A Three Step Strategy for Reducing Business Risk

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reduce business riskThe small business owners I know eventually complain about life-work balance. It turns out that life-work balance often means panic. Panic generally sets in once the business owner understands the depth and breadth of the business risk they have taken on.

 

You need a plan.

Small business owners start out focuse on hanging out their shingle and opening the door. You network for potential customers, line up your vendors, and build your marketing approach. Basically, you put your customers before the cart.

Sooner or later, most small business owners hit a wall built of expenses, demands, and surprises. But, when you build strategies into your business plan – well before the Grand Opening – you build in a buffer to absorb those shocks to your system.

A strategic business plan should have goals and projects relating to growth. But, if you are distracted by day-to-day challenges  (working IN the business), you won’t be able to do what you need to do to achieve those goals (workign ON the business).

 

6-month threshold

Without a working strategy that includes business risk management, your business energy will flag as you approach the 5-month benchmark. As you enter the sixth month, the panic will set in. I recently read a great blog on Harvard Business Review that addressed just this challenge, and it proposed a simple, three step method for overcoming the stress when it hits:

 

  • Stop: Take a personal break, replenish your juices, and master your emotional and physical assets. Get some exercise, spend some time with the family, and read a book on leadership.
  • Organize: Analyze your situation and evaluate your solutions. Call in the “troops” and seek advice and input from others. This could be your advisory board, a fellow business owner, a professional association, or your risk management adviser. Share your challenges and work with them to develop solutions you can afford and deliver on.
  • Secure: Accept the fact that you are not alone. People around you are ready to throw you a life preserver. No one you know or value has an interest in your failure. You can keep your head above water with the help of family, friends, and staff. It may be time to call in those IOU’s.

 

3-step solution

Much of the stress facing small business owners can be avoided with proper risk management planning. This is a fairly straightforward process, but one that many business owners fail to make the time for. Again, three simple steps will help you to identify, prioritize and manage the risks facing  your business:

 

  1. The first step in managing big and small business risk is identifying the problem or potential problem. For small business owners, that problem could range from a slip ‘n fall hazard for employees to poorly handled tax reporting. These problems – and any threats in between – can put you out of business.
  2. A second step segments the threats into people, places, and things. Organizing the problem reduces the stress of the problem. Once you assign accountability, locate the source of the threat, and consider the fixes, you are well on your way to solving the problem and reducing the pain.
  3. The third step shares the problems and solutions. In a sense, there are no “new” problems. You may not know it, but every business problem has been a business problem before. There are owners and advisers out there who have been there and done that, and most are only too willing and able to help others avoid their mistakes. Ask them to relieve your load. You can always pay it back or pay it forward.

 

If you are planning to start your own small business, six months before you host your Grand Opening, firm up your S.O.S. plan. Structure a response to health and safety issues, employee and customer problems, and cash flow and tax compliance crises. Be ready and willing to seek help in solving business risks. If you’re already well down the path of business ownership, its not too late. Use the process above – stop, organize, secure – to take a pause and tackle the issues that are causing you stress.

 

Image credit: pixelbliss / 123RF Stock Photo

 


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