Here’s a summary of the steps to take to mitigate risk in your small business:
- Identify the risks that could impact your business
- Think about and analyze the consequences of that impact
- Plan for consequences that have a medium to large impact
- Understand how to reduce the impact of those events and implement solutions
- Monitor, review and change your course if needed
So there’s pandemic hey? Well, now is as good a time as any to talk business risk mitigation strategies for small businesses.
While this is for private practice business owners, it’s also relevant for any small business. Here we discuss standalone risk mitigation strategies. It’s important to know you can handle your personal and business affairs without government support. I like to treat government support as a nice to have if you can get it. But if you want a strategy which will help you sleep soundly as night, read on.
Step 1: Identify the risks that could impact negatively upon your business. Here are some to get you started:
- You becoming ill
- Having to take care of someone else
- Natural disasters
- Pandemics and epidemics of course
- Competitors entering your space
Step 2: Think about and analyze the consequence of each identified risk
- What’s the likelihood of the risk?
- What’s the impact of the risk?
For example, the risk of a pandemic occurring is low. This is because the last severe pandemic was in 1918 and since then there have been advances in society to limit the pandemic possibility. However, the impact of a pandemic occurring is significant. And so, having a plan in place for this is wise from a business viability perspective.
Step 3: Plan for risks that you believe would impact your business in a significant way. The aim here is to develop solutions that lessen the impact of an event. There will be times (like now) where you can’t avoid being impacted.
- Competition: Never wait for the competition to impact your small business. Perhaps you’re successfully catering for a slither of the market and you’re doing so successfully. In this scenario, your aim would be to continue innovating to remain the best in the space.
- Pandemic: The issues for most small businesses here (including private practices) are that customers can’t or won’t see you face to face, or in more difficult times they have less money to spend due to employment and other economic factors. In this case, we need to alter the business strategy. Can you offer video-based or email-based solutions for example? Can you do home delivery for people that don’t want to leave their house? Understand what percentage of your business needs to focus on these alternatives.
Step 4: Monitor risks, review them and your strategies and solutions and change your course if needed.
All business risks can be reduced if you have, or are working towards an emergency fund. This could be three months’ worth of expenses. Also, consider your personal finances. If they’re strong, you can more easily continue to make business decisions that are most right. And you can stay the heck away from scarcity-based decision making.