Business Risk Rollercoaster
The beginning of the year allows you to look ahead. It allows you to plan. Given the general economic roller-coaster we’re all on board at the moment, it is also a good time to take stock of the business risks. Particularly, the business risks which we, as business owners and managers, have some control over.
To be blunt, statistically most businesses fail because of controllable internal problems – the external ones, such as changes in law or fashion, usually only speed up the failure.
So, let’s take a look at the business risks you need avoid, or at least be aware of:
RISK #1 : OWNER DEFICIENCIES
Deficiencies in the business owners’ experience or knowledge base or capability. These deficiencies may be due to the owner not ‘keeping up’ with trends or technologies, or the business itself outgrowing the owners capabilities, or lack of time management.
Consider upgrading your knowledge base, implementing better time management procedures, and reviewing your industry standards.
RISK #2 : FINANCIAL REPORTING DEFICIENCIES
Lack of financial management and reporting.
Consider how you draft your budgets, and how often. Consider also how often you review your actual results to your budgets and to your previous periods. Are you or track?
RISK #3 : GROW TOO QUICKLY
A major risk for a business is growing too quickly, whereby your cash flows are not keeping up with your growth.
Essentially you need to look to your planning and access to funding. Consider also slowing the growth down to allow you to become better cashed up before you spend money on infrastructure.
RISK #4 : MAJOR PROJECT RISKS
Unfortunately most business owners will undertake projects with little or no due diligence. They will typically wing it and hope for the best. This model will deliver some winners, but will probably deliver just as many, or more losers.
Necessarily, undertake your due diligence on all major projects. Again, you need to look to your planning – does the project fit in with your other business streams?
RISK #5 : SYSTEM DEFICIENCIES
Operational issues such as lack of quality control, inaccurate costing systems, inefficient processes, low productivity and poor inventory management are all internal controls which can hurt a business, but which can be quickly rectified.
Possible Solutions Review all your processes and systems. Do a SWOT analysis. Look at how your deficiencies can be turned into centres of profitability.
RISK #6 : FAILURE TO USE BUSINESS CONSULTANTS OR ADVISERS
The person who knows your business best is yourself. However a Business Consultant or Adviser will look at your business differently, objectively. You may not like some of the advice. You may wish not to adopt it. But it pays to listen. A GOOD Business Consultant or Adviser will assist you, develop a plan and keep on track.
Contact us today to discuss!