New business owners have a lot to think about. Product quality, marketing, strategy, growth. You hardly have time to notice possible risks. That’s why it’s important to look at them at the outset, particularly if you have a physical property.
Will you need to call in a risk expert? Unlikely, although it’s good to have your property checked by plumbers and electricians before engaging in business activities. You could always search for commercial plumbers Melbourne companies use, or you could get a professional risk assessor to do all the work.
This article will discuss this and some other issues that could arise with a new business, and cause you to go under. Read further if you want to prepare and make wise decisions.
Physical Risk
Anything that relates to your building or office space can be a physical risk. From faults in the building’s structure to leaks in the plumbing, your staff and your physical assets can be at risk from problems emanating in these areas. So, check the electrical wiring, and make sure you rent or own a space that’s well maintained. Not only that, but be aware of the possibility of earthquakes, floods, and tornados in your area, and take steps to mitigate that risk.
Strategic risk
A right move can make your business thrive; a wrong move can cause it to fail. Decision making in your business can lead to strategy failure. In business, you always balance risk versus reward. It’s not only the decision, but also the execution that’s important. You risk poor sales customer dissatisfaction and more if you have poor strategy, so talk to experts if you need some help.
Cyber Risk
There is always the threat of being hacked, and your finances being held to ransom if you don’t cooperate with the terrorists. The police can help, but it sets your business back years in reputational damage.
A data leak is just as bad. Have very good security systems in place for your business, but plan for cyber-war.
Compliance Risk (with Regards to Regulations)
There are a wealth of rules and regulations that your business has to follow. Non-compliance can lead to fines or closure, so make sure you have a lawyer to help you navigate these challenges. Not only will your business lessen its risk, but your clients will appreciate how you do everything you can to ensure their safety and wellbeing.
Operational or Human Risk
There is the risk of your staff opening the wrong email and landing up with malware. Fraud, embezzlement, staff behaving badly or systems failure are all risks that your company faces. Any internal problems can affect how your company operates, not only in terms of time and revenue, but in terms of reputation.
The behaviour of your staff outside the office can also sometimes affect your reputation, so make sure your team members are well trained and understand the responsibility of being your ambassadors. If you notice they’re upset with the company, handle it sooner rather than later.
Financial Risk
Risks in finance come from external factors. Stock markets, economic fluctuation and investors moving to more sustainable businesses are all factors that affect your business. Poor planning in the financial realm, fraud and human errors are other factors that create risk. It can result in loss of income, negative cash flow and closure.
It’s best to call a business advisor early and have plans in place for these scenarios.
Reputational Risk
A business that makes poor decisions or fails to consider issues like climate change in their supply chains, may run a reputational risk. News and opinions can be shared instantly on social media, so it’s important to keep up to date with mentions of your business online even if furniture burns out, information can still be there.
It’s also a good idea to be honest and transparent, and to acknowledge failure where it occurs. Customers value your making it right, rather than pretending everything is perfect where it isn’t.
Bad Hires
If you hire the wrong person for the job, it can result in your business not performing as well as it should, or not operating at all. It can relate to the wrong skill set, the wrong personality type, or the wrong definition of the job. How well are your prepared to vet and pick the correct individuals?
Project Failure
A poor project manager can result in time or cost overrun. It can lead to poor communication, and therefore misdirection among key stakeholders. This can mean that the project requirements are not met. What’s more, poor market timing can lead to project failure.
Missing Customer Expectations
If you fail to understand how your customer buys, and what they buy, you could manufacture the wrong product, market it badly, try and reach the wrong audience, and use the wrong channel to reach your customers.
This can erode your brand and actually cause you to lose customers. This proves the value of excellent market research.
Misjudge the Competition
You can misjudge your competition. Whether through ignorance or lack of research, not understanding your competition can put you on the back foot and cause you to lose customers. Always check for any disruptors which will cause your business to lose clientele.
How Prepared are You?
It’s essential to do thorough risk assessments to mitigate risk. Ask for professional advice where you need it, and make sure that your business will flourish in the future. You can’t prevent bad things from happening, but you can make your business thrive in adverse conditions.
