Starting a small business is a risky move in and of itself. It takes courage and hard work to bring an idea to life. Once you’re up and running, the risks become even greater: will you be able to sustain and grow the business? Will you be able to survive during a recession?
If you run a small business, then minimizing risk should be a top priority. Here are 7 steps for anticipating and preventing curveballs that will inevitably come your way.
Business Plans Can Help You Stay Organized
Lack of goals and direction within a small business can lead to poor outcomes. Having a strong business plan from the beginning is important, as it will help to guide your strategy whenever you are faced with an important decision.
As issues come up, it’s also a good idea to get familiar with the concept of a business case. This is a tool that small business owners can use to explore different solutions to problems or options for decision-making that can help reduce risk.
Have a Plan in Place That Prepares for Change
Your business plan and business cases are great tools for minimizing risk. But you also can’t expect everything to stay the same in your business. You have to be prepared for organizational change and be willing to be somewhat flexible. The most successful small businesses strike a good balance between planning and adapting.
Put Quality Assessments in Place
Whenever you offer goods and services to the general public, you’re taking a risk. Your product or service might not live up to customers’ expectations, it might break easily, or it might even be dangerous. It’s important to put quality assessments in place to ensure that what you’re selling is ready for the market.
You should continue to maintain rigorous quality standards even after your initial launch. This will help reduce customer complaints and give you the opportunity to grow your business.
Leverage Analytics to Make Data-Driven Decisions
We live in a data-driven world, and even small businesses have to learn how to leverage business analytics. Today, there are many free and inexpensive tools for collecting and analyzing customer data.
Data can be used to maximize your marketing budget, bring in more revenue, and optimize your operations. To maintain a competitive edge and reduce risk in today’s market, your small business needs to continually collect and harness relevant data.
Diversify Clients & Income So You’re Not Too Reliant
It’s very easy to get comfortable in business. You have a few reliable clients or customers, so you get a little lazy about marketing and growth. Once you get comfortable, it can feel like you’ll never have to worry about getting new clients or streams of income. But anything can happen, and if you’re not prepared to lose a few long-term customers, you might find yourself scrambling at some point.
This is why it’s so important to diversify your income. You should always be exploring new opportunities and income streams for your business so that you don’t come to rely on one source of revenue too heavily. This will help to ensure that you’re able to survive anything that comes your way.
Prioritize Key Assets (Including Employees)
When thinking about risk management, you have to consider worst-case scenarios. Think about what would happen if your best employee left, or if your software failed. How would you keep your business running?
To plan for anything, you have to prioritize your key assets. Make sure more than one person is trained in essential responsibilities, back up your data, and protect any other assets that keep your business running. You don’t have to be a pessimist, but you do need to understand that things go wrong in business and people leave—so you need to plan for these snags.
Last But Not Least: Get Business Insurance
Insurance might seem like something only big companies need to worry about. But the truth is that small businesses also need to get business insurance to minimize risk and provide peace of mind. You may never end up needing to file a claim, but you should add insurance as a line item among your expenses. It could end up saving your business one day!
Small businesses have all the same risks as large businesses, but on a smaller scale and with fewer resources. It pays to minimize and manage your risk as much as possible to prevent disaster later on.
Interesting related article: “What is Risk?”