Risk management is vital if you want your business to succeed or even just to survive, but many SME's are resistant to embrace the best practices to manage business risk.
Why? The main culprit is the cost of risk management to their business. Another reason is the time that it takes to put together a solid risk management plan; time that could better be spent attracting more customers, developing new products, or training staff.
However, this is a false economy. Effective risk management can not only save your business from making a loss and possibly collapsing, but it can also help you to make better decisions and meet your professional objectives.
Let’s get started.
A very common mistake that businesses can make is in thinking that they need to eliminate all risk, in order to keep their company safe. This is not correct. Risks are needed for a business to grow and thrive, but it is important that you know what type of risks your business faces, how to manage these risks and also what risks you are prepared to take as a business owner to expand your business (if you so wish to do so).
SME’s are often more exposed to certain risks than larger corporations due to a lack of resources or structural issues within the company and therefore need to be even more on the ball than their bigger counterparts.
As an SME with limited resources, you need to identify the areas of your business that could be open to a delay or disruption, such as your supplier.
What would you do if your supplier is unable to deliver your stock on time? Do you have a backup plan? Such as emergency supplies that you can use until the problem has been solved. All it takes is one unhappy customer experience for that customer to turn its back on your business for good and maybe even spread the word about their bad experience with their family and friends.
It can also be beneficial to make your customers aware of your contingency plans so that they feel safe and secure when dealing with you.
Although this may not be possible for everyone, especially in the early days of a new business, but having some additional revenue streams can mean the difference between your business staying afloat or collapsing.
Finding a way to make money around a time-consuming business can be tricky, but there are effective ways to do so. Take a look at www.tradingtips.com, which offers practical advice on learning to trade and can be carried out outside of your working hours.
You can also try and find ways to save money on the day to day running of your business, but be careful not to implement changes that will have a detrimental effect on your employees or your customers. For example, instead of cutting an employee’s hours, why not offer them the chance to work from home or to work hours that are more flexible to their needs.
A scary thought for those who are used to, and comfortable with, their own business systems, and have been for many years. However, new technologies can be invaluable when it comes to managing risk and making good decisions for your business.
Big data for one, can help you to assess and track your clients spending behavior meaning that you can target them more effectively and make more informed purchasing decisions.
Technologies can also help save you time by carrying out more basic tasks such as replying to customer questions. Chatbots are simply amazing, for example, in terms of replying to an infinite number of clients 24/7 without the possibility of human error.
SME’s can easily get tied up in the day to day running of their business, focusing on the present and not taking the time to think about the future. This is a common mistake but one that can cost a company greatly. SME’s need to be innovative and forward-thinking in order to survive in today’s economic climate and to fail to do so could result in your clients going elsewhere.
You may not believe it, but it is easier for an SME than a larger corporation to implement innovation and changes to their business as they can develop and execute their ideas quicker without corporate red tape getting in the way.
If you want your business to grow and thrive, then innovation is key; listen to your customer’s needs and utilize any creative members of your team.
Ultimately you know your business best, but a well-thought-out risk management plan can mean less nasty little surprises for you and your business as well as the opportunity to make better decisions that will benefit everyone involved.