Small business owners should consider risk management and mitigation as a valuable form of insurance against any eventuality. It will help them protect the organisation that they worked hard to create.
“Risk management is a vital element of business success. These steps can help put SME owners on the path to sustainability,” says Tom Stuart, chief marketing officer of SME service provider Lulalend.
1. Limit risky customers
If you have just started your business, make sure you avoid customers who could possibly default on invoices or make late payments.
It’s helpful to have some clear criteria for customers, and also make sure that your payment terms are clear and agreed upon before you sign any servicing contracts. It’s also important to be strict about credit checks and insist on payment in advance if you have any doubt.
2. Insure your businesses and assets
There are different types of insurance that are required by specific business sectors, while other insurance products offer you an assurance that your business will continue if something happens to its owner.
It’s a good idea to get some expert opinions to help you make sure you have the right insurance products in place.
3. Quality assurance
Test the products or services that you sell to make sure they offer quality and value for money. These tests should be repeated often as it helps protect against customer complaints or any financial claims based on poor quality or service delivery.
4. Control your dreams of growth
It is normal to dream big and to have lofty plans for tomorrow. Irrational or unrealistic dreams could put unnecessary pressure on you and your staff members. Burnout can end up costing you more than patience can.
Invest in your team and their skills first – the rest will follow.
5. Risk management team
If your team members have the skills and knowledge that is required, you can appoint them to a Risk Management Team tasked with identifying and managing business risks. The alternative is to hire an expert consultant to give you guidance.
They can give you an unbiased view into your organisation and base their advice on an internal risk audit. Working with a supplier that has an objective view of your business can help give you the right necessary feedback to guide you to success.
“Identifying the areas of risk in your organisation helps you put measures in place to limit the likelihood of them ever happening. Ask an expert to give you advice today if you need any help in spotting the risks in your organisation,” says Stuart.