Small business risks: How to take them on and win
One thing is certain in small business – you’ll have to deal with some level of uncertainty. But there’s some simple steps you can take to manage common risks and stay on top of things.
Despite recent political and economic challenges, the biggest risks for small business are often internal. This is actually good news – it means they are within your control.
Here are four ways you can take on the most common risks to your business and have the control you need to go from strength to strength.
Prioritise your cash flow
Cash flow is more than numbers on a budget sheet – a business that stays on top of incomings and outgoings is a healthy business. Here are three key priorities.
- Costs. Your budget should be flexible enough to meet rises in supplier costs and overheads, and to deal with unexpected expenses. Plotting your budget isn’t difficult – just have a separate cash flow statement that tracks money you’re expecting in versus money you need to pay out over any given period.
- Profitability. It takes time to build a profitable business, but if you go in with your eyes open you’ll be off to a great start. Prepare for those first months where you’re building up a customer base by ensuring you have enough cash on hand to keep operating until your balance sheet is truly in the black.
- Receivables. Be sure to invoice on time, collect on time and only extend credit to trusted customers who have demonstrated prompt payment. If you’re collecting money owed to you, you’ll be well-positioned to pay what you owe to others.
Never stop planning
Knowing your target market, competitors, sales and marketing strategy, optimal production process – the lot – helps set you up for success from day one.
Just as important is making this research and evaluation a continuous part of your business. That means building an ongoing strategy and planning program into your weekly rhythm. Each week, allocate time to monitor competitors, technology, regulations and changing customer preferences.
By doing this, you’ll be on top of patterns and trends as they emerge and be in great shape to respond intelligently and quickly.
Be part of your customers’ worlds
An outstanding reputation will help you grow, so knowing what customers are saying about your business is vital.
That means being part of customers’ conversations by being active on social media and promptly responding to comments and reviews. By quickly responding to feedback, you can move the conversation in a positive direction.
It also pays to be proactive – to be the ‘conductor’ of your brand reputation. By actively encouraging positive and negative feedback, you’ll be armed with the right knowledge to keep refining and growing.
Think through uncertainty
Small businesses must pay particular attention to what’s known as ‘liability risk’. The good news is, there are two simple steps to reducing this risk.
First, put in place the insurances that can reduce any vulnerabilities and provide you with peace of mind.
Second, identify potential risks and develop a plan on how best to respond to them. Some risks to think about are those posed by employees, customers, suppliers, location, reputation, competition, political decisions, and market and economic changes. You should even consider your personal circumstances as a business owner.
And there’s no need to do this alone – there’s plenty of external advice available to help you expertly assess liability risk.
In fact, seeking professional advice – for all aspects of your business – provides the firm foundations to help you thrive. The more support you have to look after your cash flow, business strategy and overall risks, the more energy and time you’ll have to focus on growing your business, even when times are uncertain.