Today I’m going to ask you to think about risk. We face risk in everything we do. In our personal lives, at work as well as when running a business.
Having a risk strategy can help you move your business forward in a way that feels comfortable to you. We all have different attitudes to risk. Some people leap first and then consider the consequences, others like to weigh up the situation carefully before proceeding, and you will be the same when running your business.
WHAT IS RISK?
So, what is risk? Risk is an uncertain event where the outcome, if different from what is predicted, affects your business.
Your business will face many risks. What if costs go up by more than predicted, or the number of customers and the amount they spend is less? Or you suffer a burglary, or your premises flood? Or a customer complains on social media? So many things can go wrong that if you sit and think about them all, they will overwhelm you and you’d never start a business. This is where risk management and having a risk strategy is important.
In deciding how to manage risk, you will need to asses the risk and its importance to your business. You will need to understand who is responsible for that risk and who will be affected by it.
You can then respond in one of four ways:
Avoid. Eliminate exposure to the risk altogether. This often means a major change in your business planning. For example, if you thought you would make soft toys, but then came across the regulations on the safety testing requirements, you might decide that the risk of making toys is too great and make dresses instead.
Reduce. Gather more information so you understand the risk better. So, to make soft toys, find our what you need to do to get the CE mark and be able to make and sell toys safely and legally
Transfer. Pass the impact of the risk onto someone else. Take out an insurance policy. If your soft toy falls apart and you have product liability insurance, as long as you followed your standard method for making the toy, the insurance will cover any claim made against you.
Manage. Put plans in place, so that you have alternatives if the risk occurs. For example, using your soft toys as home decoration instead of toys. Or, in the current situation, being able to work from home when I can’t work at The Millin Charity’s office!
Having thought about your business risks, assessed them and how you deal with them, you can then think about the positive steps you’ll take to give your business, and yourself, every chance of success.
If you would like support with risk assessing your business and products, please get in touch and we can arrange a one-to-one business advice appointment or put you in touch with one of our volunteer experts.
Back next time with some more tips for great businesses! Janet x