Now more than ever, you need to secure the financial stability of your business. While ONS statistics show that total company insolvencies are at their lowest level in ten years, with the furlough scheme and other forms of COVID-19 financial relief soon to wind up, your business will soon be fully exposed to the whims of the economy. To ensure the future of your enterprise, here are the risks you need to avoid, plus four things you can do to stay stable and successful.
What Risks Threaten Your Business?
As a sensible business owner, you need to be aware of the following risks, and their typically interconnected nature:
- Economic – The health of the wider economy, which can impact consumer and business budgets, and your sales as a result.
- Security – From data breaches to fraud, you need to guard against the illicit use of your or your customers’ information.
- Financial – Market movements, credit, liquidity, and the make-up of your own operations can all impact your profitability and solvency.
- Compliance – You must ensure your business follows all regulations and laws relevant to the services or products you provide.
- Operational – Natural disasters, damage to your premises, technical issues and other risks that will impede the continuity of your business.
- Reputational – Negative press, reviews, public legal problems, and such can all impact your reputation and make people less likely to do business with you.
Four Ways to Ensure Stability and Profitability
Tackling risks and leveraging all resources available to you is key if you want to be confident in your business’ ongoing viability.
Identify Your Risk
The first step any business owner should take when stamping out the threat of risk is identifying the exact hazards faced by their business.
Whether using a pen and paper or Enterprise Risk Management software, you should work through all areas of your business and thoroughly assess them for risk. Grade these risks on how likely they are to happen by researching relevant statistics showing the wider occurrence of that threat, then make a plan to deal with each one in order of importance.
Keep An Eye On Your Spending
It may sound obvious, but you need to make sure your business’ spending habits are as lean as they can be. Start by identifying waste across your company – that could mean unproductive machinery with high maintenance costs, materials waste during the manufacture of your products, or simply too many staff for the work available – and start reducing your expenditure, tracking your performance to make sure your cuts aren’t harming your operations.
Software can be a key area of waste: 1E’s 2016 Real Cost of Software report found that US companies wasted a massive 37% of their software budgets on tech they simply didn’t use.
Gain Specialist Legal Advice
Spanning several risks, not just compliance, legal advice is a must for practically all businesses. Whether relating to your products, services, or your business operations themselves, it is a certainty that you will have to comply with a range of often complex laws and regulations.
As a hard-working business owner, you may not have time to research these yourself, so gaining specialist legal advice from an expert that understands the legal landscape of your profession can be extremely valuable. What’s more, if the worst occurs, having a specialist in insolvency and restructuring law can help you get your business back on a firm footing and restore confidence.
There is a gigantic amount of data at the fingertips of today’s business owner. Google Analytics data that tells you more about your online customers, their habits, and preferences; sales data that shows you what and when people buy and how they like doing it; or customer service data that crunches review scores and gives you insights into what your customers think of your business, its products, and services. Whatever the source, you should use it to your advantage.
Either learn the skills needed to use these sources of data effectively or gain specialist help, then weave the insights gleaned into your business plan and offering.
Planning against risk is a complex, but thoroughly worthwhile process. With the tips above, you should be able to protect your business in the face of a changing world.