Every business exists in a world of risks. As a small business owner, you face certain risks that are specific to owning a small business. Knowing how to handle those risks is key to directing your small business to success.
Here’s a look at some of the most common risks associated with owning a small business and a few things you can do to mitigate those risks.
Damages To Property
Accidents happen to the best of us. Some accidents are small, like accidentally bumping into someone when you turn a corner. But some accidents can cost your business money, especially when the accident leads to damage to your property. For example, if you spill coffee on your computer, you suddenly have to budget hundreds, even thousands, of dollars to get a new one.
One way to minimize the impact of damage to your property is with a Business Owner’s Policy (BOP). This is a type of insurance that basically combines general liability insurance with property insurance. It will protect your furniture, equipment, and tools that you need to keep your business going.
Customer & Counter Party Risks
Sadly, there are times that customers or suppliers won’t hold up their end of the bargain. They will back out of deals or refuse to pay you or suddenly disappear when it’s time to get your supplies. While this is a fact of doing business, you can reduce your customer and counterparty risks by being scrupulous about who you do business with. The more you can reduce your risks by doing your due diligence about suppliers and vendors, the less of an impact this risk will have.
Running Out Of Cash
To keep your business running, you need enough cash to reach the milestones you need to hit to attract new investors to your business. It’s a critical question to ask: how much cash do you have? As money is moving in and out of your business, that will determine your business’s ability to grow.
Without enough cash, many businesses take on debt. While this might be an easy short-term solution, it won’t help you in the long run. Instead, if you find yourself struggling with your cash flow, look for ways to bring more cash in. Whether that’s new products or services or finding ways to monetize other areas of your business, improving your cash flow into the business is the first step.
Having The Wrong Team
Being strategic about who you bring into your business is crucial. Without the right team, you won’t have the help you need to take your business to the next level. Using your execution power to know what positions are needed to ultimately bring your products and services to market will make the most difference.
Make sure that during the hiring process, you are finding people with the hard skills that you don’t have. They will need to execute ideas and carry your business through the commercialization phase so it’s imperative that they understand where your business is and where you see it going in the future.
Hacking
Cybercrime is a fact of owning a business in today’s market. If you’re accepting credit cards, digital payment types, or keeping confidential customer information, you’re at risk of experiencing a cybercrime. To protect yourself against hacking and other forms of cybercrime, you need Cyber Securities Insurance.
With Cyber Securities Insurance, potential cybercrime against your business will be prevented, detected, and mitigated. Cyber Securities Insurance covers your privacy, data, and network exposure. If you are doing business online, it’s worth the investment. It also provides you with immediate, long-term support in the form of data breach response, data recovery, and coverage for losses from business interruptions.
Injury & Illness
As the owner of a small business, it likely feels like you can’t take a break, even in the event you get sick or injured. In a way, that’s true. Since you’re the driving force behind the success of your business. To protect yourself and your business in case you personally get injured or sick, you need business insurance.
Included in your Business Owner’s Policy, there should be some contingencies to cover the loss of time and wages should you be injured or sick. Other than that, the best thing you can do is live a healthy lifestyle. Stay current on your routine medical appointments and keep a healthy routine for eating and sleeping. That will be a preventative measure that will benefit multiple areas of your life.
Reputation Risks
In today’s marketplace, reputation means a great deal. Consumers want to shop with companies that align with their values. And as your reputation grows, it can evolve to be an important asset. That being said, just a little bad press could be your downfall. Because negative publicity moves so quickly, it’s important to know the fast and easy ways to manage your company’s reputation.
For this, turn to social media and online review sites. They allow you to directly interact with your customers and address any concerns they might have. When doing so, be professional and authentic in your responses. Customers will pick up on the times you’re being phony. Instead, address any complaints with dignity and respect. It’ll go a long way with your customer base.