How to Reduce Your Business Risk
Small businesses are subject to a number of risks, many of which the standard form of protection (business insurance) won’t cover, leaving the business extremely vulnerable. Prevention is the best cure and there are a number of things business owners can do to protect themselves.
By undertaking a risk management assessment of your business you are able to identify the possible threats and then plan appropriate responses so you can minimise or negate many potential risks. Your goal in developing risk management strategies is to reduce your insurance premiums, reduce the chances of successfully being sued, reduce potential property loss (cash & stock) and reduce the amount of time the business is unable to operate at full capacity.
Areas to be reviewed include risks posed by:
- Getting started: Start by identifying all the risks you can in each of the sections listed above. It may pay to talk to your customers, employee and suppliers to ensure all potential risks are identified. For each risk identified quantify the risk using ‘what if’ scenarios. Then devise several possibly strategies to solve the hypothetical risks identified. Once you have documented your plan ensure you review it annually or after any major change in your business (e.g. Acquisition, change of major supplier, entering new markets, new competitors etc).Customers
- Business Premises
- Goodwill (reputation)
- Information technology
- Financial transactions
- Economy (market)
- Death or serious injury to key business personnel
Tip – For business owners that are financially ill-equipped to use an accountant or consultant for this, consider involving your staff in the identification and scenario planning stages. Getting help: Easily the quickest and most reliable method of performing a professional risk assessment is to contact your accountant or a business consultant that has experience in this area.
If you are concerned about risk analysis and need assistance the team at Watts Price Accountants have a Risk Mitigation programme that they tailor to your individual needs. Don’t put your livelihood at risk, call Watts Price Accountants today on (03) 5382 3001.
Richard Kemp – Watts Price Accountants
The advice provided on this Article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs.