans been put into place?
Once the risks have been identified ask yourself what would happen if some of those things actually happened in your business? What contingency plans do you have in place? Would your business cope financially? Do you have adequate insurance in place to cover you in the event of an incident occurring? If in doubt speak to your insurance company and/or adviser to make sure that you are properly insured.
By being prepared and having contingencies in place you will be in the best possible position to handle any obstacles that stand between you and the success of your business. If you take the time to seek appropriate legal advice and follow the motto ‘hope for the best but plan for the worst’ it might just be the difference between success and failure.
Let tomorrow know you’re coming…