Every business involves some degree of risk. Acknowledging the worst case scenarios and how you will minimize or mitigate the risks inherent in your business is the first step in avoiding the problems.
Often risk awareness and mitigation will warrant an operational or administration expense category, i.e. a particular type of insurance, an employee with certain credentials / salary scale, training program for staff, etc.
Consider the following:
- What if you run out of cash? What would you do to pay the bills?
- What if your key employees quit?
- What if you get seriously hurt on (or off) the job? Do you have a plan for someone to take over key management roles?
- What are the standard risks of your industry? Have you adopted industry standards to protect the health and safety of your workers?
- What if the demand for your product or service decreases?
- What if the number of competitors increases?
- What if you are considering buying a business with liabilities (outstanding debts)?
- What if your major suppliers run into financial difficulties? Or close down?
- What other unique risks does your business / industry face in light of pandemics, border security, globalization, rare resources, unique geography etc?
- What is the age of your equipment? Could new regulations force you to upgrade? What is the remaining operational life of your equipment?
- What are the technological advances in your sector, and are you able to keep up?
- Could zoning bylaw changes require you to move in the near future?
Risk Conclusions: Clearly restate the goals and objectives for your business. Address the risks and liabilities in light of a positive way forward and the resources available to you, for example: equipment, superior technology, a talented workforce, deep and wide networks.