A Risk is an unforeseen event which is usually unfavorable and dangerous to a business entity (both new and old businesses) but it may not be totally bad especially when it can be smartly foreseen and avoided before it occurs, starting the process of risk avoidance can be an eye opener to so many things that will boost your business, if taken into consideration at the right time. Provisions should be made for such contingencies in business. Experiencing a business risk is one thing, being able to handle it is another, so it’s better to avoid it, and here are interesting tips on how to avoid risks in business.
Identify business-related risks: What are the risks related to your type of business? Is your business prone to certain risks? Know these risks, as this will help you to avoid them when the signs are surfacing. What are the likely things that may happen to your business if there is a seasonal change, economical change, social change or an uncontrollable personal decision, as the owner, try to identify them. Is your business environmentally prone to natural hazards like flood? Identify and save your business from these risks.
Classify business-related risks: Construct a table, graph or chart with your top employees and if it’s a one man business, engage your instincts and do it yourself. Group each risk in the category they belong. A breakdown in machines and equipment, illness of a key employee can be grouped under business interruption risk. As for a sole proprietor, it may be bad health too or loss of profits due to seasonal changes. Classifying and making provisions for risk avoidance before it materializes is very important.
Evaluate business risks: You can’t just assume your business will be risk-free, after identifying and classifying the risks, begin the evaluation process. When talking about business interruption risks, as an employer and owner of the company, consider how many key employees do you have? Don’t you think having just a key employee might collapse the business if the unpredictable happens? Let’s move to profits, how can you avoid risks that can endanger productivity? Involve the right hands, develop a scheme on how to make more profits, analysis the expenditure, revenue accounts and analyze how effective your circulating capital is at the moment. You don’t need to wait till problems hit your business real bad, plan ahead and avoid them.
A great organization had just one key employee with no provision for another and no key-man insurance policy in case of an eventuality. This key employee became a smaller boss and all other employees were far from him in qualification and rank. With no partner to check him, he had other intentions, very drastic ones. He committed fraud and fled, all efforts to arrest him were futile and the organization collapsed and left the owner paralyzed materially and physically. What if it wasn’t due to fraud but sudden death? What happens to the continuity of the business? As the owner and overall boss, make provisions for more than one key employee and try to have a key-man insurance policy for them. This is one way to avoid business interruption or collapse.
Proposed-Solutions and Preventive Measures: Risks are definitely unpredictable. They have no specific time but you have the ability to control and manage your time, so take time to plan, draft and establish preventive measures. As an employer and director of a company, involve your key and top employees, all of the employees if possible. Create teams on brainstorming creative measures to avoid risks. When it shows up unaware, everyone will be affected even the lowest paid employee in the organization. It’s better to make hay while the sun shines than to make hay when the sunset. Taking measures and being fully alert before the risk will save the life of your business. It’s just like cutting off the snake’s head before it plans to strike.
Risk avoidance should be looked into intelligently and carefully during board meetings and organizational meetings. It’s a relevant topic that should be evaluated to avoid sudden liquidation or collapse of a business.
Research More: Knowledge should be acquired daily. Don’t embrace the comfort zone and be totally lazy because you just made huge sales and the business is currently booming, a deadly risk can be one step away. Be business inclined always, surf the internet and carry out researches. The more your business grows, the more the risk it may face, as you research business growth, also research ways to avoid business risks. Brainstorming and sharing helpful ideas in organizational meetings will help a great deal. Do it things right, avoid risks and let your business still be in existence.
photo credit; icezen.com